Health Care Reform Update: Determining Actuarial Value

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THE LATEST HEALTH CARE REFORM UPDATE:

HHS Outlines Intended Approach for Determining Actuarial Value for Individual and Small Group Coverage (Including Good News for HSAs and HRAs)
On Feb. 24, the Department of Health and Human Services (HHS) released a bulletin that describes their approach to valuing plans that will be offered in the nongrandfathered small and individual markets after Jan. 1, 2014 (whether or not offered as qualified health plans inside an exchange).  The bulletin also describes HHS's intended approach for implementing one of the features of health care reform that is intended to make individual coverage obtained through an exchange affordable for eligible low-income individuals -- the actuarial value (AV) calculator would be used to determine required cost-sharing reductions for such individuals who purchase silver-level individual coverage through an exchange.

Standard Data: HHS's proposed approach to the actuarial value requirements established by the Patient Protection and Affordable Care Act (PPACA) would be to create a national standardized approach to determining a plan's actuarial value (AV) and develop a national "actuarial value calculator" to score plans based on their included benefits.  However, the bulletin also allows for a proposed degree of state-by-state flexibility.  Since provider payment levels and utilization can vary substantially by state, the bulletin provides for a means for states to develop their own standardized deviation of the national actuarial value formula that insurers could use to come up with AV scores in that state. 

AV Calculator Tool: HHS intends to develop a publicly available calculator tool, pre-loaded with standard data, which insurers would use to calculate their plans' AVs by inputting key information about benefit coverage and cost-sharing provisions.  A plan's AV would need to be within two percentage points above or below the specified AV for the level (e.g., a gold plan's AV could be between 78 percent and 82 percent).  HHS is soliciting comments on exactly what input fields the calculator should consider and how AVs should be calculated for plan designs that do not fit within the calculator's logic.

Treatment of HSAs and HRAs: The bulletin also makes a provision to address the treatment of employer contributions to health savings accounts (HSAs) and health reimbursement arrangements (HRAs) linked to high-deductible health plans (HDHPs).  HHS recognized that simply calculating the actuarial value of the HDHP based on the insurance product alone would understate the value of coverage and cause many HDHPs to fall below the bronze level of coverage required.  However, they also noted that accounting for the total coverage provided by the combination of the HDHP and the full value of the HSA or HRA could overstate actuarial value because, empirically, only a portion of these accounts are used toward health in a given year.  To address the issue fairly, HHS states in the bulletin, "we intend to propose that for purposes of calculating the AV of an employer health benefit plan, the annual employer contribution to the employee's HSA associated with a qualifying HDHP and the amount made available for the first time in a given year under a HRA that is linked to an employer health benefit plan shall be considered part of the benefit design of the health plan."  (Editorial comment: "How will the insurer know what HSA contributions an employer will make?")
HHS has solicited comments on the proposed bulletin, but has not specified a date by which comments must be submitted.  The full 16-page bulletin can be found at:
http://www.cciio.cms.gov/resources/files/Files2/02242012/Av-csr-bulletin.pdf.

Health Care Reform Update: Annual Dollar Limits; MLR and HSA's

THE LATEST HEALTH CARE REFORM UPDATE:

HHS Releases Guidance Related to Annual Dollar Limit Waivers
On Feb. 13, 2012, the Department of Health and Human Services (HHS) stated a health insurance issuer that has received a waiver of the annual dollar limit requirements pursuant to Section 2711 of the Public Health Service Act for a group health insurance product can sell that product to a self-insured grandfathered group health plan that has itself been granted a waiver and wishes to switch from being a self-insured plan to a fully insured plan, as long as the following criteria are satisfied:

