CBIZ Matrix & Health Reform Bulletin 40 ACA Updates: CLASS Act Suspended, Increase in ERRP Cost Thresholds and Amounts & What Are Essential Benefits?

CBIZ HEALTH REFORM MATRIX
A TOOL FOR UNDERSTANDING THE IMPACT OF HEALTH CARE REFORM
Patient Protection and Affordable Care Act (Public Law 111-148, Enacted March 23, 2010) and the
Health Care and Education Reconciliation Act (Public Law 111-152, enacted March 30, 2010)

The following health reform provisions
matrix is divided into six categories:

EMPLOYER/PLAN SPONSOR ISSUES ......................................................................................................................................... 2

REPORTING AND DISCLOSURE ISSUES ................................................................................................................................... 15

TAX ISSUES ............................................................................................................................................................................... 23

INSURANCE ISSUES .................................................................................................................................................................. 31

INDIVIDUAL RESPONSIBILITY ................................................................................................................................................... 41

MEDICARE ISSUES .................................................................................................................................................................... 45

© Copyright 2011 – CBIZ, Inc. NYSE listed: CBZ. All rights reserved. 10/18/2011
1

EMPLOYER/PLAN SPONSOR ISSUES
ALSO SEE REPORTING AND DISCLOSURE ISSUES, TAX ISSUES & INSURANCE ISSUES

2

(also see Reporting and Disclosure, Tax Issues & Insurance Issues)

Provision Impact
Note: The IRC control group Effective Date Related CBIZ
Unless otherwise noted, these provisions apply
rules apply for determining 2010 Health Reform Bulletin
to both insured and self-funded plans employer size
Temporary Early Retiree Reinsurance Program. The Early Retiree All-sized employers Program began Early Retiree Reinsurance
Reinsurance Program (ERRP) began June 1, 2010, and is designed to 6/1/10 Program (5/5/10)
encourage employers to establish or maintain health coverage for their Early Retiree Subsidy – Initial
early retirees (aged 55-64), and their eligible spouses and dependents. Application Date is Approaching
The purpose of the program is to provide reimbursement of certain (6/11/10)
expenses to plan sponsors of group health plans that provide retiree
Early Retiree Reinsurance
coverage.
Program Application Process
Application Process. To be eligible to participate in the program, an Opened (6/29/10)
application must be filed with HHS. HHS will only accept applications
Update: Early Retiree Reinsurance
submitted on its official application form.
Program (9/1/10)
Reimbursement Process Once a plan’s application has been approved
Early Retiree Reimbursement
(certified), the ERRP reimburses up to 80% of the cost of benefits in
Program Updates (10/5/10)
excess of $15k and below $90k. The reimbursement must be used to
lower plan costs, or to reduce participant premiums, copayments, Grandfathered Status and ERRP
deductibles, coinsurance, or other out-of-pocket expenses. Updates (04/04/11)
Notification Requirement. Certified plans must provide notice to all ACA Updates: CLASS Act
plan participants, including covered family members, explaining that Suspended, Increase in ERRP
the plan has been approved to receive ERRP reimbursement, and that Cost Thresholds and Amounts,
the resulting reimbursement monies may impact the participant’s and What Are Essential Benefits?
coverage under the plan. (10/17/11)
Application Deadline. In April 2011, HHS announced that the $5B
funding allocated to ERRP is running out; and thus, applications must
be submitted no later than 5:00 PM (ET) on May 5, 2011. No
applications for ERRP will be accepted after May 5, 2011.

The ERRP application, model notice, FAQs and additional information is
available via its website: http://www.errp.gov.
The Program expires January 1, 2014.

3

Impact
Provision
to both insured and self-funded plans
employer size
Extension of Dependent Coverage All-sized employers Plan years beginning Health Reform’s Coverage for
Group health plans that provide dependent coverage must on or after 9/23/10 Dependent Children Explained
continue to make such coverage available to an adult child up to (5/10/10)
age 26. Grandfathered Health Plan
For this purpose, a “dependent” includes a biological child, a step Rules (6/17/10)
child, an adopted child or a foster child. Coverage must be
New Model Notices Issued
available without regard to the child’s marital status, or whether
(7/12/10)
the child can be claimed as a dependent.
Older-aged dependents cannot be subject to a surcharge, premium Agencies Issue PPACA
penalty, or any other plan differential, unless the differential is Clarifications (10/12/10)
imposed on all dependents under the plan. An insurer is allowed to Agencies Issue Additional PPACA
charge a differential for tiers of coverage (self, self + one, self + Clarifications (12/23/10)
two, etc.).
An older-aged dependent’s enrollment must be effective as of the
first day of the first plan year beginning on or after 9/23/10.
Important Notes:
The extension of dependent coverage does not apply to HIPAA-exempt
programs, limited scope dental and vision plans, and stand alone retiree-only
plans.
Grandfathered Plan Exception: Older-aged dependent coverage must be
available to an adult child up to age 26, unless he/she has access to other
employer-provided coverage; this exception expires for plan years beginning on
or after January 1, 2014.
Ban on Preexisting Condition Exclusions. Group health plans, including All-sized employers Plan years beginning Patient’s Bill of Rights (6/23/10)
grandfathered plans, are prohibited from imposing preexisting on or after 9/23/10
condition exclusions on enrollees under 19. Plan exclusions can still be
imposed; however, the imposition of a new exclusion may cause a plan
to lose grandfathered status. Beginning 1/1/14, preexisting condition
exclusions cannot be imposed on anyone.
(N/A to HIPAA-exempt programs, limited scope dental and vision plans, and
stand alone retiree-only plans.)

