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Healthcare Reform Legal Considerations for Employers

Healthcare Reform Legal Considerations for Employers. Isabella Lee, Esq. May 14, 2013. Healthcare Reform (a.k.a.). Patient Protection and Affordable Care Act (PPACA) Affordable Care Act (ACA) Obamacare. Whistleblower Protections. PPACA | Whistleblower Protections.

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Healthcare Reform Legal Considerations for Employers

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  1. Healthcare ReformLegal Considerations for Employers Isabella Lee, Esq. May 14, 2013

  2. Healthcare Reform (a.k.a.) • Patient Protection and Affordable Care Act (PPACA) • Affordable Care Act (ACA) • Obamacare

  3. WhistleblowerProtections

  4. PPACA | Whistleblower Protections ACA “Protected Activity” Reporting PPACA Title I violations Assisting or participating in an investigation of such a violation Receiving tax credit / cost-sharing reduction as a result of participating in an Exchange or Marketplace (i.e. “pay-or-play” penalty) 180 days to file complaint Enforcement by OSHA

  5. PPACA | Whistleblower Protections • Adverse or retaliatory action may include: • Reducing pay or hours; • Firing or laying off; • Denying overtime or promotions; • Disciplining; • Denying benefits; • Failing to hire or rehire; and • Intimidating.

  6. Whistleblower | ComplaintProcedure Generally • 60 day initial response to complaint • Sec’y issues written findings • 30 days to object and request ALJ hearing • If none, order is final with no judicial review • 120 days after hearing to issue final order • 60 days to appeal to U.S. Court of Appeals

  7. Whistleblower | Example • Full- time employee status and the number of employees are key factors in determining the penalties • Employers incentivized to limit number of full-time employees to reduce or avoid “play or pay” penalties • Job eliminations / reduced hour employees may turn to the whistleblower provisions

  8. PPACA | Damages Reinstatement Restore benefits Back pay; other compensatory damages All costs and expenses (including attorneys’ fees) If complaint frivolous, employer might be awarded attorneys’ fees up to $1,000 Interim Final Rule: Comments were due by April 29, 2013

  9. HIPAAWellness Programs

  10. HIPAA |General Rule HIPAA Nondiscrimination Rules prohibit ERISA group health plans from discriminating based on a health factor. Health factors include: • health status • medical condition, including both physical and mental illnesses • claims experience • receipt of health care • medical history • genetic information • evidence of insurability • disability

  11. HIPAA |Nondiscrimination Examples Examples of impermissible discrimination based on a health factor include: • requiring individuals to take a physical exam before enrollment • charging different premiums or contributions • charging different deductibles • charging different co-pays

  12. HIPAA |Outcome-based Exception • Promotes Health & Disease Prevention • Limited Reward / Incentive (20% participant cost*) • Offered to all Similarly Situated Individuals on a voluntary basis • Reasonable Alternative • Annual Qualification Five Requirements for Outcome-Based Incentives

  13. Wellness Program | Incentives • HIPAA Programs (i.e. incentives based on health factor) • PPACA: 30% in 2014 • Proposed Regulations: 50% with tobacco-use prevention component • Total Cost of Coverage (i.e. COBRA cost)

  14. PPACA | Unanswered Questions • Affordable Coverage requirement • Minimum Value (60% of anticipated cost) requirement

  15. Know YourPPACA Obligations

  16. PPACA | Already in Effect • Age 26 dependent coverage; plan limits; pre-existing conditions • W-2 Reporting • Summary of Benefits Coverage (SBC) • FSA Limit at $2,500 • Amend cafeteria plans

  17. PPACA| 2014 Provisions • Employer Mandate: “Pay-or-Play” • Large employers with 50+ FTEs • “Affordable” / Minimum value coverage offered to all full-time employees working 30+ hours a week; 95% ok • Employer Penalties • “no-offer” penalty = $2,000 per full-time employee; first 30 employees not counted • “unaffordable” penalty is the lesser of • $3,000 x (# of full-time employees receiving premium assistance minus excludable employees) • $2,000 x (# of full-time employee minus 30)

  18. PPACA | Exchange Insurance • Individuals and small employers can purchase health insurance in a marketplace • Individual purchase through Exchange cannot be made through cafeteria plan • not a “qualified benefit” under cafeteria plan rules • States may allow large employers to purchase insurance through an Exchange in 2017

  19. PPACA | Exchange Notification Technical Release No. 2013-02 (5/8/13) Employer must notify all employees of the availability of Exchanges by 10/1/13 Model notice language issued

  20. All employees, regardless of plan enrollment status, or of part-time or full-time status. Notice provided to current employees no later than October 1, 2013 Notice provided to new employees at the time of hiring beginning October 1, 2013 (14 day window) COBRA Model Notices: New version to account for Exchange option PPACA | Exchange Notification

  21. Waiting Period | 90-day Limit “Waiting period” is the period that must pass before coverage for a participant or dependent who is otherwise eligible to enroll under the terms of the plan can become effective Eligibility conditions that are based solely on the lapse of a time period are permissible for no more than 90 days. All calendar days must be counted, including holidays and weekends, and the maximum waiting period is 90 days.

