With the re-election of President Obama, another hurdle to implementing the Affordable Care Act has been avoided. While some effects of the law on businesses are still being worked out, provisions of the Affordable Care Act would make it easier for c

onsumers to compare health plans and employers to promote and encourage employee wellness.

Recently, the Obama administration issued the following proposed rules:

• Beginning in 2014, health plans will be allowed to vary premiums based on only age, tobacco use, family size, and geography.

This also means that no person can be denied coverage based on a pre-existing condition or be charged higher premiums based on current or past health problems, gender, occupation, and small employer size or industry.

• Essential health benefits are being identified as the core set of benefits that will give consumers a consistent way to compare health plans in the

individual and small group markets.

• The implementation and expansion of employment-based wellness programs to promote and help control health care spending are a major part of the Affordable Care Act”s focus on prevention.
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We understand that navigating the changes in health care can be challenging. We will keep you appraised as the clarity of reform becomes available.

Employers wil be subject to new W-2 reporting requirements with their W-2 filings this year. Much of the responsibility will fall upon each client, because the amounts provided and cost sharing will be different than simply the gross costs of the cov

erage. Read the IRS publication here:

The Affordable Care Act requires employers to report the cost of coverage under an employer-sponsored group health plan. Reporting the cost of health care coverage on the Form W-2 does not mean that the coverage is taxable. The value of the employer’s excludable contribution to health coverage continues to be excludable from an employee”s income, and

it is not taxable. This reporting is for informational purposes only and will provide employees useful and comparable consumer information on the cost of their health care coverage.

Employers that provide “applicable employer-sponsored coverage” under a group health plan are subject to the reporting requirement. This includes businesses, tax-exempt organizations, and federal, state and local government entities (except with respect to plans maintained primarily for members of the military and their families). However, federally recognized Indian tribal governments are not subject to this requirement.

Transition Relief
For certain employers, types of coverage, and situations, there is transition relief from the requirement to report the value of coverage on the 2012 Forms W-2 (the forms for calendar year 2012 that employers generally are required to provide employees in January 2013). This relief will apply to future calendar years until the IRS publishes additional guidance. However, any guidance that expands the reporting requirements will apply only to calendar years that start at least six months after the guidance is issued. See the “Optional Reporting” column in the below chart for the employers, types of coverage, and situations

eligible for the transition relief.
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Reporting on the Form W-2
The value of the health care coverage will be reported in Box 12 of the Form W-2, with Code DD to identify the amount. There is no Video: Zoe Saldana, Sofia Vergara and Kerry Washington top the the list for celebs with the school-delays.com style. reporting on the Form W-3 of the total of these amounts for all the employer’s employees.

In general, the amount reported should include both the portion paid by

the employer and the portion paid by the employee. See the chart, below, and the questions and answers for more information.

An employer is not required to issue a Form W-2 solely to report the value of the health care coverage

for retirees or other employees or former employees to whom the employer would not otherwise provide a Form W-2.

(John Nelson, Jr, former NAHU President, sheres his thoughs)

Here are some random thoughts about the individual and small group markets, and what might happen to them during the next couple of years. They are predicated on the possibility that the

outcome of the national election yields roughly the same political dynamic in Washington DC with the House controlled by Republicans, a bare majority of one party

or another in the Senate and the President is reelected.

One of the primary concerns I have about the Affordable Care Act is its impact on the individual market. It will take a market that is fully underwritten with age bands of more than 5:1 to a new world where there is no more medical underwriting, insurers are required to take everyone, cover pre-existing conditions right away and limit age bands to a ratio of 3:1. All individuals will have to get coverage or pay a nominal tax (remember, it used to be called a penalty before the Supreme Court said it was a tax) if and when they change their minds. On top of all this, those carriers who sell individual health policies must do so while sustaining a minimum medical loss ratio of 80%.

So this is what the new world of individual health insurance is supposed to look like according to the ACA. No one will be out of insurance, insurance companies can’t overly profit from this block of business and older people won’t have to pay more than three times the premium a younger person pays. A guarantee issue marketplace where no one is turned down, insurers get tens of millions more people to insure and they can’t unduly profit from the overall system. Sounds like nirvana, huh?