4


Provision Impact
To both insured and self-funded plans employer size
Ban on Rescissions. Group health plans, including grandfathered plans, All-sized employers Plan years beginning Patient’s Bill of Rights (6/23/10)
cannot rescind such plan or coverage once an enrollee is covered on or after 9/23/10 Agencies Issue PPACA
under the plan, except in the event of fraud or intentional Clarifications (10/12/10)
misrepresentation of material fact. Cancellation can be retroactive for
the failure to pay premium. Plans must provide 30 days advance
written notice to each participant who would be affected before
coverage may be rescinded.
Ban on Annual and Lifetime Limits. Group health plans, including All-sized employers Plan years beginning Patient’s Bill of Rights (6/23/10)
grandfathered plans, are prohibited from establishing lifetime limits on or after 9/23/10 New Model Notices Issued
and unreasonable annual limits on the dollar value of “essential (7/12/10)
benefits” (to be defined by regulations) for a participant or beneficiary.
Mini-Med Plan Relief from
Plans are allowed to impose limits on non-essential benefits. A change
Annual Limit Restriction Offered
in annual or lifetime limits can cause a plan to lose grandfathered
(9/21/10)
status.
Relief for Stand-Alone Health
Special Enrollment Period A special enrollment opportunity must be
Reimbursement
made available to individuals whose coverage has dropped due to
Arrangements (8/23/11)
reaching the plan’s lifetime limit. The impacted individual must be
allowed to enroll in any of the benefit packages offered by the Update: Mini-Med Plan
employer, as long as the eligibility criteria are met. The enrollment Waivers (6/22/11)
period must be for a minimum of 30 days. ACA Updates: CLASS Act
Mini-Med Plan Waivers. Mini-med plans in existence prior to 9/23/10 Suspended, Increase in ERRP
may apply for a waiver of the annual limits. The waivers will not be Cost Thresholds and Amounts,
allowed after 1/2/14. The waiver is only granted for one plan year at a and What Are Essential
time and plans must request a waiver for each subsequent plan year. Benefits? (10/17/11)

5


Provision Impact
Coverage for Preventive Health Services. Group health plans must All-sized employers Plan years beginning Preventive Health Services
provide coverage for certain maternal and preventive health services, on or after 9/23/10 (7/15/10)
as well as evidence-based items or services recommended by the U.S. (N/A to grandfathered plans, Preventive Care Coverage
Preventive Services Task Force, the Advisory Committee on HIPAA-exempt programs, limited Expanded to Include Women’s
Immunization Practices as adopted by the Director of the CDCP and scope dental and vision plans, and
Health Services (8/3/11)
guidelines supported by the HRSA, without imposing any cost sharing
requirements when the services are delivered by in-network providers.
Independent Claims and Appeals, and External Review Process. All-sized employers Plan years beginning Internal Claims and Appeals,
Insured and self-funded group health plans must provide for an internal (N/A to grandfathered plans) on or after 9/23/10 and External Review Process
claim and appeals process, as well as an external review process, for Note: Enforcement (7/26/10)
coverage determinations and claims. delayed in certain Federal External Claims Review:
aspects of these rules Interim Procedures and Model
– see Delay in Claims Notices (8/30/10)
and Appeals Agencies Issue PPACA
Enforcement Clarifications (10/12/10)
Delay in Claims and Appeals
Enforcement (3/22/11)
Modifications to Claims and
Appeals, and External Review
Processes (7/11/11)
Salary-based Discrimination Rules Applicable to Insured Group Health All-sized employers Plan years beginning Salary-based Discrimination
Plans. Insured group health plans must comply with the on or after 9/23/10; Rules Applicable to Fully Insured
nondiscrimination rules (IRC §105(h)) currently applicable to self- (N/A to grandfathered plans, However, IRS Notice Group Health Plans (8/24/10)
funded plans. Plans cannot discriminate in favor of highly HIPAA-exempt programs, limited 2011-01 delays the Agencies Issue PPACA
compensated individuals as to eligibility and benefits. The scope dental and vision plans, and effective date of these Clarifications (10/12/10)
consequence of a discriminatory insured plan is an excise tax equaling stand alone retiree-only plans.) rules; no penalties will
Implementation of Salary-based
$100 a day, per affected employee, with a maximum penalty of be imposed until after
Discrimination Rules
$500,000. implementing
Delayed (12/23/10)
regulations are issued.