1. In all cases, the plan sponsor must have been offering group health coverage to its employees before Sept. 23, 2010, for which it obtained from HHS a waiver of the annual limits requirement;
2. The issuer from which the group health plan is now obtaining the insured policy must have obtained a waiver from HHS for the newly purchased policy;---
3. The annual limits of the new policy may not be lower than the annual limits of the previous policy, except in the situation outlined in No. 4;
4. The plan sponsor may obtain a replacement policy with a lower annual limit only if other comparable coverage is not available.  If a plan purchases a lower annual limit policy due to lack of comparable coverage, this change would cause a loss of status under 45 CFR 147.140(g)(1)(vi)(C), relating to status as a grandfathered health plan.-
5. The health insurance issuer must obtain from the plan sponsor an attestation that the criteria outlined above are satisfied, and the attestation must be accompanied by documentation outlining the terms of the prior coverage. Issuers shall retain this information in accordance with the data retention requirements of the Sept. 3, 2010, and Nov. 5, 2010, annual limits guidance documents.
6. To the extent not superseded here, all prior HHS guidance regarding annual limits waivers continues to apply to the plan and policies described here.

Milliman Study Highlights the Impact of Medical Loss Ratio Rules on HSAs
A new report by Milliman Inc. says that high-deductible health plans, including those with health savings accounts (HSAs), will likely be more adversely impacted by the medical loss ratio requirements under PPACA than other types of comprehensive medical plans.  Consumers who rely on HSA-qualified plans to finance their health care may experience greater costs in their current health plans and may eventually have to find more expensive replacement coverage.

The primary issues of concern for high-deductible plans are that:

• The medical loss ratio formula doesn't take into account contributions to HSAs.  Many high-deductible health plans are accompanied by an HSA, which covers much of the first-dollar costs before the plan's deductible is reached. HSA contributions are currently not reflected in the medical loss ratio calculations.
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• High-deductible health plans may not be able to raise rates fast enough to keep up with rising costs.  High-deductible health plans will require larger annual rate increases than typical medical plans because medical inflation will have a greater impact on claim levels than plans with lower deductibles.
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• Every plan has fixed expenses that it covers with premiums.  Since high-deductible health plans have lower premiums than other plans, a greater percentage of the premium must be used to pay these fixed expenses. ---

High-deductible health plans have less predictable claims experience that could increase the risk of paying rebates.  High-deductible insurance plans pay fewer claims than plans with low deductibles.  But when high-deductible health plans pay claims, the claim dollar amounts tend to be larger.  This lower-frequency/high-payment creates less actuarial predictability which can result in high claims in one year and low claims in another.  If the plan has low claims, it may not meet the 80 percent medical loss ratio and be required to pay rebates.  If the plan has high claims, it may lose money that it cannot "make up" in other years.

Health Care Reform Update: SBC Rules; Essential Benefits; Auto-Enrollment

Happy Valentines Day everyone!

Today we've partnered with our partners at UBA to bring you the most recent updates to Health Care Reform.

Agencies Release PPACA Final Rule, Guidance and Templates for Summary of Benefits and Coverage (SBC) and Uniform Glossary of Terms

The Departments of Labor, Treasury and Health and Human Services have released final regulations under the Patient Protection and Affordable Care Act (PPACA) that require health insurers and group health plans to provide concise and comprehensible information about health plan benefits and coverage to those with private health coverage.  Under the rule, health insurers must provide consumers with clear, consistent and comparable summary information about their health plan benefits and coverage. The new explanations will be available beginning, or soon after, Sept. 23, 2012.

Specifically, these rules will ensure consumers have access to two key documents that will help them understand and evaluate their health insurance choices:

• A short, easy-to-understand Summary of Benefits and Coverage (SBC); and
• A uniform glossary of terms commonly used in health insurance coverage.

 All health plans and insurers will provide an SBC to shoppers and enrollees at important points in the enrollment process, such as upon application and at renewal.  A key feature of the SBC is a new, standardized plan comparison tool called “coverage examples,” which will illustrate sample medical situations and describe how much coverage the plan would provide in an event such as having a baby (normal delivery) or managing Type II diabetes (routine maintenance, well-controlled).

The rule's effective date is 60 days after publication in the Federal Register (scheduled for Feb. 14, 2012).  The applicability date is generally Sept. 23, 2012 (or the first day of the first plan year after this date, or the first day of the first open enrollment period after this date). 