Not quite.

The problem with this scheme is that millions more folks will be coming on board a system that is already overburdened with all kinds of pressures. Given that it has had similar reforms in place for years, Massachusetts is a precursor to what we all might be seeing past 2014; the uninsured population has gone down but lines have gotten longer in waiting rooms. And, the number of primary care doctors is struggling to meet the demand for services from the newly insured while insurance rates there continue to rise.

Some folks whom I respect on the carrier side have told me that we’re likely going to see individual rates increase by at least 50% in order to meet ACA-related provisions. It’s not hard to understand why. As mentioned above, medical underwriting will cease to exist and insurance companies will be limited in terms of how they rate folks. The only factors they can take into account when it comes to pricing are the geographic location and age of the insured. Yes, they can rate up for smoking but that’s it. Rates for 20 year-olds will definitely go up because insurers are not going to have an appetite to overly reduce rates on 50 and 60-year-old folks who typically have more claims.

How will the exchange factor into any of these dynamics? The people who are charged with creating and operating exchanges have a simple and noble mission; to reduce the population of uninsureds as much as they can. They can do this by facilitating the process for determining eligibility for subsidies, enrolling people through any appropriate means (including using agents) and by providing consumers an easy to understand means to help them navigate through the complexity of choosing and getting enrolled in the plan that online casino is right for them. But beyond all this, the exchange will be facing the same dynamics that we will all be facing with the individual market and its new world-related costs. The exchange can’t do anything about guarantee issue, the 3:1 age banding and the other insurance reforms. So the products offered via the exchange are going to be subject to the same economic pressures as those products outside of the exchange. The carriers know this. The exchange knows this.

Ah, but there’s the election! I don’t think the outcome of the election is going to affect much of this. For things to dramatically change with the individual reforms and, for that matter, the entire ACA, three things would need to happen; Romney would have to win AND the republicans would have to keep a majority in the House (this is a probability) AND the republicans would have to take a majority in the Senate (The polls point to 48 republicans and 52 democrats – so far). Regardless of the outcome of the election, no one I know in Washington thinks the Republicans have any appetite for bringing back medical underwriting.

So with all this said, here’s where I think things will go with the individual market. First of all, ever since the Supreme Court called the penalty a tax, my bet is that the administration immediately undertook action to make this whole thing moot. No one

who is in office and/or running for office wants to impose another healthcare-related tax – especially in this economy. So my bet is that this will be made moot by one simple action – the creation of a special open-enrollment period via regulations – not an act of Congress. The ACA is over 2,700 pages long. Regulators whose jobs are to interpret what congress “meant” and to turn their general wishes into actions have already added thousands of pages to the bill. Some of the many pages of regulations to come will undoubtedly include an open-enrollment provision which is very similar to Medicare D. It could be as simple as, if you’re eligible for coverage, you must sign up before January 1st, 2014. If you decide not to (maybe you’re healthy and are willing to pay the tax in case you change your mind down the road) and something happens that compels you change your mind, too bad. Insurance companies will not have to take you. Period. This legislation is being seriously contemplated in Sacramento and I have little doubt that federal regulators will turn this into reality. This will help keep the rates lower than they could be.

But we still have the 3:1 age banding issue and we also have the burden on the healthcare delivery system from the millions of people getting insurance for the first time who have unaddressed care needs. I predict that somehow, relief will be given on the 3:1 issue. It could come from future legislation or just regulators giving the insurance industry another year or two to adjust and transition. But I wouldn’t be surprised to see that happen sometime in 2013.

Speaking of 2013, that is going to

be an interesting year for our industry. 2013 is serious ramp-up time for the major provisions of the ACA, but it is also a window of opportunity for Congress to pass legislation addressing some of the more onerous provisions and unintended consequences of the ACA. Nothing much has happened in 2012 because this is an election year; one that is inherently full of political posturing. 2013, on the other hand is a post-election year. Lawmakers will be less afraid to take chances and good, make-sense legislation could happen.