6


Provision Impact
Choice of Primary Care Provider. If a group health plan requires All-sized employers Plan years beginning Patient's Bill of Rights (6/23/10)
designation of a primary care provider (PCP), a participant must be on or after 9/23/10 New Model Notices Issued
allowed to designate a participating in-network PCP, who is available to (7/12/10)
accept him/her. A pediatrician can be designated as a child’s PCP.
(N/A to grandfathered plans, HIPAA-exempt programs, limited scope dental
and vision plans, and stand alone retiree-only plans.)
Direct Access to OB/GYN Services. Group health plans must provide All-sized employers Plan years beginning Patient's Bill of Rights (6/23/10)
direct access to OB/GYN providers, without prior authorization or a on or after 9/23/10 New Model Notices Issued
referral from the individual’s primary care physician. Plans may require (7/12/10)
the OB/GYN provider to agree or adhere to the plan’s policies and
procedures relating to referrals, obtaining prior authorization, and
providing services, pursuant to a treatment plan.
Access to Emergency Room Services. Group health plans that provide All-sized employers Plan years beginning Patient's Bill of Rights (6/23/10)
coverage for hospital emergency room services must also cover on or after 9/23/10
emergency services without prior authorization, even if the emergency
services are provided on an out-of-network basis. Plans cannot impose
limitations on coverage or greater cost sharing requirements for out-of-
network emergency services than those that apply to in-network
services.
and vision plans, and stand alone retiree-only plans)
60-day Advanced Notice of Material Modification of Benefits. A notice All-sized employers Effective 3/23/10, but Agencies Issue Additional PPACA
of any material modification of benefits must be provided to plan plans not obligated to Clarifications (12/23/10)
participants no later than 60 days prior to the effective date of the comply until
change. implementing
Note: In addition to this requirement, plans subject to ERISA, presumably, will regulations are issued
have to continue complying with all existing ERISA disclosure requirements; by HHS/DOL/IRS
this may be clarified in future regulations. Plans exempt from ERISA are
subject to this new requirement. (N/A to HIPAA-exempt programs, limited
scope dental and vision plans, and stand alone retiree-only plans.)

7


Provision Impact
employer size
OTC Medications Are Not Qualified Expenses. FSAs, HRAs, Archer MSAs, Individuals 1/1/11 Over-the-Counter Medication
and HSAs can no longer reimburse the cost of over-the-counter (OTC) Prohibition Clarified (9/7/10)
medications, except for insulin or prescribed OTC medications. Debit Limited Relief for Debit Card
cards for FSAs and HRAs can only be used for prescribed OTC Purchases of OTC
medications, if certain conditions met. Medications (1/10/11)
Medical Loss Ratio. Insurers in the individual and group markets, Plans in the large group, small 1/1/11
including grandfathered plans, are required to provide an annual group and individual markets,
rebate to each enrollee if the ratio of the amount of premium revenue including grandfathered plans.
expended on costs related to reimbursement for clinical services and These restrictions do not apply
activities that improve health care quality versus the total amount of to self-insured plans.
premium revenue is less than:
85% for insurers in the large group market
80% for insurers in the small group or individual markets
Beginning January 1, 2014 the rebate amount will be based on
averages for each of the previous 3 years for the plan.
Simple Cafeteria Plans. An eligible small employer can establish a Employers with 100 or fewer Plan years beginning Simple Cafeteria Plans (9/1/10)
simple cafeteria plan that includes a safe harbor from the employees on or after 1/1/11
nondiscrimination requirements applicable to cafeteria plans and
certain qualified benefits. These simple cafeteria plans must meet the
following requirements:
1. Eligible Employer. To be eligible to sponsor a simple cafeteria plan,
the employer must have employed an average of 100 or fewer
employees on business days during either of the 2 preceding years.

8


Provision Impact
Unless otherwise noted, these provisions apply to both
insured and self-funded plans
employer size

Simple Cafeteria Plans continued
2. Minimum eligibility and participation requirements. All employees
who had at least 1,000 hours of service for the preceding plan year
are eligible to participate in the plan and may, subject to terms and
conditions applicable to all participants, elect any benefit available
under the plan.
3. Contribution requirement. The employer is required, without regard
to whether a qualified employee makes any salary reduction
contribution, to make a contribution to provide qualified benefits
under the plan, on behalf of each qualified employee.
CLASS Act: Voluntary, Self-Funded Long-Term Insurance Program. HHS All-sized employers This provision has ACA Updates: CLASS Act
will establish a voluntary long term care insurance program for been suspended Suspended, Increase in ERRP
purchasing community living assistance services and supports (CLASS Cost Thresholds and Amounts,
program). and What Are Essential
An individual would be required to contribute to the program for 5 years Benefits? (10/17/11)
(vesting period) before benefits (up to $50/day cash benefit) are
available. The payments can be used to purchase non-medical services
and support necessary to maintain community residence, including,
home modifications, assistive technology, accessible transportation,
homemaker services, respite care, personal assistance services, home
care aides, and nursing support.
The program is financed entirely through voluntary payroll deductions.
All working adults will be automatically enrolled in the program, unless
they choose to opt-out. Employers can voluntarily choose to provide
enrollment tools and process the premiums for the program.

9


Provision Impact
employer size

Uniform Summary of Plan Benefits and Coverage. Plans must provide All-sized employers 3/23/12 Proposals on Exchanges,
applicants and enrollees an additional disclosure document, explaining (or, 12 months after Premium Assistance and Uniform
certain aspects of the health benefit coverage. The document must model forms issued) Benefit Summary (8/18/11)
meet uniform standards, such as format, appearance, language, and
content.
Note: In addition to this requirement, plans subject to ERISA, presumably, will
have to continue complying with all existing ERISA disclosure requirements; this
may be clarified in future regulations. Plans exempt from ERISA will be subject
to this new requirement.
Patient-Centered Outcomes Research Fee. Group health plans must pay Insurers of fully-insured plans Plan years beginning
a fee of $2 ($1 for policy years ending during fiscal year 2013) and All-sized employers of 9/30/12
multiplied by the average number of lives covered under the policy. The self-funded plans
fee must be paid by insurers of fully-insured plans, and employers of
self-funded plans. The fees will be used to measure patient-centered
outcomes.

