The Employer s Essential HEALTH CARE REFORM COMPLIANCE CHECKLIST 2014

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1 The Employer s Essential HEALTH CARE REFORM COMPLIANCE CHECKLIST 2014

2 HEALTH CARE REFORM COMPLIANCE CHECKLIST: The #1 Online Health Benefits Solution Zane Benefits was founded in 2006 to revolutionize the way employers provide employee health benefits in America. We empower employees to take control over their own healthcare, while helping employers recruit and retain the best talent. Our online solutions allow small and medium-sized businesses to successfully transition to a health benefits program that creates happier employees, reduces costs, and frees up more time to serve their customers. >> Learn more at For more information about ZaneHealth, visit Zane Benefits' Partner Program is an opportunity for insurance professionals to provide clients with custom Zane Benefits solutions. >> Request a Partner Evaluation. DISCLAIMER The information provided herein by Zane Benefits is general in nature and should not be relied on for commercial decisions without conducting independent review and analysis and discussing alternatives with legal, accounting, and insurance advisors. Furthermore, health insurance regulations differ in each state; information provided does not apply to any specific U.S. state except where noted. See a licensed agent for detailed information on your state.

3 HEALTH CARE REFORM COMPLIANCE CHECKLIST: The Employer s Essential HEALTH CARE REFORM COMPLIANCE CHECKLIST 2014 Introduction Health care reform is changing the landscape of employee health benefits. Most employers look at the new Affordable Care Act (ACA) regulations and ask, how will health reform impact our bottom line? As an employer, you understand that offering employees access to quality health benefits gives you a competitive edge on recruitment and retention. And, it shows that you care about employees. But the high costs of traditional group health insurance can be a challenge to businesses of any size. Luckily, health care reform offers new opportunities for businesses and employees to take advantage of cost-savings with a pure defined contribution health plan. A pure defined contribution health plan pairs an employer-funded healthcare allowance with individual health insurance (and the individual premium tax credits) to create cost savings for both the employer and employees. Being 100% confident that you are ACA compliant, while taking advantage of new costsaving opportunities, will help your company thrive amidst health care reform uncertainty. Download the Guide to Defined Contribution Health Plans

4 HEALTH CARE REFORM COMPLIANCE CHECKLIST: How to Use This Checklist The following health care reform checklist outlines key ACA compliance issues employers may need to complete in How do you know which compliance issues relate to your company s type of health benefits? The checklist includes notations for which types of benefits each regulation applies to, including employer-sponsored group health insurance plans, pure defined contribution health plans (DCPs), and/or Flexible Spending Accounts (FSAs). Checklist Sections Plan Design and Administration Compliance (pg. 5) Reporting and Payroll Compliance (pg. 8) Additional Health Reform Resources (pg. 10) Checklist Key Applicable for companies offering an employer-sponsored group health insurance plan. Applicable for companies offering pure defined contribution plan (a healthcare reimbursement plan that is not linked to a group plan). You may be using an HRA or Section 105 HRP to offer the defined contribution plan. Applicable for companies offering a Flexible Spending Account (FSA) to employees. Note: The checklist is for general reference purposes only and is not all-inclusive. The checklist assumes compliance with new reforms introduced

