Published in "Anderson Kill's Health Reform Alert"

About Anderson Kill & Olick, P.C.

Anderson Kill practices law in the areas of Insurance Recovery, Anti-Counterfeiting, Antitrust, Bankruptcy, Commercial Litigation, Corporate & Securities, Employment & Labor Law, Health Reform, Intellectual Property, International Arbitration, Real Estate & Construction, Tax, and Trusts & Estates. Best-known for its work in insurance recovery, the firm represents policyholders only in insurance coverage disputes, with no ties to insurance companies and no conflicts of interest. Clients include Fortune 1000 companies, small and medium-sized businesses, governmental entities, and nonprofits as well as personal estates. Based in New York City, the firm also has offices in Newark, NJ, Philadelphia, PA, Stamford, CT, Ventura, CA and Washington, DC. For companies seeking to do business internationally, Anderson Kill, through its membership in Interleges, a consortium of similar law firms in some 20 countries, assures the same high quality of service throughout the world that it provides itself here in the United States.

Anderson Kill represents policyholders only in insurance coverage disputes, with no ties to insurance companies, no conflicts of interest, and no compromises in it's devotion to policyholder interests alone.

While health care is the focus of the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act (collectively known as PPACA), enacted in March 2010, employers are facing many related questions regarding the impact of the act, if any, on other types of employee benefits. A prime example is whether the act affects the rights or obligations of employers to offer long-term care insurance to some or all of their employees.

The answer is that, except in one possible circumstance, PPACA does not affect an employer's provision of long-term care insurance to any of its employees. If an employer wishes to offer this benefit, it is free to do so; if the employer has no interest, it has no obligation. This does not mean, however, that PPACA, the most comprehensive health care reform law in our history, has no provisions at all regarding long-term care. It has a few. For example, there are incentives within PPACA for states that offer home- and community-based services as long-term care alternatives to nursing homes. There also are provisions that aim toward improving the quality of long-term care hospitals and improving staff training in long-term care facilities.

In addition, PPACA includes the Community Living Assistance Services and Support Act (CLASS Act). The CLASS Act is a voluntary, federally administered, worker-financed long-term care insurance program, designed to go into effect around 2012. Even when effective, however, the CLASS Act should not affect an employer's ability to provide long-term care insurance to one or more of its employees.

The one exception to keep in mind regarding long-term care insurance is whether such insurance might eventually be viewed as a "Cadillac" benefit subject to additional taxation, especially for employers who offer it to some employees but not others. PPACA provides for Section 4980I of the Internal Revenue Code to impose a 40% excise tax beginning in 2018 on insurance companies, or employers who self insure, on the cost of health insurance in excess of $10,800 for individual coverage or $27,500 for family coverage (indexed for inflation).

At least at present, all indications are that long-term care insurance will not be calculated as part of this excise tax. In determining whether such excess cost exists, Code Section 4980I(d)(1)(B)(i) expressly provides that any coverage "for long-term care" shall not be included in this calculation. But employers who choose to offer long-term care insurance should keep in mind that 2018 is a long way off. Many things can change between now and then and the details of this excise tax are certainly among them.

The prudent course is for employers to keep one watchful eye on the statute as it phases in over the next seven years and another watchful eye on the implementation regulations.

John J. Hess is a shareholder in the New York office of Anderson Kill & Olick, P.C. and is a member of the firm's Health Reform Task Force. Mr. Hess has extensive experience in the areas of tax law, employee benefits and ERISA.

With its extensive experience in the field of health insurance recovery, Anderson Kill's Health Reform Task Force is monitoring the rapidly changing developments in health insurance on the federal and state levels.  For more information, including additional articles on health reform, please visit our web site here

The information appearing in this article does not constitute legal advice or opinion. Such advice and opinion are provided by the firm only upon engagement with respect to specific factual situations