Effective Date 2013
FSA Cap. The maximum amount of salary contributions to a flexible All-sized employers with FSA 1/1/13
medical spending account is capped at $2,500. plan
Retiree Prescription Drug Coverage. An employer’s deduction for retiree All-sized employer sponsored 1/1/13
prescription drug expenses is reduced by the amount of the Medicare health plans claiming
Part D tax-free subsidy. Medicare Part D retiree drug
subsidy
Automatic Enrollment in Health Plan. Employers who offer their Employers with 200+ full-time Notice due 3/1/13
employees enrollment in one or more health benefit plans, are required employees Requirement for
to automatically enroll new full-time employees in one of the plans automatically
offered, subject to any waiting period. enrolling is to be
clarified.

10


Provision Impact
Note: The IRC control group Effective Date Related CBIZ Health Reform
Unless otherwise noted, these provisions apply to
rules apply for determining 2014 Bulletin
both insured and self-funded plans employer size

Shared Responsibility for Employers regarding Health Coverage. A (tax) Employers with 50+ full- 1/1/14
penalty could be imposed against employers who: time equivalent employees
Fail to Offer Coverage to full-time employees; or (FTEE).
Offer coverage to employees qualified for premium tax credits or A FTEE is determined by
cost-sharing reductions. dividing the aggregate
number of hours worked
Reporting Requirement. Employers subject to the penalty for
by part-time employees in
noncompliance are required to file an IRS return and furnish
a month by 120. The
information statements to employees. The return and information
number of FTEEs is
statement must include:
reduced by 30 and part-
1. Identifying information of the employer and covered employees; time employees are not
2. Certification as to whether the employer offers minimum essential counted for penalty
coverage; assessment purposes.
3. Length of any waiting period;
4. The months during the calendar year for which coverage was
available;
5. The monthly premium for the lowest cost option in each enrollment
category;
6. The employer’s share of the total costs of benefits, and
7. The number of full-time employees.

11


Provision Impact
both insured and self-funded plans
employer size

Free Choice Vouchers. Employers who offer minimum essential All-sized employers This provision has Repeal of 1099 and Voucher
coverage to employees and pay any portion of the cost would have been repealed. (4/19/11)
been required to provide free choice vouchers to certain qualifying
employees (those exempt from the individual mandate, but do not
qualify for premium subsidies).

Ban on Discriminatory Premium Rates. Group health plans may only Employers with 100 or fewer Plan years beginning
vary premium rates based upon: employees. on or after 1/1/14
Individual or family coverage; May be applicable to large
The rating area; employer plans (100+
employees) offered through
Age (rates can’t vary by more than 3 to 1); and
Exchange.
Tobacco use (rates can’t vary by more than 1.5 to 1).
Ban on Excessive Waiting Periods. Group health plans cannot require All-sized employers Plan years beginning
enrollment waiting periods in excess 90 days. on or after 1/1/14

12


Provision Impact
employer size

Ban on Discrimination Based on Health Status. Group health plans and All-sized employers Plan years beginning
insurers are prohibited from imposing discriminatory eligibility rules on or after 1/1/14
based on any of the following health status-related factors, relating to
the covered individual or his/her dependent:
Health status;
Medical condition (including both physical and mental illnesses);
Claims experience;
Receipt of health care;
Medical history;
Genetic information;
Evidence of insurability (including conditions arising out of acts of
domestic violence).
Disability; or
Any other health status-related factor determined discriminatory
by HHS.
Reward for Participation in Wellness Program. The reward under a All-sized employers Plan years beginning
standard-based wellness program can be up to 30% (currently 20%) of on or after 1/1/14
the cost of coverage (this amount could increase up to 50%, if deemed
appropriate by the Agencies). Wellness premium discounts will not
cause loss of grandfathered status.
Coverage for Individuals Participating in Approved Clinical Trials. All-sized employers Plan years beginning
Individual and group health plans cannot deny individual participation on or after 1/1/14
in approved clinical trials and must cover routine costs in approved
clinical trials. Insurers are not required to cover:
The investigational item, device or service;
Items and services that are provided solely to satisfy data
collection and analysis needs that are not used in the direct
clinical management of the patient; or
A service that is clearly inconsistent with widely accepted and
established standards of care for a particular diagnosis.

13


Provision Impact
employer size

Excise Tax on High Cost Employer-Sponsored Health Coverage. A 40% All-sized employers 1/1/18
excise tax will be imposed on the value of high cost employer
sponsored health coverage (“Cadillac” health plans) exceeding certain
threshold limits ($10,200/individual; $27,500/family) [indexed]. The
employer calculates the excise tax and provides it to the insurer or
third party administrator, who then pays the tax.

14

REPORTING AND DISCLOSURE ISSUES
ALSO SEE EMPLOYER/PLAN SPONSOR ISSUES, TAX ISSUES & INSURANCE ISSUES

15

(also see Employer/Plan Sponsor Issues, Tax Issues & Insurance Issues)

