Global Health Care Update

Transcription

1 Global Health Care Update November/December 2013 This bimonthly Update summarizes recent legislative developments and trends related to health care and highlights recently passed and pending legislation that may require employers to take action to comply with new rules or review existing plans. Action May Be Required Indonesia Employers may wish to review their health care benefits in light of the rollout of the health care regime of the new National Social Security System (SJSN). The SJSN law was passed in 2004 with the goal of achieving universal social security coverage via five programs health coverage, employment injury, old age (provident fund), pensions, and death benefits. To date, a Presidential Regulation has been issued only for health care coverage. When the health care regime is fully implemented, all citizens and their family members will be covered, and foreign employees with a minimum six-month period of work and their family members must enroll. Effective January 1, 2014, the new health insurance program applies to current members of the social security system (JAMSOSTEK) medical system and their family members; individuals who cannot afford to contribute; military personnel and civil servants in the Defense Ministry and their family members; police personnel and civil servants in the National Police and their family members; and Members of Perusahaan (Persero) Asuransi Kesehatan Indonesia (ASKES). Health insurance coverage will be gradually rolled out to all others, including individuals working in the informal sector, with a target date of full implementation by January 1, The immediate impact to the private sector stems from the compulsory nature of health coverage. Under the current JAMSOSTEK system, coverage is not compulsory as long as the employer provides similar or better health coverage to employees and their dependents. With the implementation of this program, employers and employees are required to contribute to the program, regardless of whether the employer provides coverage. Companies may consider restructuring current programs and/or using the new system to provide benefits. It is not yet possible to prepare a comparison of plans as numerous operating regulations are still pending, such as the determination of contribution levels, identification of relevant benefits including room and board classifications, and administrative procedures. Copyright 2013 Aon plc 1

2 United Arab Emirates (UAE) Employers in Dubai will be required to provide health insurance to employees under the Health Insurance Law No. 11 of Employer-provided health insurance will be mandatory for all nationals and expatriates, including those working in free trade zones. Health insurance will be a prerequisite for the new and renewed residency visas. If an employer does not provide insurance for dependents, employees will have to pay a minimum of AED 600 for each dependent. Health insurance must provide the essential benefit package, which is expected to cover emergency, primary, secondary, maternity, and surgical procedures. The cost is estimated to be 1.5% of total payroll; employers cannot require employees to contribute to the cost. Coverage will be rolled out in phases until the middle of 2016, when all employees must be covered by the essential benefit package. The first phase will be implemented in Recent Developments U.S. Health Care Reform The U.S. Centers for Medicare and Medicaid Services (CMS) announced that small group health insurance policies, as well as individual health insurance policies, that are currently in place can remain in effect for one year without having to comply with the Patient Protection and Affordable Care Act (Affordable Care Act) marketplace rules that start in CMS issued a letter to state insurance commissioners informing the commissioners that the transition policy applies to both small group and individual policies that have changed since the law took effect, as well as to policies that individuals and small groups purchased after the law was enacted. The definition of a small group varies from state to state, but generally does not exceed 100 employees. Under the transition policy, state insurance commissioners have the final say and can override the extension. Additionally, insurers are not required to extend these policies. Insurers that extend the policies must let consumers know to what extent their policies do not comply with requirements of the Affordable Care Act and inform them of additional options and tax credits available through the Exchanges. The U.S. Treasury Department and Internal Revenue Service (IRS) released three sets of regulations (and associated guidance) related to tax provisions slated to fund the Affordable Care Act. Brief summaries are provided below: Final regulations relating to additional Medicare tax: These final regulations relate to the additional hospital insurance tax on income above threshold amounts (Additional Medicare Tax), as added by the Affordable Care Act. Specifically, the final regulations provide guidance for employers and individuals relating to the implementation of the Additional Medicare Tax, including the requirement to withhold Additional Medicare Tax on certain wages and compensation, the requirement to file a return reporting Additional Medicare Tax, the employer process for adjusting underpayments and overpayments of Additional Medicare Tax, and the employer and individual processes for filing a claim for refund for an overpayment of Additional Medicare Tax. The regulations became effective on November 29, Copyright 2013 Aon plc 2