  22. DOL Audit

  23. DOL Audit | Increased Enforcement • In 2012: • 239,250 individual employee complaints • 3,566 civil investigations • 2,570 (72.1%) resulting in monetary results for plans or other corrective action • 218 referred for litigation; 100 civil cases filed • Referrals, news reports, Form 5500s, random • DOL to substantially increase the number of ERISA plan audits

  24. DOL Audit | Overview • Notice of Audit • Documents Request • Onsite Interviews • Follow-up Requests • 10-day Letter • Reply / Negotiation

  25. DOL Audit | Preparation • Call your lawyer • Notify Applicable Insurance policies • D&O • ERISA fiduciary coverage

  26. DOL Audit | Preparation • Know your plan document • Actual plan operations follow plan document • Plan document in compliance with laws and regulations; proper disclosures • Form 5500s are timely filed • Timing of participant contributions

  27. DOL Audit | Preparation • Logistics of Investigator’s Onsite Visit • Witnesses • Interview Questions

  28. DOL Audit | Advanced Planning • Internal audit • Legal review of plan documents • Training • Self-Correction Programs • Voluntary Fiduciary Correction Program (VFCP) • Delinquent Filer Voluntary Compliance Program (DFVCP)

  29. You had the power all along, my dear…

  30. Q & A

  31. Contact Information Isabella Lee Atlanta (404) 888-3811 ilee@fordharrison.com

  32. Agenda • Whistleblower Provisions • HIPAA Wellness Programs • Know Your PPACA Obligations • DOL Audit • Q & A • Appendix

  33. Appendix Slides

  34. Pay or Play Penalty The ACA’s “play or pay” rules generally apply to employers with at least 50 full-time (or full-time equivalent) employees beginning in 2014. If an employer doesn’t offer minimum essential coverage to substantially all full-time employees (and their dependents), then it is subject to a penalty tax of $2,000 per year for each full-time employee (minus the first 30) if at least one full-time employee obtains federal tax credits or subsidies to purchase health coverage through a federal or state exchange. Penalties also may be imposed if the coverage doesn’t provide “minimum value” or is unaffordable. The penalty is $3,000 per full-time employee for whom coverage is not affordable and who receives a credit or subsidy in connection with exchange coverage.

  35. FSA Annual Limit $2,500 • Previously no limit on FSA contributions • Effective Jan. 1, 2013 Action Steps • Amend cafeteria plan documents and summary plan descriptions • Passive enrollment considerations

  36. W-2 Reporting Requirements • Reports the value of health care • Non-taxable • Effective beginning with W-2s issued in January 2013 • Employee assistance program (EAP), wellness program, or on-site medical clinic? Small Employer Exception Fewer than 250 W-2’s issued the prior year

  37. Summary of Benefits Coverage • Simple and concise explanation of benefits • Model SBC notice available • Effective: 1st day of the 1st OE / Plan Year after Sept. 23, 2012 • 60-day notice rule Action Steps • New hires or special enrollees – NOW • Ensure consistency between SBC and plan documents; amendments where necessary

  38. PPACA| Individual Mandate Penalty Flat dollar amount or % of taxable income, whichever is greater Flat dollar amount per individual is $95 in 2014; $325 in 2015; and $695 in 2016. % of a household’s income that is in excess of the tax filing threshold 1% in 2014; 2% in 2015; 2.5% in 2016

  39. PPACA| Individual Mandate Penalty EXAMPLE 2014 $50,000 household income Flat fee penalty = $95 % = 1% of difference between $50,000 and tax threshold Assume tax threshold for 2014 is $10,000 % penalty = $400* *Capped at a certain national average premium amount

  40. Disclaimer These presentation materials are provided as a general informational service to clients and friends of Ford & Harrison LLP. It should not be construed as, and does not constitute, legal advice on any specific matter, nor do these materials create an attorney-client relationship.

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