Provision Impact
employer size

Notice of Special Enrollment: Extension of Dependent Coverage to Age All-sized employers Plan years beginning Health Reform’s Coverage for
26. Dependents who age off a group health plan must be given a on or after 9/23/10 Dependent Children Explained
special enrollment opportunity of 30 days. The 30-day enrollment (5/10/10)
opportunity must be provided to: Grandfathered Health Plan
Dependents who were not eligible when the parent first became Rules (6/17/10)
covered under the plan; New Model Notices Issued
Dependents who have lost eligibility; and (7/12/10)
Dependents currently on COBRA, due to loss of eligibility. Agencies Issue PPACA
Dependent children who become newly eligible by virtue of this law Clarifications (10/12/10)
must be given a special enrollment opportunity to enroll in any of the Agencies Issue Additional
benefit packages offered by the employer. PPACA Clarifications
Notice Requirement. A written notice explaining the special enrollment (12/23/10)
opportunity, and the 30-day enrollment period, must be provided no
later than the first day of the first plan year beginning on or after
9/23/10. The notice must include a statement that children whose
coverage ended, or who were denied coverage (or were not eligible for
coverage), because the availability of dependent coverage of children
ended before attainment of age 26 are eligible to enroll in the plan or
coverage.
The notice may be provided to an employee on behalf of the
employee’s child. In addition, the notice may be included with other
enrollment materials that a plan distributes to employees, provided the
statement is prominent. Enrollment must be effective as of the first
day of the first plan year beginning on or after 9/23/10.

16


Provision Impact
employer size

Dependent Coverage (Continued)
Important Notes:
The extension of dependent coverage does not apply to HIPAA-exempt
programs, limited scope dental and vision plans, and stand alone retiree-
only plans
Grandfathered Plan Exception: Older-aged dependent coverage must be
available to an adult child up to age 26, unless he/she has access to
other employer-provided coverage; this exception expires for plan years
beginning on or after January 1, 2014.
Notice of Rescission of Coverage. Individual and group health plans, All-sized employers Plan years beginning Patient’s Bill of Rights
including grandfathered plans, must provide 30 day-advanced written on or after 9/23/10 (6/23/10)
notice of a rescission of coverage to each affected individual, prior to Agencies Issue PPACA
rescinding coverage. Clarifications (10/12/10)
Lifetime Limit Notifications. Group health plans must provide written All-sized employers Plan years beginning Patient’s Bill of Rights
notice to individuals when the lifetime limit on the dollar value of all on or after 9/23/10 (6/23/10)
benefits is no longer applicable and that an individual, if covered, is New Model Notices Issued
once again eligible for benefits under the plan. (7/12/10)
Special Enrollment Period. For those individuals whose coverage has Mini-Med Plan Relief from
dropped due to reaching the plan’s lifetime limit, a special enrollment Annual Limit Restriction Offered
opportunity must be made available. The individual must be given (9/21/10)
notice of the enrollment opportunity. The notice may be included with
other enrollment materials as long as the statement is prominent. The
notice and enrollment opportunity must be provided beginning no later
than the first day of the first plan year beginning on or after 9/23/10
and coverage must take effect no later than the first day of the first
plan year beginning on or after 9/23/10.

17


Provision Impact
employer size

Notice of Grandfathered Health Plan Status. All grandfathered health Grandfathered plans, whether No later than the first Grandfathered Health Plans
plans, whether insured or self-funded, are required to provide a Notice insured or self-funded day of the first plan Rules (6/16/10)
to covered individuals of the plan’s grandfathered status. The Notice year beginning on or New Model Notices Issued
may be included in any plan materials provided to participants and after 9/23/10 (7/12/10)
beneficiaries and must include the plan’s contact information for
Agencies Issue PPACA
questions and complaints.
Clarifications (10/12/10)
Grandfathered Status & ERRP
Update (04/04/11)
Notice of Choice of Primary Care Provider. if a group health plan All-sized employers Plan years beginning Patient's Bill of Rights
requires designation of a primary care provider (PCP), a participant on or after 9/23/10 (6/23/10)
must be allowed to designate a participating in-network PCP, who is New Model Notices Issued
available to accept him/her. A pediatrician can be designated as a
(7/12/10)
child’s PCP.
Notice of Right to Direct Access to OB/GYN Services. Group health All-sized employers Plan years beginning Patient's Bill of Rights
plans must provide direct access to OB/GYN providers, without prior on or after 9/23/10 (6/23/10)
authorization or a referral from the individual’s primary care physician.
New Model Notices Issued
Plans may require the OB/GYN provider to agree or adhere to the
(7/12/10)
plan’s policies and procedures relating to referrals, obtaining prior
authorization, and providing services, pursuant to a treatment plan.

18


Provision Impact
employer size

60-day Advanced Notice of Material Modification of Benefits. A notice All-sized employers Effective 3/23/10, but Agencies Issue Additional
of any material modification of benefits must be provided to plan plans not obligated to PPACA Clarifications
participants no later than 60 days prior to the effective date of the comply until (12/23/10)
change. implementing
Note: In addition to this requirement, plans subject to ERISA, presumably, will regulations are issued
have to continue complying with all existing ERISA disclosure requirements; by HHS/DOL/IRS
this may be clarified in future regulations. Plans exempt from ERISA are
subject to this new requirement.
N/A to HIPAA-exempt programs, limited scope dental and vision plans, and
stand alone retiree-only plans.
Notice of Participation in Early Retiree Reimbursement Program. Group Group health plans that are Immediately after the Early Retiree Reinsurance
health plans participating in the ERRP and have received certification, participating in the ERRP, first reimbursement is Program (5/5/10)
must provide notice to all plan participants, including covered family whether insured or self-funded received, but it may be Early Retiree Subsidy – Initial
members, explaining that the plan has been approved to receive ERRP provided in advance Application Date is Approaching
reimbursement, and that the resulting reimbursement monies may (6/11/10)
impact the participant’s coverage under the plan. The notice may be
Early Retiree Reinsurance
hand delivered to the participant, as long as it is addressed to all
Program Application Process
family members. Employees may be provided with the notice
Opened (6/29/10)
electronically; however, a statement that the employee is responsible
for providing the notice to covered family members should be included Update: Early Retiree
with the notice. The ERRP model notice and additional information is Reinsurance Program (9/1/10)
available via its website: http://www.errp.gov. Early Retiree Reimbursement
Program Updates (10/5/10)