So I expect to see an open-enrollment period mitigate the adverse selection issue and I wouldn’t be surprised to see relief given on the 3:1 rate band. Both of these moves will help with softening the rate blow to the consumer, but the rates will still go up pretty high. Other factors for increasing rates are the benefit ceilings imposed by the feds via the ACA and the benefit floor imposed by laws and regulations here in California. As an aside, carriers are finding it difficult to create a “bronze” level plan. You remember the metallic plans right? When 2014 rolls around, all plans must fit into one of four metallic levels of benefits; bronze (60% of actuarial value), silver (70%), gold (80%) and platinum (90%). So guess what? Because of the legislative floors and ceilings, carriers are finding it very difficult to create a bronze benefit plan. Again, 2013 should be very interesting and I have hopes that a number of troubling details like this and the issues above will be addressed.

October 01, 2012 (CaliforniaHealthline) by George Lauer – As many as four million Californians could remain uninsured after all national health reforms are in place, and about half of them will be eligible for subsidized coverage but not enrolled, ac

cording to a new report.

National reform will bring health coverage to millions of previously uninsured Californians through the expansion of Medi-Cal and creation of subsidized insurance through the new Health

Benefit Exchange. However, millions still will fall through the cracks, say authors of a joint report from the UC-Berkeley Center for Labor Research and Education and the UCLA Center for Health Policy Research. According to the authors, 3.1 million to four million Californians still will be uninsured after health reform fully takes effect.

“The number of remaining uninsured doesn’t surprise us, but I suspect it will surprise others,” said Ken Jacobs, chair of the UC-Berkeley Labor Center and one of the report’s authors.

“Both the overall number and the mix of who those people are … important data and should serve as a wake-up call for the need to maintain the safety net system in California,” Jacobs said.

Among the findings and predictions in the report, “Who Will Remain Uninsured?”:

•Half of all remaining uninsured, or two million Californians, will be eligible for Medi-Cal or exchange subsidies but will remain unenrolled due to lack of awareness about the programs, challenges in the enrollment process or an inability to afford subsidized coverage;
•Nearly 40% of the remaining uninsured will not be able to afford coverage;
•More than 70% of the remaining uninsured will be exempt from the federal tax penalty; approximately 3% of all Californians will owe a tax penalty in 2019 due to not obtaining minimum coverage;
•Latinos will make up two-thirds of the remaining uninsured; and
•Californians with limited English proficiency will account for about 60% of the uninsured.
•Report Recommends Extra Effort in Latino Community
Authors of the report recommend that state officials make an extra effort to connect with the Latino community.

Chad Silva, policy director for Latino Coalition for a Healthy California, agreed.

“The California Departments of Health Care Services and Managed Health Care and the Health Benefit Exchange need to engage community-based stakeholder groups who are already working with this population,” Silva said. “Groups such as ours, who have ties with many of these groups, can help to facilitate the dialogue and linkages,” he said.

Silva said there is some doubt

in the Latino community about whether outreach efforts by the state’s new insurance exchange will be adequate.

“It is our understanding that the exchange plans to allocate $250,000 for a statewide outreach effort. This would not be sufficient to engage a population the size of Fresno,” Silva said.

“It is concerning that they underestimate how hard it will be to engage the Latino community, especially those residing in rural communities in isolated areas. The report highlights some of the issues: language, age, class, etc., that would make engagement difficult if the right people are not treated as partners in this process,” Silva said.

“All of this is exacerbated by their compressed timeline,” Silva added. “People and things can get missed when done very quickly. We need to be diligent, and help the exchange help themselves.”

The Health Benefit Exchange this week begins a nomination process to identify and select stakeholders to participate in advisory groups.