5 HEALTH CARE REFORM COMPLIANCE CHECKLIST: Health Care Reform Compliance Checklist Plan Design & Administration Certain plan design requirements apply on a plan year basis, meaning the changes take effect when a group health plan begins a new plan year. As a result, compliance deadlines may vary. Check with your health insurance broker or defined contribution provider to confirm deadlines. 1. Grandfathered Plan Status A grandfathered plan is defined as being in existence when health care reform was enacted on March 23, If you make certain changes to your plan, your plan is no longer grandfathered. Such changes include significantly cutting or reducing benefits; raising the coinsurance, co-payments, or deductibles; changing insurance companies; etc. See: What is a Grandfathered Health Insurance Plan? If you have a grandfathered plan: Determine whether it qualifies to maintain grandfathered status. If you ve changed to a non-grandfathered plan: Confirm the plan has first-dollar benefits for preventive care, includes essential health benefits, and meets patient rights and benefits required by the ACA including coverage of adult children up to age No Annual Limits The ACA prohibits health plans from imposing annual or lifetime limits on essential health benefits (EHB). Unless a health plan receives an annual limit waiver, as of January 1, 2014 annual or lifetime limits are not allowed. See: ACA Annual and Lifetime Limits Requirements If you offer a group plan: Identify the plan's current annual limits on essential health benefits (EHBs). Amend plan documents and/or insurance policies to modify or remove limits as applicable. If you offer a defined contribution health plan: Confirm with your defined contribution provider that the plan does not place limits on EHBs, and that the plan complies with Public Health Services (PHS) Act 2711 (the annual limit provisions). See: New Guidance on Tax-Free Reimbursement of Individual Health Insurance. 3. Waiting Periods: Max 90-Days Effective January 1, 2014, health plans may not have a waiting period that exceeds 90 days. See: 90 Day Limitation on Waiting Periods for Group Health Plans, and The 90 Day Waiting Period Rule and Defined Contribution Health Plans 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 eligibility criteria, and amend as necessary.

6 HEALTH CARE REFORM COMPLIANCE CHECKLIST: Summary of Benefits & Coverage (SBC) The Summary of Benefits and Coverage (SBC) is a required, easy-to-understand summary of the benefit. Determine who will prepare and provide the SBC documents. Normally it is your insurer, defined contribution provider, or third-party administrator. Add SBC to open enrollment/welcome packets, and provide the SBC at least thirty (30) days before plan year begins. Add SBC to new-hire packets (or initial enrollment packets, if you have a waiting period). 5. Essential Health Benefits As of January 1, 2014 small group plans must cover essential health benefits (EHB), a package of ten items and services. If you offer a small group health plan: Confirm with your health insurance broker that your plan covers all EHBs. This requirement does not apply to self-insured plans or plans offered in the large group market. Read more about essential health benefits. If it does apply, identify employer-sponsored coverage that must be reported annually, and implement the payroll process. 6. Sixty (60) Day Notice of Plan Changes A health plan or issuer must provide 60 days advance notice of any mid-year material modifications to the plan. Notice can be provided in an updated SBC or a separate summary of material modifications. Provide written notice of any material modifications to plans (that are not related to renewals of coverage). Notice needs to be provided at least sixty (60) days in advance to all eligible individuals. 7. Notice of Coverage Options through the Marketplaces Employers were required to provide written notice to all current employees (regardless of full-time/part-time status) about coverage options through the Marketplaces by October 1, In 2014, notice is required to new employees at time of hire. For details on the notice see: Employer ACA Marketplace Notice Requirements Determine who will provide notice, and how. The Department of Labor has provided two templates for employers to use: 1. Employers Offering a Group Health Plan 2. Employers Not Offering a Group Health Plan Add notice to new hire packet.

7 HEALTH CARE REFORM COMPLIANCE CHECKLIST: Cost-Sharing Limitations For non-grandfathered plans beginning in 2014, employee cost sharing for coverage of essential health benefits (EHB) cannot exceed: $6,350 for self-coverage $12,700 for family coverage Review plan cost-sharing limits If you offer a small group health plan: Review deductible amounts. This includes the combination of an employee s out-ofpocket expenses including co-insurance, co-payments, and deductible (but not premiums). For small group plans, annual deductibles may not exceed: $2,000 for self-coverage $4,000 for family coverage If you offer more than one health plan: You need to consider the total cost-sharing across all plans. However, if you use more than one independent health benefits administrators there is some leeway until See: Delay in Out-of-Pocket Spending Limits, for Some. Exception: A small group plan may exceed the annual deductible if the plan cannot reasonably reach a given level of coverage or metal tier without exceeding the deductible limit. 9. Flexible Spending Account (FSA): Annual Contribution Limit of $2,500 New limits of $2,500 for health care FSAs apply to plan years beginning on or after January 1, Note: The limit does not apply to non-health care FSAs, such as dependent care FSAs. As needed, make sure your FSA plan documents are amended retroactively by December 31, As needed, communicate new health care FSA annual limit to employees and confirm that all communications reflect new limit. 10. Preventive Care Services Effective for plan years beginning on or after August 1, 2012, non-grandfathered health plans must cover specific preventive care services without cost-sharing requirements. See: List of preventive care services. If you have a non-grandfathered group plan, confirm your plan covers specified preventive care services without cost sharing. If not, make plan changes to ensure compliance. If you offer a Defined Contribution Health Plan: Confirm your plan is set up to cover preventive care at 100% without cost-sharing. If not, make plan changes to ensure compliance.