19


Provision Impact
employer size

Independent Claims and Appeals, and External Review Process. As part Non-grandfathered group Plan years beginning Internal Claims and Appeals,
of the requirements applicable to independent claims and appeals, health plans and plans that on or after 9/23/10 and External Review Process
and external review process, the plan or insurer must provide lose grandfathered status. (7/26/10)
claimants with the following document(s), in writing, to the affected These rules apply to ERISA Federal External Claims Review:
Note: Enforcement
individual(s): plans and non-ERISA plans, Interim Procedures and Model
delayed in certain
Notice of Adverse Benefit Determination such as governmental plans Notices (8/30/10)
aspects of these rules
and church plans.
Notice of Final Internal Adverse Benefit Determination – see Delay in Claims Agencies Issue PPACA
Notice of Final External Review Decision. and Appeals Clarifications (10/12/10)
Enforcement Delay in Claims and Appeals
There are specific content and timeframes for providing these notices,
depending on whether the issue relates to an urgent care or life- Enforcement (3/22/11)
threatening matter, or whether it relates to a non-urgent matter. In Modifications to Claims and
addition, there are specific methods of distribution of the various Appeals, and External Review
notices in urgent and non-urgent instances. Processes (7/11/11)
In addition to these notice requirements, plans subject to ERISA must
to continue to comply with all existing ERISA claims and appeal
disclosure requirements.

Effective Date 2011
New Form W-2 Reporting Rules. Employers are required to disclose the All-sized employers required to Beginning 2011 See “IRS Pronouncements” in
aggregate cost of any employer-sponsored health insurance coverage file a Form W-2. Tax Year; however, Agencies Issue Additional
on the Form W-2, including both the employer’s and employee’s share. N/A to Self-funded plans exempt the reporting is PPACA Clarifications
Plans excluded include LTC plans; on-site medical clinics; stand-alone, from federal COBRA; government- voluntary for the (12/23/10)
non-integrated dental or vision plans; contributions to HSAs, Archer sponsored plans maintained for 2011 plan year.
military members and their
IRS Issues Interim Guidance on
MSA, HRAs, or salary reduction contributions to FSA; or multiemployer Employers issuing W-2 Reporting (3/30/11)
plans. The aggregate cost can be calculated in one of several ways: families; or Federally-recognized
Indian tribal government plans.
fewer than 250
the insurance premium method, the COBRA method, or, a modified Form W-2s per
COBRA method. year are exempt
until 2013

20


Provision Impact
employer size

Expanded 1099 Reporting Requirements. Businesses that pay $600 or All-sized employers This provision has Expanded 1099 Reporting
more for goods and/or services to a single payee, whether a been repealed. Requirements for 2012 and Call
corporation or otherwise, would have been required to file an for Public Comment (8/3/10)
informational return reporting the payments.
Repeal of 1099 and Voucher
(4/19/11)

Uniform Summary of Plan Benefits and Coverage. Plans must provide All-sized employers 3/23/12 (or, 12 Proposals on Exchanges,
applicants and enrollees an additional disclosure document, explaining months after model Premium Assistance and
certain aspects of the health benefit coverage. The document must forms issued) Uniform Benefit
meet uniform standards, such as format, appearance, language, and Summary (8/18/11)
content.
Note: In addition to this requirement, plans subject to ERISA, presumably, will
have to continue complying with all existing ERISA disclosure requirements;
this may be clarified in future regulations. Plans exempt from ERISA will be
subject to this new requirement.
Quality of Care Reporting Requirement. Plans and insurers are All-sized employers 3/23/12
required to submit a quality of care report to HHS. The type of
information included in the report are details about coverage benefits,
health care provider reimbursement structures, any improvement of
health outcomes, and implementation of any wellness or prevention
activities.
Effective Date 2013
Notice of Exchange Coverage. Employers are required to provide each All-sized employers 3/1/13
employee at the time of hiring, as well as current employees, a written
notice informing the employee of the existence of an Exchange,
including a description of the services provided by such Exchange, and
the manner in which the employee may contact the Exchange to
request assistance.

21


Provision Impact
employer size

Employer Health Insurance Reporting Requirement. Reports to IRS. Employers with 50+ full-time 1/1/14
Employers must satisfy an IRS reporting requirement relating to its employees
health insurance coverage as to access, eligibility, waiting periods,
costs, number of employees, and other coverage details.
Reporting Requirement. Employers subject to the penalty for
noncompliance are required to file an IRS return and furnish
information statements to employees. The return and information
statement must include:
1. Identifying information for the employer and covered employees;
2. Certification as to whether the employer offers minimum
essential coverage;
3. Length of any waiting period;
4. The months during the calendar year for which coverage was
available;
5. The monthly premium for the lowest cost option in each
enrollment category;
6. The employer’s share of the total costs of benefits, and
7. The number of full-time employees.

Benefit Statements to Employees. The employees listed in the IRS
report, above, must be furnished a written statement relating to
information contained in the employer’s report, applicable to the
employee.

