HEALTH CARE REFORM PROVISIONS BY TYPE AND SIZE OF PLAN Last Rev. July 14, 2014

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1 2010: First Plan Year on or after September 23, 2010 Extension of dependent coverage up to age 26 No pre-existing condition exclusions for enrollees under age 19 No lifetime dollar limits on "essential health benefits" (EHB) Restricted annual dollar limits on "essential health benefits" (EHB): $750,000 if PYB is -9/22/11 $1.25 mil if PYB is 9/23/11-9/22/12 $2 mil if PYB is 9/23/12-12/31/13 No annual dollar limits on "essential health benefits" Preventive services Patient protections: Can select pediatrician as PCP Patient protections: Cannot require referral or pre-authorization for OB/GYN Patient protections: Cannot require pre-authorization or referral for emergency care Patient protections: Cannot impose additional costs or limits on out-ofnetwork emergency care discrimination testing Plan Notice: GF plan must notify participants it is GF No rescissions -- except if fraud or misrepresentation Yes* Yes No No Yes* Yes No No Enforcement delayed until IRS issues final regulations not issued as of 3/5/14 No Yes No Yes No No No * Before 2014, GF plan is not required to offer if over-age dependent has other group coverage available Not applicable to grandfathered individual coverage EHB requirement applies only to small group & insured policies & non-gf plans; but No lifetime dollar limits on EHB applies to all plans that offer EHB, even if grandfathered Not applicable to grandfathered individual coverage; all plans that offer EHB, even if grandfathered NO annual dollar limits in 2014, restricted annual limits before 2014 Self-insured already subject to 105(h) nondiscrimination testing Must provide with all/most notices about benefits Copyright 2014 LGAA, Inc. This document is not intended or provided as legal advice. 1

2 2011 Medical Loss Ratio (MLR): 80% for small groups, 85% for large groups Over-the-counter (OTC) drugs no longer reimbursable by Health FSA plan, HSAs, MSAs or HRAs, unless prescribed by doctor HSAs - non-qualified distributions - penalty increases from 10% to 20%, plus income tax 2012 Benefit appeals procedures & external review procedures Start capturing necessary information for W-2 Reporting of value of employer-sponsored health coverage Applies for 2011 calendar year, rebates in 2012 Yes Yes Yes 1/1/2011 Yes Yes No 1/1/11 Delayed until 2012 PY for calendar year plans 1st 2012 payroll period, for 2012 W-2s (which must be sent by 1/31/13) Yes Yes No No Yes No Selffunded Selffunded Yes Yes Yes No MLR Rebates (will apply annually) 8/1/2012 Yes Yes Yes Coverage of all FDA-approved contraceptive methods, as part of preventive services for women Uniform Summary of Benefits & Coverage (SBC) 2013 $2500 limit on annual Employee pre-tax contribution to Health FSA W-2 Reporting of Health Care Coverage Employers to provide Notice of Health Insurance Marketplaces to employees Comparative Clinical Effectiveness Research Fee (aka CER fee or PCORI Fee) 8/1/12 1 st Open Enrollment period on or after 9/23/2012 1/1/2013 by 1/31/2013, for the 2012 tax year Yes Yes No Selffunded by October 1, 2013 due by 7/31/13, for the 2012 plan year These plans are self-funded reimbursement plans. HSAs are self-funded plans Existing ERISA claims & appeals rules still apply to GF plans Applies in 2012 to employers who sent >250 W-2s in 2011 MLR rebate is from the carrier, so N/A to self-funded N/A to certain religious employers & 1-year delay for religious-affiliated employers No SBC required for H.S.A.s or for excepted benefits such as separate dental or vision plans or most HFSAs HFSAs are self-funded plans *But delayed effective date for employers that filed < 250 W-2s for 2011 Original effective date was March 1, 2013 $1 per member per year, 2nd year increases to $2 per member. Copyright 2014 LGAA, Inc. This document is not intended or provided as legal advice. 2

3 2014 DELAYED: see 2015 & 2016 Employer mandate (aka "pay-orplay") - Potential penalties on ERs who don't offer specified coverage. DELAYED: see entry under Affordability test: If EE cost for self-only coverage exceeds 9.5% of income. Delayed to 2015 or 2016 depending on ER size. Originally effective in Delayed to 2015 or 2016 depending on ER size. Originally effective 1 st Plan Year on or after Employer mandate only applies to ERs with 50 or more FT EEs (and FT Penalties only apply if at least one FT EE gets a gov't subsidy for buying insurance in an Individual Marketplace No penalty and no Affordability test on ERs with fewer than 50 FT EEs (and FT Minimum Value (MV): Employer health plans and health insurance policies must pay at least 60% of actuarial value of benefits under the plan, to meet MV requirement No pre-existing condition exclusions for anyone Waiting period for coverage cannot exceed 90 days (1 st of month after 60 days of eligibility). Can start after bona fide orientation period of not more than 1 month. No Yes No* No* All size insured and selfinsured ER plans must provide MV, but standard population used in the calculation is different for self-insured and large insured plans than for small plans all size employers who offer coverage, not just employers with at least 50 EEs Extension of dependent coverage up to age 26, even if dependent has other group coverage available Requirement that plans & policies provide "essential health benefits" and meet specified actuarial values No annual dollar limits on essential health benefits (Prior to 2014, restricted annual dollar limits applied) Yes* Yes No No No Yes Yes * Before 2014, GF plan is not required to offer if over-age dependent has other group coverage available. small group insurance plans & individual policies Although EHB requirement applies only to non-gf small group insured policies, the prohibition on annual limits on EHBs applies to all plans that cover EHBs Copyright 2014 LGAA, Inc. This document is not intended or provided as legal advice. 3