‘Safety Net Will Still Be Needed’

Report authors recommend that California officials take steps to ensure a strong post-ACA safety net.
“The most important take-away from this report I think,” UC-Berkeley’s Jacobs said, “is to urge governments at every level — federal, state and county — to maintain whatever they’re doing after ACA arrives. It’s fair to assume most programs won’t need as much money or attention because a lot of the people who use those programs now will be insured, but it won’t be everyone — not by a long shot.”
Jacobs added, “Programs like Family PACT and LIHP and others will still serve an important role — maybe not as big a role, but still important.”
Family PACT provides family planning services to low-income Californians, and LIHP — the Low Income Health Program — is part of the state’s 1115 Medicaid waiver known as the “Bridge to Reform.” Both programs are administered by the state Department of Health Care Services.
The report also suggests state officials might consider creating new safety-net programs once the ACA is in place and the state’s needs change.
“We don’t really have anything I mind at this point,” Jacobs said. “That is more a long-range recommendation that California be thinking of new possibilities.”
Undocumented Immigrants Part of the Mix
The report predicts that after health care reforms are in place almost three-quarters of California’s uninsured will be U.S. citizens or documented immigrants. That means as many as one million undocumented immigrants may be among the uninsured.
That meshes with estimates by Latino Coalition for a Healthy California, Silva said, adding that it’s a difficult group to count.
“This is not a population that tends to want to be counted due to fear [of] reprisals,” Silva said.
“We agree with the conclusions made in the report that point to strengthening the safety net, in particular the clinics, which can be federally qualified, FQHC look-alikes. The state needs to avail itself of every federal opportunity to fund the clinics and increase funding to assure that health care is provided to all,” Silva said.
Silva said the report’s findings support a broader approach to health care that goes beyond insurance.
“I think the conclusions and recommendations in this report would tend to support investments into wellness and health at the community level,” Siva said. “Clearly, insurance coverage is not going to do enough to address health disparities and health equity. It is clear that millions will be left out for one reason or another. The best way to address this is to not focus on insurance coverage but to focus on preventing disease.”
Silva said investing in clinics and taking advantage of federal programs that support creating healthier communities, such as safe routes to schools and community transformation grants, would help.
“If the environment in which we live is healthier as the result of smarter planning, more open spaces, greater access to healthier foods, the community as a whole benefits. This report supports the idea that we need to be thinking about this differently. Insurance coverage only deals with one side of the equation. The greater impact can be realized by investing in health and wellness,” Silva said.

Health care reform at-a-glance W-2 reporting requirements.

The Affordable Care Act (ACA or health care reform law) requires employers to report the cost of employer-sponsored health benefits. This is a new, separate entry on the W-2 form. Here’s

w

hat you need to know:

Who the provision applies to:

The W-2 reporting provision applies to grandfathered and non-grandfathered plans, both fully insured and self-funded groups.
The requirement applies to anyone who is still receiving benefits from the employer, including COBRA participants and retirees (even though retiree-only plans are exempt from the health care reform law).

What the provision requires:

Employers must report the cost of coverage under an employer-sponsored group health plan. Employers must start reporting for tax years on or after January 1, 2011 (meaning it would be reported on employees’ W-2 forms they receive in 2012).
However, there will be transition relief available for certain employers and types of coverage. (See this question for more information about transition relief.)

Costs to be included in the calculation:

The ACA didn’t specify the costs to be included in the W-2 calculation. Instead, it stated that the rules will be similar to those of Internal Revenue Code section 4980B(f) – the method for calculating applicable premiums for COBRA continuation coverage. Based on that description, IRS guidance states that the following types of coverage will be included in the W-2 calculation:
 Medical plans, including limited benefit plans
 Prescription drug plans
 Dental and vision coverage provided as part of the medical plan
 Hospital indemnity or specified illness (insured or self-funded) paid pre-tax or by employer
 Health Flexible Spending Arrangement (FSA) for the plan year in excess of employee’s cafeteria plan salary reductions for all qualified benefits
 Employee physicals
 Domestic partner coverage
 Employee assistant programs (required if employer charges a COBRA premium)
 On-site health clinics (required if employer charges a COBRA premium)
 Wellness programs(required if employer charges a COBRA premium)
 Medicare supplement insurance
Due to transition relief, there are some optional coverage types that employers can choose or choose not to include in reporting the cost of health care benefits. (See this question for a list of those coverage types.)