22

TAX ISSUES
ALSO SEE EMPLOYER/PLAN SPONSOR ISSUES, REPORTING AND DISCLOSURE ISSUES & INSURANCE ISSUES

23

TAX ISSUES
(also see Employer/Plan Sponsor Issues, Reporting and Disclosure Issues & Insurance Issues)

Provision Impact
employer size

Small Business Tax Credit. Small businesses and tax-exempt Employers who employ 25 1/1/10 The Small Business Health Care
employers that provide health care coverage to their employees or fewer full-time Special credit carry Tax Credit (5/20/10)
under a qualified health care arrangement are entitled to a credit for employees and pay back rules apply Additional Guidelines to the
taxable years beginning 1/1/10. To be eligible, the business must: average annual wages 1/1/11 Small Business Tax Credit
1. Employ 25 or fewer full-time equivalent employees ("FTEs") for between a maximum of
(12/22/10)
the tax year; $25,000 (10 or fewer
employees) and $50,000
2. Pay average annual wages of less than $50,000 per employee;
(25 or fewer employees).
and
Employers who employ 25
3. Maintain a “qualifying arrangement”, i.e., employer pays
or more employees could
premiums for each employee enrolled in health insurance
qualify for the credit if
coverage offered by the employer in an amount equal to a
some of its employees
uniform percentage (minimum 50%) of the premium cost of the
work part-time.
coverage. Credit is only available for insured plans; it is not
available for self-funded plans, including employer contributions
to FSAs, HRAs, HSAs, or other similar account-based plans.
Eligible tax exempt employers receive a credit of 25%. After 2013,
the credit increases to 50% for employers (35% for tax exempt)
purchasing coverage through an insurance exchange, subject to a 2
consecutive-year limit.
The entire amount of premiums can be claimed as a credit by
employers with 10 or fewer employees whose annual wages are
$25,000 or less.
Increase of Adoption Credit. Increase of the maximum amount of Individuals 1/1/10
qualified adoption expenses eligible for tax credit from $12,170 Sunset Date: 12/31/11
(indexed for 2010) to $13,170 (indexed for inflation). The credit is
fully refundable in year claimed.

24

TAX ISSUES

Provision Impact
employer size

Adult Dependent Children Coverage. The cost of employer-provided All-sized employers 3/30/10 IRS Guidance: Tax-Favored
health coverage of dependent children under the age of 27 (as of the Status of Dependent Coverage
end of the tax year) is excluded from employee’s gross income, and is (4/28/10)
not included in employment taxes. Self-employed individuals may
State Tax Treatment of Older-
deduct premiums paid on dependent coverage. The exclusion of aged Dependent Coverage
health expenses from the employee’s taxable income extends to
(12/16/10)
reimbursements and premiums paid by employers.
Economic Substance Doctrine. The economic substance judicial All-sized employers Transactions entered
doctrine has been codified. Transactions are treated as having into after 3/30/10
economic substance, and therefore, respected for tax purposes, only
if the transaction results in a meaningful change to a taxpayer’s
economic position, and the taxpayer has a substantial purpose for
entering into the transaction (apart from Federal income tax effects).
Significant penalties apply to transactions that fail these
requirements.
Excise Tax on Indoor Tanning Services. A 10% tax is imposed on the Individuals 7/1/10
cost of indoor tanning services.

Effective Date 2011
Increased Penalty for Nonqualified HSA or Archer MSA Distributions. Individuals 1/1/11
Penalties on nonqualified HSA distributions increase from 10% to
20%. The penalty for nonqualified distributions from Archer MSAs
increases from 15% to 20%.

25

TAX ISSUES

Provision Impact
employer size

New Form W-2 Reporting Rules. Employers are required to disclose All-sized employers required to Beginning 2011 Tax See “IRS Pronouncements” in
the aggregate cost of any employer-sponsored health insurance file a Form W-2 Year; however, the Agencies Issue Additional PPACA
coverage on the Form W-2, including both the employer’s and reporting is voluntary for Clarifications (12/23/10)
employee’s share. Plans excluded include LTC plans; on-site medical N/A to Self-funded plans exempt
the 2011 plan year. IRS Issues Interim Guidance on
clinics; stand-alone, non-integrated dental or vision plans; from federal COBRA; government-
W-2 Reporting (3/30/11)
contributions to HSAs, Archer MSA, HRAs, or salary reduction sponsored plans maintained for Employers issuing fewer
contributions to FSA; or multiemployer plans. The aggregate cost military members and their than 250 Form W-2s per
families; or Federally-recognized
can be calculated in one of several ways: the insurance premium Indian tribal government plans.
year are exempt until
method, the COBRA method, or, a modified COBRA method. 2013

Effective Date 2012
Expanded 1099 Reporting Requirements. Businesses that pay $600 All-sized employers This provision has been Expanded 1099 Reporting
or more for goods and/or services to a single payee, whether a repealed. Requirements for 2012 and Call
corporation or otherwise, will have to file an informational return for Public Comment (8/3/10)
reporting the payments. Certain business purchases made with Repeal of 1099 and Voucher
credit or debit cards are exempted from the reporting requirement. (4/19/11)

Effective Date 2013
FSA Cap. The maximum amount of salary contributions to a flexible All-sized employer sponsored 1/1/13
medical spending account is capped at $2,500. FSA plans