• Final rule
• Guidance for Compliance
• Summary of Benefits and Coverage (SBC) Template | MS Word Format
• Sample Completed SBC | MS Word format
• Instructions for Completing the SBC - Group Health Plan Coverage
• Instructions for Completing the SBC - Individual Health Insurance Coverage
• Why This Matters Language for "Yes" Answers
• Why This Matters Language for "No" Answers
• HHS Information For Simulating Coverage Examples
• Uniform Glossary of Coverage and Medical Terms

HHS Provides Illustrative Information Regarding Benchmarks for Essential Health Benefits

The Department of Health and Human Services (HHS) provided illustrative information to complement its Dec. 16, 2011, bulletin on essential health benefits (EHB) under the Patient Protection and Affordable Care Act.  The information provides the names of the three largest products in the small group market in each state ranked by enrollment, as well as a list of the top three nationally available Federal Employee Health Benefit Program plans based on enrollment.

In an earlier bulletin released Dec. 16, 2011, HHS described the approach it intends to pursue in rulemaking to define these essential health benefits.  Under that approach, states would be able to select an existing health plan to set as a benchmark for the items and services included in the package. The options would be:

• one of the three largest small group plans in the state;
• one of the three largest state employee health plans;
• one of the three largest federal employee health plan options;
• the largest HMO plan offered in the state's commercial market.

Plans could modify coverage as long as they do not reduce the value of coverage.  States must also ensure the essential health benefits package covers items and services in at least ten categories of care, including preventive care, emergency services, maternity care, hospital and physician services and prescription drugs.   
 
For additional information:
Fact sheet
ASPE Issue Brief - summary of individual market coverage
ASPE Research Brief - information on comparing benefits in small group products and state and federal employee plans

DOL, HHS and Treasury Issue Technical Release on Automatic Enrollment, Waiting Periods and Employer Shared Responsibility 

Under PPACA

The Employee Benefits Security Administration (EBSA) has issued Technical Release 2012-01, which provides information on questions from employers and other stakeholders regarding the provisions of the Patient Protection and Affordable Care Act (PPACA) governing automatic enrollment, employer shared responsibility, and the 90-day limitation on waiting periods.  These provisions are scheduled to become effective in 2014.  Also outlined in the release are various approaches that the three regulatory agencies (Departments of Labor, Treasury and Health and Human Services) are considering proposing in future regulations or other guidance.

The full release can be found at http://www.dol.gov/ebsa/newsroom/tr12-01.html.  Comments are requested by April 9, 2012, may be submitted anonymously, and will be shared by the Departments.  

W-2 Health Coverage Value Reporting

More IRS Guidance on W-2 Reporting of Health Coverage:

Among the provisions contained in the 2010 Patient Protection and Affordable Care Act was a requirement that employers report, on each employee's IRS Form W-2, the value of any employer-provided health coverage.  As explained in our October 2010 article, this reporting requirement is optional for 2011, but mandatory for 2012 (that is, for W-2s to be provided in January of 2013).  The IRS issued an initial round guidance on this reporting requirement in Notice 2011-28 (as summarized in our April 2011 article), but that Notice left many questions unanswered.  A number of those questions have now been answered in Notice 2012-9.

Overview of Reporting Requirement

Before addressing the recent guidance, it is worth noting some key points that have not changed.  For instance, this reporting requirement remains optional for 2011, but then required for 2012.

Also preserved is a postponement of this requirement for "small" employers.  Any employer that is required to issue fewer than 250 W-2s for 2011 (or that would have been required to issue fewer than 250 W-2s had it not engaged an agent to handle this reporting) qualifies for this postponement.  The soonest such a small employer might be required to report the value of its employees' health coverage is January of 2014 (on the 2013 W-2).

Once this reporting requirement does apply, the value of employer-sponsored health coverage is to be reported in Box 12 of the W-2, using the code "DD."  Finally, this latest Notice reemphasizes that nothing in this new reporting requirement will cause an employee to be taxed on any employer-provided health coverage.

