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Patient Protection and Affordable Care Act (PPACA) Basics

The Patient Protection and Affordable Care Act (PPACA) was passed by Congress and then signed into law by President Obama on March 23, 2010. It was amended via the budget reconciliation process several days later and President Obama signed the Health Care and Education Reconciliation Act of 2010 on March 30, 2010. Together, these two measures comprise what is known as the federal health reform law. On June 28, 2012 the U.S. Supreme Court rendered a final decision to uphold the health care law, and then on July 24, 2012 the Congressional Budget Office released a revised estimate as to what health reform will cost the federal government over the next 10 years.

The Obama Administration has developed a number of official websites that provide access to information, regulations, guidance and more on the provisions of the health reform law.

www.healthcare.gov is the official site of the new Health Insurance Marketplace and the entry point for consumers who wish to shop for exchange-based coverage. For compliance resources regarding Marketplace coverage and consumer assistance, CMS has set up the marketplace.gov site.

Most of the insurance market reform provisions of the new law fall under the jurisdiction of the Department of Health and Human Services’ Center for Consumer Information and Insurance Oversight.

The Department of Labor also has jurisdiction over many PPACA provisions. The Department’s overview page contains a wealth of information, and their Frequently Asked Questions pages give detailed answers to very specific PPACA implementation scenarios.

The Internal Revenue Service has a site dedicated to the tax-related provisions of the health reform law. In addition, they have a separate site with news releases, multimedia and legal guidance.

Finally, the White House Office of Health Reform also is a comprehensive source of information.

Exchange/Marketplace Resources

Marketplace enrollees may experience problems resolving issues with the exchange. As such, the exchange may ask for additional documentation or clarification. This resource discusses tips to resolve these data matching problems.

PPACA Resources for Clients

The health reform law is extraordinarily complicated and all of its provisions become effective at various times. To help you break the insurance coverage provisions and their implementation dates down in a manageable way for your clients we’ve created a detailed timeline of federal healthcare reform law provisions that will impact Individual and employer health insurance consumers. A condensed version of the timeline suitable for distribution to consumers and employer clients. Download and print copies here or you can purchase printed copies via NAHU’s online store.

Compliance Information About Specific PPACA Provisions

ACA Implementation (Part XVIII) and Mental Health Parity Implementation

The Department of Labor's Employee Benefits Security Administration has updated its website with FAQs about ACA Implementation Part XVIII and Mental Health Parity Implementation.

Preventive Care Services

All group and individual plans that do not have grandfathered status, including self-funded plans, have to cover specific preventive care services with no cost-sharing in plan years beginning on or after September 23, 2010. Additional specific women’s preventive services must be provided without cost-sharing in plan years beginning after August 1, 2012. This provision in the law applies to most employers unless the employer qualifies for specific religious exemptions.

Grandfathered Health Plans

Individual and group health plans that existed on or before March 23, 2010 had the option to choose grandfathered status once health reform was enacted. However, individuals and employer group plans that elected to keep their current policy on a grandfathered basis can only do so if they maintain essentially the same benefits and follow strict rules that limit increases to employee cost-sharing or out-of-pocket costs. An amendment to the grandfathered plan rules issued in November 2010 allows all group health plans to switch insurance companies and shop for the same coverage at a lower cost and maintain their grandfathered status, so long as the structure of the coverage doesn’t violate one of the other rules for maintaining grandfathered status. Once a plan loses its grandfathered status, it is subject to all of the law’s market reforms when they take effect.

Extension of Coverage for Adult Children

All group and individual plans, including self-funded plans and grandfathered plans, in plan years beginning on or after September 23, 2010, have to cover dependent “children” to age 26.

MLR Rebate Compliance

All individual, small group and large group health plans were subject to medical loss ratio (MLR) requirements beginning on January 1, 2011. Individual and small group insurers must ensure that 80% of their premium revenue is directed towards medical claims and large group insurers must adhere to an 85% MLR. Self-funded plans are exempt from this requirement. Any plan that does not meet these requirements beginning in 2011 must issue a rebate to consumers by August of the following plan year.

Summary of Plan Benefits and Coverage

Beginning with plan years and open enrollment periods that start on or after September 23, 2012, all group plans and group and individual health insurers (including self-funded plans) will have to provide a summary of benefits and a coverage explanation that meets specified criteria to all enrollees when they apply for coverage, when they enroll or reenroll in coverage, when the policy is delivered and when any material modification is made to the terms of their coverage outside of the coverage renewal period. The summary and explanation are commonly referred to as a SBC, and will require substantially more information than current summary plan descriptions.

W-2 Reporting

The health reform law established that eventually all employers must include on Forms W-2 the aggregate cost of employer-sponsored health benefits, for informational purposes only. The provision was originally supposed to apply to benefits provided during taxable years after December 31, 2010. However, enforcement of this provision was delayed for one year and made optional for the 2010 tax year (reported in 2011). The IRS has also specified that for smaller employers (those filing fewer than 250 W-2 forms) this requirement remains optional through at least 2012 (i.e., for 2012 Forms W-2 that generally would be furnished to employees in January 2013). Optional treatment for smaller employers will remain in effect until further guidance is issued, which has not occurred yet.

FSAs

FSA contributions for medical expenses will be limited to $2500 per year, with the cap annually indexed for inflation.

Taxes

For more information, please contact Senior Director of Health Reform Compliance Pam Mitroff. For specific compliance questions, requires NAHU membership, click here to login and ask your question.