26

TAX ISSUES

Provision Impact
employer size

Increased Medicare (Hospital Insurance) Tax on High-Income Individuals with wages of 1/1/13
Individuals. The Medicare portion of an individual’s FICA tax is $250,000 (married filing
increased (by 0.9%), from 1.45% to 2.35%, to the extent an jointly), $200,000 (single), or
individual’s wages exceed $250,000 for married filing jointly, $125,000 (married filing
$200,000 for single taxpayers, or $125,000 for married filing separately)
separately.
Employer must withhold on all wages >$200,000
Employee liable regardless of employer withholding
Counted for estimated tax payments
Unearned Income Medicare Contribution. A Medicare tax is imposed Individuals with net investment 1/1/13
on high income individuals, equal to 3.8% of the lesser of an income and modified AGI of
individual’s: $250,000 (married filing
“Net investment income” (capital gains, interest, dividends, jointly), $200,000 (single), or
annuities, rent and gross income from passive activities); or $125,000 (married filing
separately)
Modified AGI in excess of $250,000 for married filing jointly,
$200,000 for single taxpayers, or $125,000 for married filing
separately.
No employer withholding requirement
Counted for estimated tax payments
Net investment income excludes income from a qualified
retirement plan and amounts subject to self-employment taxes.
Retiree Prescription Drug Coverage. An employer's deduction for All-sized employer sponsored 1/1/13
retiree prescription drug expenses is reduced by the amount of the health plans claiming Medicare
Medicare Part D tax-free subsidy. Part D retiree drug subsidy

27

TAX ISSUES

Provision Impact
employer size

Modification of Itemized Deduction for Medical Expenses. The Individuals 1/1/13
threshold for deductibility of unreimbursed medical expenses is
increased from 7.5% to 10% of AGI. The 7.5% threshold is retained
through 2016 for individuals who are at least 65 years old by year
end.
Effective Date 2014
Shared Responsibility for Employers for Health Coverage. Covered Employers with 50+ full-time 1/1/14
employers may be subject to monthly nondeductible penalties: equivalent employees (FTEE).
For failure to offer minimum essential coverage (including, in an A FTEE is determined by
employer-sponsored plan, employer payment of at least 60% of dividing the aggregate number
the benefit costs) at an affordable rate (employee’s contribution, of hours worked by part-time
including salary reduction amounts, cannot exceed 9.5% of employees in a month by 120.
household income): The number of FTEEs is
Monthly Penalty in 2014: (Number of full-time employees – 30) reduced by 30 and part-time
x 166.67. After 2014 the amount of the penalty is indexed for employees are not counted for
inflation. penalty assessment purposes.
Offering minimum essential coverage at an affordable rate, but
at least one full time employee is eligible for or receives a
premium tax credit or cost sharing assistance for buying
insurance from a State exchange plan.
Monthly Penalty in 2014: Number of credit employees x $250
(subject to cap in the amount described in the first penalty,
above). After 2014, the amount of the penalty is indexed for
inflation.

28

TAX ISSUES

Provision Impact
employer size

Free Choice Vouchers. Employers who offer minimum essential All “qualifying employers” 1/1/14
coverage to employees and pay any portion of the cost must provide
free choice vouchers to certain qualifying employees (those exempt
from the individual mandate, but do not qualify for premium
subsidies). Qualified employees include any employee:
1. Whose required contribution for minimum essential coverage is
between 8 and 9.8% of household income;
2. Whose household income does not exceed 400% of the FPL; and
3. Who does not participate in the employer’s health plan.
The amount of the voucher includes what the employer would have
paid to cover the employee in its plan. The employer pays these
amounts to the Exchange plan in which the employee is enrolled. The
entire cost of the voucher is deductible by the employer. Any excess
over the cost of the premium for coverage through the Exchange is
paid to the employee as taxable compensation.
Premium Assistance Tax Credit. Taxpayers with family income of Individuals with family income 1/1/14 Proposals on Exchanges,
400% of the federal poverty level (FPL) or less, and whose employers at or below 400% of the Premium Assistance and
fail to offer minimum essential coverage at an affordable rate (see Federal Poverty Level Uniform Benefit Summary
above), are entitled to a tax credit for coverage purchased through a (8/18/11)
State exchange. The amount of the credit is based upon premium
cost and family income, but starts at the amount by which premiums
exceed 2% of family income if the income is at or below 100% of FPL.
At 400% of FPL the credit is the amount by which premiums exceed
9.5% of income. The credit is refundable, payable in advance, and
remitted directly to the insurer.

29

TAX ISSUES

Provision Impact
employer size

Excise Tax on High Cost Employer-Sponsored Health Coverage. A All-sized employers 1/1/18
40% excise tax will be imposed on the amount paid for high cost
employer-sponsored health insurance coverage exceeding certain
threshold levels ($10,200/individuals; $27,500/family)[indexed].
The tax is imposed on health insurance issuers, plan administrators
(for self-insured plans), or employers making contributions (HSAs
and MSAs). The tax is calculated using overall cost of insurance,
including premium costs and employer/employee contributions, but
excludes stand-alone dental and vision plan coverage.

30

INSURANCE ISSUES
(ALSO SEE EMPLOYER/PLAN SPONSOR ISSUES, TAX ISSUES & INDIVIDUAL RESPONSIBILITY)

31

CBIZ Matrix & Health Reform Bulletin 40 ACA Updates: CLASS Act Suspended, Increase in ERRP Cost Thresholds and Amounts & What Are Essential Benefits?

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CBIZ Matrix & Health Reform Bulletin 40 ACA Updates: CLASS Act Suspended, Increase in ERRP Cost Thresholds and Amounts & What Are Essential Benefits?