Calculating the Cost of Coverage

Although the Notice addresses numerous questions, most employers will simply want to know how to calculate the cost of the coverage to be reported on each W-2.  The amount to be reported should reflect both the employer and employee portions of that cost, with the annual amount equal to the sum of all monthly amounts (and under all plans sponsored by the same employer).

If a plan is insured, the amount to be reported should be the insurance premium charged for whatever level of coverage an employee received.  If a plan is self-funded, the general rule is to use the "applicable premium" calculated for COBRA purposes.  An example in the Notice makes clear that this does not include the additional 2% administrative fee allowed to be charged to COBRA beneficiaries.

Although these few rules should cover the vast majority of cases, the Notice does provide certain permissible alternatives.  For instance, a "modified COBRA premium method" may be used if an employer subsidizes a plan's COBRA premiums.  If an employer makes a good-faith estimate of the "applicable premium" - and then uses that estimate in calculating a subsidized COBRA premium - the employer may report the estimated amount as the cost of coverage on an employee's W-2.

Similarly, if an employer chose to continue charging a prior-year COBRA premium during the reporting year (and determines in good faith that the reporting year's cost of COBRA coverage was at least as large as the prior year's), the employer may use that prior-year COBRA premium (again, minus the 2% administrative fee) to satisfy this W-2 reporting mandate.

Finally, the Notice provides a number of permissible options if an employer charges a "composite" rate for active employees (such as the same amount for either employee-only or employee-plus-spouse coverage), but then calculates separate rates for COBRA purposes.  Subject to certain limitations, such an employer may report either the composite rate or the COBRA rate (minus the 2% administrative charge).

Employers wishing to rely on any of these special rules should read the Notice carefully for additional restrictions and limitations.

Recent Clarifications 
Among the recent clarifications contained in Notice 2012-9 are the following: 

• There is no need to report any employee contributions to a flexible spending account ("FSA").  However, if an employee allocates any employer "flex credits" to a health FSA, those employer amounts must be reported. 
   
• Whether the value of dental or vision coverage must be reported on a W-2 depends on whether that coverage constitutes an "excepted benefit" under the HIPAA portability and nondiscrimination rules.  In general, this would be the case if either (1) the coverage is offered under a separate policy, certificate, or contract of insurance, or (2) participants have the right to elect the dental or vision coverage and must pay an additional premium if they do so.  The value of such excepted benefits need not be reported. 
   
• An employee assistance program ("EAP"), wellness program, or on-site medical clinic may be subject to this reporting requirement if it constitutes a "group health plan."  However, the reporting of these benefits will be required only if the employer charges a separate premium for someone to receive COBRA coverage under these benefits. 
   
• Even if an employer is not required to report the value of certain types of health coverage - either the types listed immediately above, or coverage received under a health reimbursement arrangement ("HRA"), as noted in the prior guidance - the employer may choose to report these amounts.  For some employers, this approach may be more consistent with the systems in place to track the value of the various types of coverage provided to each employee.
   
• Pre-existing rules require an employer to provide a W-2 within 30 days of a request received from an employee who terminates during the calendar year.  Under this recent Notice, however, such a W-2 need not report the cost of any health coverage received by that employee.
   
• Moreover, if an employer waits until year-end to supply W-2s to terminated employees (the more usual case), those W-2s may report either the value of the coverage received only while an active employee or the value of the coverage received through the end of the year (thereby including the value of any COBRA coverage).  The employer must be consistent, however, in selecting one of these two approaches.
   
• In a bit of welcome news, the Notice provides that an employer need not report the value of health coverage received by any individuals who are not otherwise entitled to receive a W-2.  These might include COBRA beneficiaries, retirees, non-employee directors, or independent contractors.
   
• The IRS Form W-3 (which is used to transmit employee W-2 data to the IRS) need not report the cost of any health coverage.
   
• In general, this W-2 reporting requirement applies even to the value of any health coverage that must be included in an employee's taxable income.  This might include the value of coverage provided to an employee's domestic partner, or to a non-dependent child over age 27.  Contrary to the earlier guidance, however, it is not necessary to report the value of coverage that is taxable only because (1) a self-funded plan discriminates in favor of highly compensated individuals (in violation of Section 105(h) of the Tax Code), or (2) an employee is a 2% or more shareholder in a Subchapter S corporation.
   
