The Patient Protection and Affordable Care Act (PPACA), also referred to as health care reform, introduced several new laws and regulations that impact employers of all sizes. Previously, we posted a 2013 health care reform checklist. This 2014 health care reform checklist covers three (3) key PPACA compliance issues employers may need to complete for 2014.
Whether an employer needs to complete each item depends on the type of employee health benefits offered, and number of employees.
For example, if an employer offers a traditional group health insurance plan, the requirements are different than if the employer offers a pure defined contribution health plan (ie health insurance allowances). The checklist outlines these differences, and assumes compliance with PPACA compliance issues 2010-2013.
1. Waiting Periods: Max 90-Days
Effective January 1, 2014, health plans may not have a waiting period that exceeds 90 days.
If you offer a group plan: Review all enrollment waiting periods, and amend as necessary.
If you offer a defined contribution health plan: Review all plan enrollment waiting periods, and amend as necessary.
2. Annual Limits
PPACA prohibits health insurance plans from imposing annual or lifetime limits on essential health benefits (EHB).
If you offer a group plan: Remove all annual limits on Essential Health Benefits (EHB) by first day of first plan year beginning on or after 1/1/14.
If you offer a defined contribution health plan: Confirm the plan design and administration complies with PHS 2711 (annual limits) and PHS 2713 (preventive care). If you've offered a stand-alone HRA in the past, speak with your provider about tranistioning to a Healthcare Reimbursement Plan (HRP).
3. Play or Pay Strategy
Starting January 1, 2015*, PPACA requires all applicable large employers (50+ FTE employees) to either provide qualified, affordable health insurance or pay a penalty based on full-time employees.
IMPORTANT: Employers with less than 50 FTE employees are NOT subject to this requirement.
First, determine if you are subject to the Play or Pay rules. Will you have 50+ FTE employees in 2015? If you're unsure, see this FAQ: Does my small business have to offer health insurance?
Second, if 50+ FTE employees, complete a cost analysis to determine if you will play, pay, or play differently:
Play: Offer a qualified, affordable group health insurance plan. If “Playing”: Review plan(s) to confirm they satisfy minimum essential coverage rules, and confirm the plans are affordable (employee’s premium portion for self-coverage is less than 9.5% of income).
Pay: Choose to not offer a group health insurance plan, and pay applicable penalties. If “Paying”: Calculate applicable penalties you may be subject to.
Play Differently: Choose to not offer a group health insurance plan, pay penalties, and offer a defined contribution health plan. If “Playing Differently”: Use a defined contribution software provider to set up a plan prior to 2015.
For more details, see: Affordable Care Act: Play or Pay?
*The employer mandate and employer tax penalties were delayed from 2014 to 2015. This delay was announced on July 2, 2013. Employers now have until 2015 to comply. See: ACA Employer Mandate and Penalty Delayed until 2015.