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Health Care Reform

Summary of Benefits & Coverage

A group health plan (and its administrator) must provide a summary of benefits and coverage (SBC) for each benefit package free of charge to entities and individuals for open enrollment periods starting on or after Sept. 23, 2012. The plan must provide the SBC as part of any written application materials it distributes for enrollment.If the plan doesn’t distribute written application materials for enrollment, it must distribute the SBC no later than the first date on which the participant is eligible to enroll in coverage for the participant or any beneficiaries. If there’s any change to the information required to be in the SBC that was provided on application and before the first day of coverage, the plan must update and provide a current SBC to a participant or beneficiary no later than the first day of coverage. Among the items to be included in the SBC are:

  • A uniform glossary of definitions of standard insurance terms and medical terms so that consumers may compare health coverage and understand the terms of (or exceptions to) their coverage,
  • A description of the coverage, including cost sharing, for each category of benefits identified by the secretary in guidance,
  • The exceptions, reductions and limitations of the coverage,
  • The cost-sharing provisions of the coverage, including deductible, coinsurance and copayment obligations, and
  • The renewability and continuation of coverage provisions.

W-2 Reporting

PPACA requires employers to report the cost of coverage under an employer-sponsored group health plan on an employee’s Form W-2, “Wage and Tax Statement.” This reporting is for informational purposes only to show employees the value of their health care benefits so they can be more informed consumers.Many employers were eligible for transition relief for the 2012 tax year until the IRS issued final guidance for this reporting requirement. The amount reported doesn’t affect tax liability, as the value of the employer excludible contribution to health coverage continues to be excludible from an employee’s income, and it’s not taxable.

Flexible Spending Accounts

Employees will be limited to contributing no more than $2,500 pretax dollars to their health Flexible Spending Accounts (FSAs) per year. Prior plan year contributions, because of PPACA’s grace period, do not count toward the limit.Most employers will need to amend their plan documents to reflect this change. These amendments can be made as late as Dec. 31, 2014, but employers must operate the plan in compliance with the law as of January 2013. Be sure to communicate this information to participants during the enrollment period when participants make their 2013 plan year elections.

Employee Notice of Exchange

Before October 1, 2013, employers must notify employees about  the availability of Health Insurance Marketplace. This requirement applies to essentially all employers and requires employers to provide the Exchange Notice to all employees on payroll. Employers may modify the template to meet their needs, and it must include employer-specific information.

The following are frequently asked questions and answers regarding this requirement:

Which Employers? With some very limited exceptions, all employers, regardless of  the number of employees and regardless of whether or not you currently offer a  group health insurance plan must provide the Exchange Notice.

Which  Employees get the Notice? Notices must be provided to all active full-time and part-time employees.  Even if you do not currently offer a group health plan or, even if the employee has waived coverage if you do offer, they all must be notified.

What does the Notice have to say? The Department of Labor has provided a template and we encourage our clients to use the template.  The Notice must provide some general information about the Exchange/Marketplace and some specific information about your company. Further, the Notice explains that employees can purchase health insurance from private insurance companies through a health insurance exchange known in Michigan as the Mi Health Marketplace.

When does the Notice have to be Sent? Before October 1, 2013 is the short answer. Employers were originally required to provide this notice by March 1, 2013; however, because most all of the information required was not yet available, the deadline was delayed to October 1, 2013.  For employees hired on and after October 1, 2013, notice of the Marketplace must be provided within 14 days of hire.

How does the Notice Get Sent? The Notice must be provided in print or through electronic delivery for those of your employees who have access to a computer at work with an assigned company email. It is recommended that you retain a signed copy of the notice from each employee for your records.