• If a single plan provides both health coverage and non-health coverage (such as disability or life insurance), an employer may use any reasonable method to allocate the total cost of coverage between the two categories - and then report only the cost of the health coverage.  Alternatively, if either the health coverage or the non-health coverage is merely "incidental" to the other type of coverage, the employer may treat the plan as though it provided only the primary type of coverage.
   
• The value of the coverage provided to an employee may be determined on the basis of the facts known to the employer on December 31 of the reporting year.  Accordingly, any information learned after that date may be disregarded, even if that information results in the employee's coverage during the reporting year either increasing or decreasing in value.  The value might increase, for example, if an employee was allowed to retroactively add coverage for a newborn child who was born during the reporting year.  It could decrease if an employee retroactively dropped coverage for a former spouse in connection with a divorce.
   
• If the final pay period in a calendar year laps over into the following year, an employer may allocate the value of any health coverage received during that pay period between the two calendar years, based on a reasonable allocation of the days falling within each year.  Alternatively, so long as it is done consistently, the employer may allocate that entire pay period to either of the two calendar years.
   
• Although prior guidance suggested that both hospital indemnity insurance and coverage for a specific disease or illness were entirely exempt from this W-2 reporting requirement, the most recent Notice limits this exemption to plans under which an employee pays the full premium for that coverage on an after-tax basis.  If an employer pays any portion of the premium - or if an employee pays any portion of the premium on a pre-tax basis - the entire value of the coverage must be reported.  As a result, even some "voluntary insurance arrangements" (which are exempt from most requirements of ERISA) must be reported on a W-2 - that is, if employees pay their premiums on a pre-tax basis.

Although the first W-2s on which the value of health coverage must be reported are not due until January 31, 2013, employers will want to ensure that they are able to capture all the data they will need in order to comply with this reporting requirement.  For instance, they will need to know the type and level of coverage received by each employee during each month (or pay period) during 2012.  This may require that payroll software be reprogrammed in the very near term to preserve a record of these coverage levels.

The IRS expects to issue still further guidance on this reporting requirement.  According to Notice 2012-09, however, any such guidance will be prospectively effective only.  Moreover, it will apply only to calendar years beginning at least six months after that additional guidance is issued.  For this reason, employers who are subject to this W-2 reporting requirement in 2012 should assume that this is the final guidance they will receive before reaching their compliance deadline.

HCR Update: Form W-2 Guidance; State Exchanges

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IRS Issues Additional Guidance on Form W-2 Health Care Coverage Reporting Requirement
The U.S. Internal Revenue Service (IRS) has issued Notice 2012-9 to provide additional guidance on the informational reporting to employees of the cost of their employer-sponsored group health plan coverage on Form W-2.  The IRS requested public comments on the W-2 reporting requirement in Notice 2011-28. Notice 2012-9 responds to these comments and amends, restates and supersedes Notice 2011-28.  Specifically, the new notice includes guidance on the W-2 reporting as it relates to small employers, flexible spending accounts, dental and vision plans, COBRA and health reimbursement arrangements.

Health care cost information will have to be reported on 2012 W-2s, which will be issued in 2013. Under previous IRS guidance, smaller employers -- those that distribute fewer than 250 W-2s in 2011 -- are exempt from this requirement until at least 2014 and possibly longer.

The latest guidance, released Tuesday, makes clear that employers can -- but are not required to -- report contributions to health reimbursement arrangements in calculating health care costs.  In addition, the cost of providing coverage through employee assistance programs, wellness programs or on-site medical clinics is not required to be reported if the employer does not charge premiums for the coverage to COBRA beneficiaries.  The guidance also clarifies that the reporting requirement does not apply to Indian Tribal governments.

The latest guidance also reiterates numerous provisions in last year's guidance, including that that the cost of coverage that is taxable to employees, such as for a child over age 26, must be reported on the W-2, and that contributions employees make to flexible spending accounts are to be excluded from the health care cost figure.

