Changes Coming to Businesses in 2010 from Health Care Reform

What Happens in Year One (2010) of Health Care Reform?

Most of the health care reform provisions in the Patient Protection and Affordable Care Act (PPACA), signed into law on March 23, 2010, and then clarified and amplified by a subsequent reconciliation measure, don’t take effect for six months—and many others not until subsequent years. Thus by September 23 of this year, there will be a slew of preliminary changes affecting insurers, health providers and even the consumer.

In the meantime, one undated measure affecting most employers seemingly took effect immediately, but even it is awaiting clarifying regulations from the government. This is the provision that mandates break times for nursing mothers at work, a provision that several states had previously enacted on their own. Though PPACA says these break periods don’t need to be paid, the Fair Labor Standards Act (FLSA) does mandate that break periods be paid. We’ll have to wait for regulations to clarify this provision, though the law does exempt workplaces with fewer than 50 employees if they can prove undue hardship in adopting such break periods with dedicated lactation rooms.

Another provision affecting employers with 25 or fewer employees also kicked in immediately. This is a tax credit for small businesses with average annual wages of less than $50,000 who offer health insurance. In 2010 the credit tops out at 35 percent of the cost (but the scale does slide based on insurance costs and employee wages).

Some PPACA aspects do take effect immediately. The Department of Health and Human Services (HHS) is authorized to set up an annual review process to make sure insurance premium increases aren’t excessive. The Food and Drug Administration (FDA) can now approve generic versions of biologic drugs (while manufacturers, who prevailed in the congressional debate, retain 12 years of exclusive patent protection). Also, and more amorphously, PPACA directs the formation of task forces to develop and disseminate recommendations on clinical and community prevention services.

Some other provisions of the reform effort will commence as soon as the regulatory agencies develop their final rules.

Within 60 days of passage, the HHS Secretary must create uniform, easy-to-understand language to describe health insurance benefits that will then be mandatory for insurance companies to use in their policies. This is to enable consumers to better understand and compare policies. (Did anyone writing the bill ever consider the irony of federal bureaucrats being asked to write plain language?) HHS will also immediately begin granting awards to states that establish health information centers to answer consumers’ questions.

At the 90-day mark, HHS will create a high-risk insurance pool for those with pre-existing conditions. The pool will operate until a new rule kicks in forbidding insurers from declining coverage for those with pre-existing conditions. This rule, however, doesn’t take hold until 2014, the final year of PPACA’s progressive health insurance reforms.

Also, on June 21 the HHS Secretary will establish an early retirement health benefits reimbursement fund to assure access to health care by early retirees and their partners and dependents. This is a $5 billion program.

By July 1, states are required to establish Web sites where residents can readily assess what insurance options are available to them.

At the six-month mark, on September 23, 2010, some sizeable reform measures will take effect:

→ Coverage of children on their parents’ insurance policies will be extended through age 25.
→ Denial of benefits for children with pre-existing conditions will also be outlawed, though it appears that this covers only children currently insured, not new enrollees. 
→ Insurers will be forbidden from dropping people’s coverage (called recission) unless they can prove that fraud was committed on the application.
→ Group health plans must eliminate both lifetime and annual dollar caps on the value of benefits provided.
→ Group health plans likewise cannot discriminate against lower-wage workers by providing enhanced benefits for the highly compensated (though self-insured plans are not affected by this mandate).
→ Health providers must also publish a list of costs for standard procedures. 
→ Finally, new health plans after September 23 must drop copays for preventive health services.

Oddly, tanning services will be subject to a 10 percent tax beginning July 1 (with other taxes to follow on other groups in the years to come), while those on Medicare will receive a one-time payment of $250 to offset prescription copays and the infamous “donut hole” in Part D, the prescription benefit.

Though a lot takes place in 2010, the first year of PPACA, the major elements of the legislation don’t kick in until 2014, when every person in the U.S. must have insurance—or pay a $95 fine, which then escalates in subsequent years.

Only time will tell if these 2010 measures, as civic-minded as they are, lead to higher insurance premiums and/or the flight of insurers from the health care business. Meanwhile, sensing insurer counterinsurgency (including higher premiums and administrative bookkeeping legerdemain), Congress is already debating another measure to cap yearly insurance premium increases.

Can the “public option” be far behind?

Meanwhile, through all this employers who currently offer health insurance not only must look forward to big changes coming down the pike over the next three-plus years, but they also must continue to mind their proverbial P’s and Q’s over COBRA post-employment insurance (along with current government subsidies) and HIPAA medical information privacy requirements.

Personnel Concepts offers several powerful products to help with both the Health Insurance Portability and Accountability Act (HIPAA) and the Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1986, which created the insurance continuation program. Please visit our HIPAA-COBRA Web compliance section for these products.

About the author:
Gary McCarty is a researcher and Web Content Manager for Personnel Concepts.

Note: The details in this white paper are provided for informational purposes solely. All answers are general in nature, not legal advice and not warranted or guaranteed. Readers are cautioned not to rely on this information. Because laws change over time and in different jurisdictions, it is imperative that you consult an attorney in your area regarding legal matters and an accountant regarding tax matters.