The pulse of reform: Spring 2011 update

Published May 2011
Page 7: Update effective February 2012
Reason for update: Automatic enrollment delayed until 2014

The mandate that requires companies with more than 200 full-time employees to automatically enroll employees in their medical plans has been delayed until 2014.

The Department of Labor, Health and Human Services and the Internal Revenue Service released a statement in February 2012 noting that this requirement will not go into effect until regulations are issued, and those regulations are not expected until 2014.

Download the original report, published before these updates became available. For consultative help in creating a future-ready benefits strategy for the post reform era, contact your Unum sales representative. The pulse of reform: Spring 2011 update

Published May 2011
Page 26: Update effective January 2012
Reason for update: IRS releases additional guidelines on W-2 requirement

The government released further guidance on W-2 reporting guidelines on January 3, 2012. According to the IRS report, an employer does not need to report the cost of hospital indemnity, critical illness, cancer or other specified disease coverage if those benefits are offered as independent, non-coordinated benefits and if the payment for those benefits is includable in the employee’s gross income. Those same benefits need to be included in each employee’s W-2 if they are paid for with pre-tax dollars, or otherwise funded in whole or in part by an employer.

The clarifications continue to indicate that Unum benefits do not need to be included in W-2 reporting unless the employer helps fund Unum’s supplemental hospital indemnity, critical illness, cancer or other similar fixed indemnity or specified disease coverage. This only applies when an employer makes at least some contribution to the cost of coverage or its employees pay a portion of the premium on a pre-tax basis through a Section 125 cafeteria plan. Unum’s employee assistance program is not a group health plan subject to the reporting requirements. Employers are responsible for this reporting even when their disability providers also issue W-2s for paid disability benefits.

See more information about the W-2 guidelines.

Download the original report, published before these updates became available, which includes earlier information on W-2 benefits reporting in general. Contact your Unum sales representative for consultative help in creating a future-ready benefits strategy for the post reform era. Page 8 update effective November 2011
Reason for update: The CLASS Act not implemented

The government announced in November 2011 that The CLASS Act — the portion of health care reform that was intended to provide long term care benefits for Americans — will not be implemented in its current form.

Although the CLASS Act was projected to generate a large surplus of funds over the first five years of each policy, government actuaries determined there was no way to maintain those surpluses when claims became payable.

For more information on the government’s decision not to implement the CLASS Act, read the analysis provided in the article “Class Act not viable”.

Page 30 update effective December 20, 2011
Reason for update: U.S. Supreme Court to rule on mandates

The Supreme Court has scheduled three days at the end of March to hear oral arguments in lawsuits challenging the constitutionality of health care reform.

This is the schedule for the hearings:

March 26: The court will hear arguments on whether the Anti-Injunction Act makes it premature for the court to rule on the constitutionality of health care reform until the individual mandate actually goes into effect in 2014.

March 27: The court will hear arguments on the constitutionality of the individual mandate itself. This is the part of the law that requires most Americans to purchase health insurance. At issue is whether Congress has the ability to regulate commerce to this extent.

March 28: The court will hear arguments on whether the rest of the law can remain if the mandate does not survive, or whether the individual mandate is “severable” from the rest of the law. (Most legislation automatically includes a severability clause, which lets the rest of a law stand if part is struck down in the courts. The PPACA does not have this clause written into it.)

In addition, the court will also hear arguments that day on whether states can be forced by the federal government to expand their share of Medicaid costs and administration, with the potential penalty of losing that funding if they refuse to do so.

The court is expected to issue a ruling by the end of its current term in June.

See more information about the health reform case before the Supreme Court.

Impact to brokers — If the requirement that most Americans purchase health insurance is upheld, the larger pool of Americans eligible for health insurance could create new opportunities for business growth.

Impact on employers — If the requirement that most Americans purchase health insurance is upheld, communicating benefits information to employees will become more critical than ever before.

Impact to employees — If the requirement that most Americans purchase health insurance is upheld, employees not offered health insurance through their employer will need to seek coverage through the Health Insurance Exchanges, or through providers not listed on an Exchange.

If the requirement is struck down in the courts, it is too early to tell how this may impact the implementation of health care reform, or what the long-term impact may be on brokers, employers and employees. Page 17 update effective June 2011
Reason for update: Government ends application period for limited benefit plan waivers

The PPACA originally allowed health insurers to apply for temporary waivers from the coverage mandates of law so that limited benefits plans — also known as “mini-meds ”8212; would be able to operate until the Exchanges open in 2014.

In June 2011, the government announced that it was cutting short the application period for temporary waivers that allow limited benefits plans to continue operating without meeting the coverage mandates of the law.

The government announced it would accept no new applications for plan waivers after September 22, 2011. Waivers granted within that time period will remain valid until 2014.

Impact on employers — According to the government, virtually all plans needing a waiver had already submitted applications by the new cutoff date, so most limited benefits plans will likely remain active until 2014. If there is no waiver for the plan, the employer will need to communicate coverage changes to employees.

Impact on employees — Most employees covered by limited benefit plans will continue to be offered that level of coverage until 2014, unless their employers choose to make a change. Any changes would be communicated by the employer.

Download the original report, published before these updates became available. Contact your Unum sales representative for consultative help in creating a health reform-friendly benefits strategy.