4 2014 continued Mandatory coverage for clinical trials Modified Community Rating ( Fair Health Insurance Premiums ) (California does not allow tobacco use as a factor, for small insured plans) Limits on cost-sharing : Maximum deductible limits are repealed. They were going to be $2,000/$4,000 for Limits on cost-sharing: Out-ofpocket maximums same as for HSAcompatible HDHPs, which for 2014 will be $6,350.00/$12, See 2015 for changes effective in For employees who meet certain results-based wellness program standards, employers can offer financial incentives of up to 30% of the total premium or cost of coverage in the group health plan Transitional Reinsurance Fee -Imposed on group health plans & policies, based on number of enrollees (employees & dependents 1 st Play year on or after Would have been effective as of 1 st Plan Year on or after, so many plans already complied for 2014 plan year, before the limits were repealed 1 st Plan Year or Wellness Program on or after - 12/31/2016 No Yes Yes Yes No Yes Yes* Yes* Health Insurance Industry Fee Yes Yes No Yes DELAYED: see entry under 2015 Employer reporting requirements: must report specified plan & coverage to gov t & employees but some incentives in place for simplified reporting One-yr delay of reporting requirements. Originally effective for 2014, reporting is now effective in For non-grandfathered small insurance policies, carriers can only rate based on 4 factors: age (3:1 ratio), geographic area, tier and tobacco use. *If it had not been repealed, the Maximum deductible would have applied only to grandfathered small insured plans Maximum out-of-pocket limit applies to non-grandfathered large and small insured plans and individual policies, and also to self-insured plans An additional 20% incentive is allowed for wellness programs to reduce or stop tobacco use (i.e., total incentive is 50% of total premium cost) For 2014, fee is $63 per year per participant (employee & dependents). For 2015, fee is $44.00 per year per participant Fee on health insurance carriers based on market share, to fund Marketplace subsidies Large employers (at least 50 employees) are required to report Copyright 2014 LGAA, Inc. This document is not intended or provided as legal advice. 4

5 2014 continued Automatic enrollment in employer group health plan (but employee can opt out) 2015 Delayed until after 2014 (until regulations issued, we don t know the date) Yes Yes Yes No Only applies to employers with more than 200 full-time employees Limits on cost-sharing: Out-ofpocket maximums for 2015 are different for HSA-compatible HDHPs than for other plans because based on two different indices. For 2015 OOP limits will be: --HDHP: $6,450 & $12,900 --Other plans: $6,600 & $13,200 Employer mandate (aka "pay-orplay") - Potential penalties on ERs who don't offer minimum essential coverage to at least 95% of EEs who work at least 30 hrs/wk (& to dependents), or who do offer coverage but it does not meet Affordability test & minimum value requirement. Affordability test:- If EE cost for selfonly coverage exceeds 9.5% of: EE s W-2 income from the ER, or EE s hourly rate x 130 hrs/month, or FPL for single individual, potential penalty on employer Employer reporting requirements: must report to gov t & employees, certain plan information/terms & if employer offered minimum essential coverage plans until 9//30/2017. Applies in 2015 to ERs with at least 100 FTEEs and FTEs. Delayed to 2016 for ERs with EEs. Also, for 2015 only, offer of coverage may be to only 70% of FTEEs, rather than 95% In 2015, applies only to ERs with 100 or more FT EEs or FTEs. Applies for 2015, report due in Originally effective for 2014, Maximum out-of-pocket limit applies to all size nongrandfathered insured plans and individual policies, and also to self-insured plans Employer mandate only applies to ERs with 100 or more FT EEs (and FT Penalties only apply if at least one FT EE gets a gov't subsidy for buying insurance in an Individual Marketplace No penalty and no Affordability test on ERs with 99 or fewer FT EEs (and FT but in 2016 possible penalty for noncompliant ERs with EEs Note: employers with at least 50 employees, even though in 2015 ERs with EEs are not subject to ER mandate penalties 2016 Employer Mandate Affordability Test As of January 1, 2016, applies to ERs with EEs as well as to ERs with 100 or more EEs As of January 1, 2016, applies to ERs with EEs as well as to ERs with 100 or more EEs Does not apply to ERs who employed fewer than 50 EEs on average during the prior calendar year No penalty and no Affordability test on ERs with 99 or fewer FT EEs (and FT Copyright 2014 LGAA, Inc. This document is not intended or provided as legal advice. 5

6 2018 Cadillac Tax: 40% excise tax on the amount by which the total cost of employer-sponsored health plan exceeds specified thresholds 1/1/ thresholds are: $10,200 for self-only coverage; $27,500 for other coverage (The 2010 amounts will be adjusted for 2018 based on medical trend from ) This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader must consult with legal counsel to determine how laws or decisions discussed herein apply to the reader s specific circumstances. Consult your attorney for specific questions related to your obligations under the PPACA. Copyright 2014 LGAA, Inc. This document is not intended or provided as legal advice. 6