8 HEALTH CARE REFORM COMPLIANCE CHECKLIST: Reporting & Payroll 11. W-2 Reporting Requirements Beginning with the 2012 tax year, employers with 250 or more W-2 Form Employees must report the aggregate cost of employer-sponsored group health coverage on employees W-2 Forms. If you offer a group health plan: Determine if the W- 2 requirement applies to you (over 250 W-2 Form employees). W-2 reporting for smaller employers is optional until further guidance is issued. If it does apply, identify employer-sponsored coverage that must be reported annually, and implement payroll process. If you offer a Defined Contribution Health Plan: W-2 reporting is optional until further guidance is issued. 12. PCORI/CER Plan Fees The ACA created the Patient-Centered Outcomes Research Institute (PCORI) to help patients, clinicians, payers, and the public make informed health decisions by advancing comparative effectiveness research. The Institute s research is to be funded, in part, by fees paid by health insurance issuers and sponsors of self-insured health plans. These fees are called comparative effectiveness research fees or CER plan fees. Self-funded plans and health insurance issuers must pay a $1 per covered life fee for comparative effectiveness research. Fees are effective for plan years ending on or after Oct. 1, Fees increase to $2 the next year and will be indexed for inflation after that. Full payment of the research fees will be due by July 31 of each year. It will generally cover plan years that end during the preceding calendar year. For Defined Contribution Health Plans: Use your Defined Contribution Administration Software to calculate employee counts for Form High-Earner Medicare Payroll Taxes As of 2013, employees earning more than $200,000 a year ($250,000 for joint filers) must pay higher Medicare hospital insurance (HI) taxes beginning in The new tax is 2.35% (an increase of 0.9%) of applicable wages above those thresholds, so a worker earning $300,000 a year will pay HI taxes of 1.45% on $200,000 plus 2.35% on $100,000. There is no change to the employer s share of the HI tax. Identify high-earner employees and make administrative adjustments to withhold the additional 0.9% Medicare HI payroll tax (Form W-2, box 5) regardless of the employee s tax filing status or marital status. See: ACA Additional Medicare Tax for High Earners.

9 HEALTH CARE REFORM COMPLIANCE CHECKLIST: Additional Resources: Health Care Reform & Defined Contribution View all of our free ebooks, Whitepapers and On-Demand Webinars at: zanebenefits.com/health-benefits-resources How can health care reform and defined contribution help create benefits employees love? Let our team of experts walk you through each step in a free demo. Or, see our real-life client defined contribution case studies section.

10 HEALTH CARE REFORM COMPLIANCE CHECKLIST: The #1 Online Health Benefits Solution Zane Benefits was founded in 2006 to revolutionize the way employers provide employee health benefits in America. We empower employees to take control over their own healthcare, while helping employers recruit and retain the best talent. Our online solutions allow small and medium-sized businesses to successfully transition to a health benefits program that creates happier employees, reduces costs, and frees up more time to serve their customers. >> Learn more at For more information about ZaneHealth, visit Zane Benefits' Partner Program is an opportunity for insurance professionals to provide clients with custom Zane Benefits solutions. >> Request a Partner Evaluation. Become a Fan on Facebook Follow us on Twitter Join our Defined Contribution Group Watch our videos on YouTube DISCLAIMER The information provided herein by Zane Benefits is general in nature and should not be relied on for commercial decisions without conducting independent review and analysis and discussing alternatives with legal, accounting, and insurance advisors. Furthermore, health insurance regulations differ in each state; information provided does not apply to any specific U.S. state except where noted. See a licensed agent for detailed information on your state.