3 Final regulations on the health insurance providers fee, IRS Notice , and IRS Revenue Ruling : These final regulations relate to the annual fee imposed on covered entities engaged in the business of providing health insurance for United States health risks. This fee is imposed by Section 9010 of the Affordable Care Act. The regulations affect persons engaged in the business of providing health insurance for United States health risks. The regulations became effective on November 29, The Treasury and IRS also released additional guidance on the health insurance providers fee. Notice provides guidance on the time and manner for submitting Form 8963 (Report of Health Insurance Provider Information), notifying covered entities of their preliminary fee calculation, submitting a corrected Form 8963 for the error correction process, and the time for notifying covered entities of their final fee calculation. IRS Revenue Ruling explains income tax treatment of amounts a covered entity collects from policyholders to offset the cost of the annual fee imposed under the Affordable Care Act. Final regulations on net investment income tax: These final regulations provide guidance on the general application and computation of the 3.8% Medicare contribution tax on the unearned income of individuals, estates, and trusts when incomes meet certain income thresholds. The regulations became effective on December 2, Americas The U.S. Treasury and IRS modified the use-or-lose rule for health flexible spending arrangements (FSAs) by allowing a USD 500 carryover. The Treasury and IRS issued Notice , which modifies the rules for Code Section 125 cafeteria plans. Specifically, the guidance changes the longstanding use-or-lose rule for FSAs. For the first time, at the plan sponsor s option, employees participating in health FSAs will be allowed to carry over, instead of forfeiting, up to USD 500 of unused amounts remaining at the end of a plan year. According to the Treasury, some plan sponsors may be eligible to take advantage of the option to adopt a carryover provision as early as plan year In addition, the existing option for plan sponsors to allow employees a grace period after the end of the plan year remains in place. However, a health FSA cannot have both a carryover and a grace period; it can have one or the other or neither. Additionally, the Notice clarifies the scope of the transition relief provided in the preamble to proposed regulations under Section 4980H that allows greater flexibility for individuals to make changes in salary reduction elections for accident and health plans provided through Section 125 cafeteria plans for noncalendar cafeteria plan years beginning in In related news, the annual dollar limit on employee contributions to employer-sponsored FSAs remains unchanged at USD 2,500. In the United States, the CMS announced the 2014 Medicare Part A and Part B premium, deductible, and coinsurance amounts to be paid by Medicare beneficiaries. The standard monthly Medicare Part B premium will not increase in 2014 and will remain at the 2013 rate of USD Higher-income beneficiaries (those with incomes over USD 85,000 single/usd 170,000 joint) will pay higher premiums. According to CMS, the past five years have been among the slowest periods of average Part B premium growth in Medicare s history. The Medicare Part B deductible also will remain unchanged at USD 147. Copyright 2013 Aon plc 3