The full 23-page text of the Notice can be found at:
http://www.irs.gov/pub/irs-drop/n-12-09.pdf.


CRS Analyzes Effect of Definition of Income in New Law on State Exchange Premium Credits A new law signed by President Barack Obama (P.L. 112-56) has changed the definition of modified adjusted gross income (MAGI) to include nontaxable Social Security income, for purposes of qualifying for both Medicaid and premium assistance for state exchanges that are being created as per the Patient Protection and Affordable Care Act (PPACA).  According to a report issued by the Congressional Research Service (CRS), this is expected to reduce Medicaid enrollment by between approximately 500,000 to one million people, starting in 2014, although, under the PPACA, certain groups are exempt from income eligibility determinations for Medicaid based on MAGI anyway, including:

• Foster children
• Those receiving Supplemental Security Income (SSI)
• The elderly
• The disabled 
• The medically needy
• Those enrolled in a Medicare Savings Program
• Also, prior to 2014, states are not required to use MAGI when determining Medicaid eligibility for the new mandatory Medicaid eligibility group created by the PPACA, which includes all nonelderly, non-pregnant individuals, such as childless adults, certain parents, and certain people with disabilities, who are not otherwise eligible for Medicaid and are also not entitled to or enrolled in Medicare Part A or Part B.

Those losing Medicaid eligibility could include many early retirees, as well as some people receiving survivor benefits or disability benefits.  Many of those people would, in turn, become eligible for premium assistance and cost sharing subsidies in the new state exchanges, although some people that would have been eligible for premium assistance prior to the enactment of P.L. 112-56 will now no longer be eligible.

The net effect of the new eligibility provisions is expected by the CBO and the Joint Committee on Taxation to increase enrollment in the health exchanges by about 500,000 in any given year between 2014 and 2021.  Changing the definition of MAGI to include all Social Security benefits, both taxable and non-taxable, was also estimated by the CBO to reduce the deficit by three billion dollars over the period of 2012-2016 and by approximately $13 billion from 2012 to 2012.
In its report, the CRS points out that it was the intent of the ACA to make Medicaid eligibility and premium credit eligibility more inclusive and consistent with other low-income programs.  The CRS is warning, however, that the inclusion of non-taxable income besides nontaxable Social Security income, which is something the government is considering, may be administratively cumbersome and expensive, because, unlike non-taxable Social Security income, not all nontaxable income is reported (for informational purposes) on tax returns.  Verification of income for MAGI purposes is streamlined at the moment, but attempting to verify multiple sources of other nontaxable income would presumably be administratively complex.

Employer Compliance Alert! Union Backed Election Rule Changes

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NATIONAL LABOR RELATIONS BOARD PASSES LIMITED VERSION OF UNION-BACKED ELECTION RULE CHANGES