Even though the W-2 calculation will be based on COBRA rules, employers should not assume that the W-2 amount will be the same as the COBRA amount for two reasons:
 The W-2 reporting requirement extends to plans that don’t ordinarily count toward the COBRA premium
 The COBRA calculation allows for an administrative fee and the W-2 calculation does not

Questions and answers:
Q: Does this mean employees will pay taxes on their health insurance?
A: No. There is nothing about the reporting requirement that causes or will cause excludable employer-provided health coverage
to become taxable. The purpose of the reporting requirement is to provide employees useful and comparable consumer
information on the cost of their health care coverage.

Q: Must an employer issue a W-2 form with the aggregate cost of applicable employer-sponsored coverage to an
individual to whom the employer is not otherwise required to issue a W-2 form, such as a retiree or other former
employee receiving no compensation required to be reported on a W-2 form?
A: No. The IRS Notice 2012-9 stated that an employer is not required to issue a W-2 form reporting the aggregate reportable
cost to an individual to whom the employer is not otherwise required to issue a W-2 form.

Q: Where will this information appear on the W-2 form?
A: The IRS has determined that the value of health care coverage will appear in Box 12 with Code DD to identify the amount.
You can view the draft form on the IRS website.

Q: Are there any types of coverage I don’t have to include?
A: According to IRS guidance, employers do not need to include these amounts in the W-2 calculation:
 Accident insurance
 Automobile medical payment insurance
 Disability insurance
 Credit-only insurance
 Employee contributions to health care flexible spending accounts and health savings accounts (reported elsewhere on
W-2)
 Health Flexible Spending Arrangement (FSA) funded solely by salary-reduction amounts
 Health Saving Arrangement (HSA) contributions by employer or employee
 Archer Medical Savings Account contributions by employer or employee
 Long-term care insurance
 Plans paid for with after-tax dollars
 Stand-alone dental and vision coverage
 Workers’ compensation insurance

Q: Do I need to adjust the calculation if an employee is

only covered for part of the month?
A: The provision doesn’t indicate how to calculate for partial-month coverage. We expect further clarification is forthcoming.

Q: What transition relief is being provided?
A: For certain employers and types of coverage listed below, the requirement to report the cost of coverage will not apply for the
2012 W-2 forms (the forms required for the calendar year 2012 that employers generally are required to provide employees in
January 2013) and will not apply for future calendar years until the IRS publishes guidance giving at least six months of advance
notice of any change to the transition relief. However, reporting by certain employers and types of coverage may be made on a
voluntary basis.

Q: Which employers and types of coverage does it apply to and how long does it last?
A: The transition relief applies to the following:
(1) employers filing fewer than 250 W-2 forms for the previous calendar year (for example, employers filing fewer than 250 2011
W-2 forms (meaning Forms W-2 for the calendar year 2011, which generally are filed with the SSA in early 2012) will not be
required to report the cost of coverage on the 2012 W-2 forms (which generally are filed with the SSA in early 2013). For
purposes of this relief, the number of W-2 forms the employer files includes any forms it files itself and any filed on its behalf by
an agent under § 3504 (see Q&A-3 of Notice 2012-9 for more information). In addition, for purposes of this relief, the employer is
determined without the application of any aggregation rules;

(2) multi-employer plans;
(3) Health Reimbursement Arrangement (HRA) contributions;
(4) dental and vision plans that either
 are not integrated into another group health plan or
 give participants the choice of declining the coverage or electing it and paying an additional premium (see Q&A-20 of Notice 2012-9 for more information);
(5) self-insured plans of employers not subject to COBRA continuation coverage or similar requirements;
(6) employee assistance programs, on-site medical clinics, or wellness programs for which the employer does not charge a premium under COBRA continuation coverage or similar requirements; and
(7) employers furnishing W-2 forms to employees who terminate before the end of a calendar year and request a Form W-2 before the end of that year.