4 The 2014 Medicare Part A deductible will increase to USD 1,216, up from USD 1,184 in The Part A deductible is paid by the beneficiary per spell of illness for covered inpatient hospital services. After the first 60 days of hospitalization, the 2014 coinsurance will be USD 304 per day for days 61 through 90 (USD 296 in 2013), and USD 608 per day (USD 592 in 2013) for the 91 st and later days. The daily coinsurance for the 21 st through 100 th day in a skilled nursing facility will be USD 152 in 2014, up from USD 148 in Three U.S. federal agencies the CMS, the Department of Labor s Employee Benefits Security Administration (EBSA), and the IRS jointly issued long-awaited final mental health parity regulations. The final regulations implement the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008, which requires parity between mental health or substance use disorder benefits and medical and surgical benefits with respect to financial requirements and treatment limitations under group health plans and group and individual health insurance coverage. The final regulations also contain a technical amendment relating to external review with respect to the multistate plan program administered by the Office of Personnel Management. Private employers with fewer than 50 employees are exempt from the law. The mental health parity provisions of the final regulations apply to group health plans and health insurance issuers for plan years (or, in the individual market, policy years) beginning on or after July 1, According to the agencies, until the final regulations become applicable, plans and issuers must continue to comply with the mental health parity provisions of the interim final regulations. The Supreme Court of Canada has dismissed the application for leave to appeal from the decision of the British Columbia Court of Appeal in Lacey v. Weyerhaeuser Company Limited, which dealt with the issue of whether an employer could reduce the amount it would continue to contribute to the cost of health insurance for retirees where there was no written employment contract. Over a period of time, the employer had a pattern of telling its employees that they would have such benefits for life upon retirement and frequently used phrases such as part of your compensation, benefits will be provided for the lifetime of you and your spouse and the company will pay the premium, as well as referring to the retirement benefits as an entitlement. Therefore, the decision of the British Columbia Court of Appeal stands; the benefits were deferred compensation, and the employer became contractually obligated to provide the agreed benefits and maintain the contribution rate. Under pending legislation in Puerto Rico, nonresidents and tourists would be required to have health insurance. The insurance would have to cover any medical expenses incurred while on the island. Individuals travelling to Puerto Rico would be required to pay for the insurance at the point of entry (airport or port). It is not known when action will be taken on this bill (H.B. 1410). Asia In Japan, the structure of the health care system would change and costs would increase for elderly individuals under legislation currently under review by the Diet. Prefectural governments would be given the authority to run the public health care system rather than city, town, and village governments. City, town, and village governments would be responsible for the provision of daily living support services for the elderly with minor disabilities; these would no longer be covered by the national elderly nursing care program. Also, out-of-pocket expenses for individuals age 70 to age 74 would increase from 10% to 20%. For high-income households, out-of-pocket expenses for elderly nursing care also would increase to 20%. Copyright 2013 Aon plc 4

5 Europe The Irish government plans to reduce tax relief on health insurance premiums. Currently, individual taxpayers may deduct up to 20% of the health insurance premium paid. Under the 2014 budget, the tax relief on health insurance premiums would be capped at EUR 1,000 for adults and EUR 500 for children. Ireland s Social Welfare and Pensions Bill 2013 includes provisions that would affect the payment of benefits. The waiting period for an illness or injury benefit paid by the Department of Social Protection would increase from three to six days. Also, the government would pay a standard maternity benefit of EUR 230 per week. Currently, the maximum weekly benefit is EUR 262. Employers that top-up maternity benefits could see an increase in their costs. Under the Portuguese government s 2014 budget, the tax treatment of employer-provided health insurance would change. Employer-provided health insurance to employees and their dependents would not be considered taxable income to the employee if the benefit were available to all employees. Middle East and Africa The South African Taxation Laws Amendment Bill 2013 would change the tax treatment of life and disability insurance premiums. The premiums paid by individuals on disability policies would no longer be deductible. The benefit would be tax free, regardless of whether it was paid as a lump sum or annuity. For employer-provided disability policies, the premium would be deductible to the employer if the employee paid a fringe benefits tax on it. Again, the benefit paid to the employee would be tax free. If passed, the change would affect premiums paid and benefits received on or after March 1, * * * * For more information on the topic and countries in this newsletter, please refer to the Aon Hewitt Country Profiles eguide. You can learn more about the Country Profiles eguide here. Copyright 2013 Aon plc 5

6 About Aon Hewitt Aon Hewitt empowers organizations and individuals to secure a better future through innovative talent, retirement and health solutions. We advise, design and execute a wide range of solutions that enable clients to cultivate talent to drive organizational and personal performance and growth, navigate retirement risk while providing new levels of financial security, and redefine health solutions for greater choice, affordability and wellness. Aon Hewitt is the global leader in human resource solutions, with over 30,000 professionals in 90 countries serving more than 20,000 clients worldwide. For more information on Aon Hewitt, please visit Copyright 2013 Aon plc This document is intended for general information purposes only and should not be construed as advice or opinions on any specific facts or circumstances. The comments in this summary are based upon Aon Hewitt's preliminary analysis of publicly available information. The content of this document is made available on an as is basis, without warranty of any kind. Aon Hewitt disclaims any legal liability to any person or organization for loss or damage caused by or resulting from any reliance placed on that content. Aon Hewitt reserves all rights to the content of this document. Copyright 2013 Aon plc 6