By Michael Sankary
Is your church prepared to meet the new requirements?
Employers — including churches — need to start taking an active role in planning for the future of their employee benefit plans with regard to the Patient Protection and Affordable Care Act (ACA).
Three regulatory agencies are responsible for implementation and enforcement of the Act: Internal Revenue Service (IRS), United States Department of Labor (DOL), and United States Department of Health & Human Services (HHS). Making sure your church satisfies the provisions under all three will take careful planning.
What is your church doing to make sure it’s in compliance? Currently, your church should know, among other things: if the church is grandfathered, or not; if it has distributed all the required materials and notices; and, if it made all required changes regarding limits, dependent coverage, preexisting conditions and so on.
Moving forward, your church should be considering: if it’s subject to “pay or play” penalties; if so, who must
be offered coverage; and, if its coverage is considered “affordable.”
2013 and beyond
Does your church have access to actuarial tools to help it model the financial implications of different health plan options as it moves forward? Highlighted below are the major changes, effective late 2012 through 2014:
Summary of benefits and coverage (SBC) — Insurance companies and group health plans must provide participants with a concise (four-page, double-sided) document detailing, in plain language, consistent information about health plan benefits and coverage. The deadline for providing the SBC to participants and beneficiaries is the first open-enrollment period that begins on or after Sept. 23, 2012.
W-2 reporting — Starting with the 2012 tax year, employers are required to report the aggregate cost of employer-sponsored group health coverage on employees’ W-2 Forms. In general, the amount reported should include both the portion paid by the employer and by the employee. The cost must be reported beginning with the 2012 W-2 Forms.
$2,500 FSA annual limit — Starting with plan years beginning on or after Jan.1, 2013, an employee’s annual pre-tax salary reduction contributions to a health flexible spending account (FSA) must be limited to $2,500.
Preventive care for women — For plan years beginning on or after Aug. 1, 2012, non-grandfathered health plans must cover specific preventive care services for women, without cost-sharing requirements. For calendar-year plans, they must comply starting Jan. 1, 2013.
Additional Medicare tax for high-income earners — Starting on Jan. 1, 2013, employers must withhold additional amounts on employees who earn more than $200,000 (and more than $250,000 for married filing jointly).
Specifically, an additional 0.9-percent Medicare Hospital Insurance tax goes will be applied.
Exchange notices — final regulations still pending.
Annual limits on essential health benefits — Must be phased out by 2014.
Pre-existing conditions — Must be phased out by 2014.
Waiting periods — For plan years starting on or after Jan. 1, 2014, an employer can no longer implement a waiting period longer than 90 days.
Nondiscrimination for fully insured plans — Non-grandfathered, fully insured groups may not discriminate in favor of highly compensated individuals. (Compliance isn’t required until final regulations have been issued.)
Wellness programs — Employers offering wellness programs can offer rewards of up to 30 percent (potentially increasing to 50 percent for tobacco-related programs) of the cost of coverage for participating in a wellness program and meeting certain health-related standards.
Employer mandate — Starting Jan. 1, 2014, employers with at least 50 full-time employees are required to offer “affordable” minimum essential coverage to all full-time employees and must self-report their compliance to the Treasury. Employers that don’t comply, and whose employees receive a premium credit or cost-sharing subsidy, will be subject to the following penalties, calculated monthly: If the employer doesn’t offer the required coverage to all its full-time employees, the penalty is $2,000 x the number of full-time employees the employer has (in excess of 30). If the employer does offer the required coverage to all its full-time employees, but the coverage isn’t “affordable” (more than 9.5 percent of his/her wages for self-only coverage), or doesn’t cover enough cost of certain benefits, the penalty is the lesser of: (a) $3,000 x the number of full-time employees who receive a premium tax credit or cost-sharing reduction for purchasing coverage through the Exchanges; or (b) $2,000 x the number of full-time employees the employer has (in excess of 30).
What to expect
As of press time, many provisions had received final guidance. In fact, more than 700 pages of regulations had been issued!
This guidance, in conjunction with the regulations above — due for implementation over the next several months — will require employers to assess their current situation and prepare for these deadlines as they loom nearer.
Michael Sankary is employee benefits producer at Fort Worth, TX-based Higginbotham, one of the country’s largest independent insurance brokers.