On November 30, during a closely-watched session, National Labor Relations Board Chairman Mark Pearce and Member Craig Becker voted to proceed with preparation of a final rule modifying the Board's election procedures to speed up the process in certain circumstances.  Member Brian Hayes, the only Republican Board member, opposed the majority's effort as a mistake that would "ultimately cause harm to the agency and the constituencies we serve." The changes that ultimately were passed represent a substantially more limited version of what initially had been proposed by the Board's majority and are summarized as follows: Elimination of pre-election appeals to the Board from the actions of the Regional Director on an election petition, providing instead only for a single, discretionary appeal of pre-election and post-election issues after the votes are cast.  An appeal to the Board prior to the election is limited to issues that otherwise would escape Board review if not raised prior to the election.    Express direction that a pre-election hearing is to determine only whether a question concerning representation exists, and that the hearing officer has authority to limit evidence taken at the hearing where the evidence does not have relevance to a genuine issue of fact material to that issue.  This means that questions of individual voter eligibility (as opposed to appropriate bargaining unit composition) will be litigated after the election, as opposed to before.  Also, the hearing officer may decline requests of parties to submit post-hearing briefs, which right previously was guaranteed by the Board's rules. Elimination of the current requirement that the vote may not be held sooner than 25 days after the Board's Regional Director issues a Direction of Election.  As a result, some elections likely will be held sooner after the Direction of Election than was previously the case. The new rules were passed notwithstanding substantial criticism from the business community and others who viewed this move as an attempt by labor-friendly Board members to speed up the election process prior to the end of Member Becker's recess appointment that ends on December 31.  As a result of the criticism and the threat by Member Hayes to resign, which move would have left the Board with two members and would have divested the Board from authority to conduct its business, the majority watered down the original proposal, eliminating the following proposed changes: The requirement that a hearing be held within seven days of the filing of a union's representation petition. Allowing the union's petition to be filed electronically, rather than the current practice requiring filing by hand or regular mail. The requirement that the employer prepare and file a comprehensive "statement of position" on the union's election petition no later than the date of the hearing, together with the requirement that any issues not raised by the employer in its statement are waived by the employer and may not be raised later. The requirement that unions be given employees' email addresses and telephone numbers prior to the election. The requirement that the voter eligibility list ("Excelsior list") be given to the union within two work days of the Direction of Election, instead of the current rule allowing for seven work days. These additional proposals remain open to future debate and adoption by the Board.  However, with the impending expiration of Member Becker's recess appointment, the question of whether these additional proposals stand a chance of passing remains unclear. The Board will draft a final rule codifying the adopted changes. The final rule is intended to be issued prior to the expiration of Member Becker's term. Opponents of the changes are working to block even the more limited the changes via legislation (the Workforce Democracy and Fairness Act, H.R. 3094), and potentially through judicial action. Even though the new rule will have less impact on employers than the originally proposed rule, the new rule still substantially shortens the period from filing of the petition to the date of election from the current Board election target of 42 days.  Elections almost certainly will be held more quickly. The actual period will be determined by the circumstances of each case. The fact that elections will be held more quickly underscores the need of employers to remain constantly vigilant regarding potential union organizing efforts in order to address such efforts at the earliest possible opportunity.

Health Care Reform Update: Benefits Summary Deadline Delayed

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Employer Health Care Reform Law Communication Mandate Delayed
Employers have more time to comply with rules dictated by the health care reform law that will require them to revamp how they communicate and explain their health care plans.  In a notice published Nov. 17, the Department of Labor (DOL) said the reporting requirements would not go into effect until after final rules are published.   "It is anticipated that the...final regulations, once issued, will include an applicability date that gives group health plans and health insurance issuers sufficient time to comply," the Labor Department said.

At the time the proposed rules were issued by the Health and Human Services (HHS), Labor and Treasury departments, federal regulators said they would go into effect on March 23, 2012.  Among other things, the proposed rules would require employers to provide employees with an "easy-to-understand" summary of benefits and coverage (SBC) and, upon request, a glossary of commonly used health care coverage terms, such as deductible and copay.  Plus, the summary of benefits and coverage would have to include the portion of expenses a health care plan would cover in each of three situations: having a baby, treating breast cancer and managing diabetes.

Agencies Issue FAQs on Health Care Reform's SBC Requirement and on Mental Health Parity Implementation
The DOL, HHS, and IRS have jointly issued a new set of frequently asked questions (Part VII) addressing health care reform's summary of benefits and coverage (SBC) requirement plus mental health parity implementation (MHPAEA).   This new FAQ seems to confirm that the final regulations may be significantly different from the proposals and suggests that there may be relief as to the applicability date as well.  While no one can predict exactly what the final requirements will be and although general preparation for future compliance probably remains advisable, relying too closely on current proposals may not be the best use of time and resources. 

Also, plan sponsors and their advisors will want to study the mental health parity FAQs closely.  The agencies characterize these as "clarifying FAQs" and stress that they will continue to investigate complaints regarding the MHPAEA requirements and will take enforcement action for violations to ensure compliance (these requirements took effect with plan years beginning on or after July 1, 2010).

The full text is available at http://www.dol.gov/ebsa/faqs/faq-aca7.html.