U.S. health care reform comes into effect years from now, right?
Well, not quite. A number of important provisions will be coming
into effect soon, generally on January 1, 2011 for non-union
calendar year plans. U.S. plan sponsors need to know about them
even if their plans are insured. In fact, in addition to making
sure that certain family members are eligible for coverage under
the new rules, companies with retiree coverage (particularly
retiree drug coverage) need to make decisions now.
These significant new requirements include the following:
Both insured and uninsured plans must cover adult children of
employees up to age 26 if they have no other employer coverage
All plans must cover children under the age of 19 with
Lifetime and certain annual benefits caps will be
Plans may not apply deductibles against preventive care.
New insured group health plans will be subject to
non-discrimination rules for the first time.
Beginning in 2011, over-the-counter medicines not prescribed by
a physician cannot be reimbursed in a pre-tax flexible spending
Employers who provide retiree medical coverage must decide as
soon as possible -
How to deal with the elimination, in tax years beginning after
December 31, 2012, of the tax deduction for the subsidy to
providers of drug coverage to Medicare Part D retirees. Accounting
rules are reported to require a current charge to reflect the loss
of the future deduction.
Whether to apply to participate in a new reinsurance program to
reimburse employers providing pre-65 medical coverage to retirees
not yet eligible for Medicare. The new program, which reimburses
certain employer costs, is supposed to be up and running within 90
days. Since this program has a fixed amount allocated for these
reimbursements to employers, benefits might be limited to employers
who apply right away.
In tax years beginning after December 31, 2009, qualified small
employers will be entitled to a tax credit for purchasing health
insurance for employees. The Internal Revenue Service has issued
some initial guidance on eligibility for this
These are important examples, but this is not an exhaustive
list. Further, some of these provisions, such as the new
non-discrimination requirements for insured plans, will not apply
to "grandfathered plans" in existence on March 23, 2010,
even if they take in new participants. It is not yet clear what
changes to plan terms might end grandfathered status.
Despite all those far off effective dates for many of the new
law's provisions, it is clear that U.S. group health plan
sponsors need to be thinking in terms of short term as well as long
term compliance, and should be monitoring carefully all guidance
issued interpreting this complicated new law.
Carol Buckmann has practised in the employee
benefits field for over 25 years, advising clients on all aspects
of employee benefits and retirement plans, including questions
relating to 401(k), defined benefit and employee stock ownership
plans, welfare plans, fiduciary responsibility, prohibited
transactions and plan asset issues arising in investment fund
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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