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June 2, 2010
The Patient Protection and Affordable Care Act of 2010
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After more than a year of highly charged partisan debate, the U.S. Congress has passed the most
sweeping overhaul of our healthcare system since Medicare. We at NGS understand the uncertainty and
anxiety being felt by our clients, as we all begin to understand the ultimate impact this legislation will have
on self-funded employer benefit plans.
In the coming months and years, federal agencies will be tasked with writing the detailed regulations that will ultimately dictate the true impact of reform on your business. NGS, through our own Government
Relations staff and our leadership position in influential trade associations like the Self-Insurance Institute
of America (SIIA), will serve as your eyes and ears as that process plays itself out. In the coming months,
we'll be providing you with regular communications on developments that may impact you and your
employees. Your Account Manager will also work with you on an individual basis to help you understand
how specific provisions of your plan are touched by this legislation.
For now, we'd like to provide you with a very high-level summary of the key components of the legislation that address employer-sponsored health plans. As they say, "the devil is in the details," and despite the fact that the new law is 2,300 pages long, we still don't have many of those. Here's what we do know:
Enacted Provisions Affecting Employer-Sponsored Health Plans - BEGIN AFTER 9/23/10:- Prohibition of lifetime limits - Prohibits all plans from establishing lifetime limits.
- Prohibition of annual limits - Allows restricted annual limits for "essential benefits" as defined by the Secretary of HHS. Starting in 2014, all plans will be prohibited from establishing annual limits on the dollar value of benefits.
- Prohibition of pre-existing conditions - Plans may not impose any pre-existing condition exclusions for dependent children.
- Coverage of preventive health services - Requires all plans to cover preventive services and immunizations, recommended by various Federal agencies, specifically including certain child preventive services and women's preventive care. Plans are prohibited from imposing any cost-sharing requirements.
- Dependent coverage - Requires all plans offering dependent coverage to make coverage available to dependents that are under the age of 26, unless they have access to coverage from another source. Plans are not required to cover dependents of dependents.
- Expanded beneficiary appeals availability - Requires plans to implement a process for internal and external appeals of coverage determinations and claims. Plans must comply with minimum standards for external appeals to be established by the Secretary of DOL.
OTHER PROVISIONS:
Allowable Prevention and Wellness Incentives:
Allows employers to discount up to 30% of the premium or cost-sharing requirements for participants in a workplace wellness program and provides discretion to HHS to permit discounts up to 50%.
Employer Responsibility:
Employers with more than 50 employees that do not offer coverage would be required to pay $2,000 for each full-time employee who receives the premium assistance tax credit. The first 30 employees would be exempt - e.g. a firm with 51 workers that does not offer coverage will pay an amount equal to 51 minus 30, or 21 times the applicable per employee payment amount. Additionally, large employers offering coverage that have at least one employee receiving a premium tax credit would be required to pay $3,000 per-employee receiving the subsidy.
Employee "Free Choice" Voucher:
The bill allows employees with access to an employersponsored plan, under certain income eligibility, to receive a voucher from their employer, equal to their employer's contribution ("free choice" voucher), to
purchase coverage through an Exchange participating plan. (Employers are required to provide notice to their employees to inform them of the existence of an exchange.) To be eligible for a voucher, an employee would have to meet specific criteria.
Automatic Employee Enrollment:
The bill requires employers with more than 200 employees to automatically enroll new full-time employees in coverage, and provide adequate notice for an employee to opt out of any coverage for which the individual or employee was automatically enrolled.
Excise Tax on Generous Plans:
Starting in 2018, the new law levies an excise tax of 40% on insurance companies and plan administrators for any health coverage plan that is above the threshold of $10,200 for single coverage and $27,500 for family coverage.
Fees on Self-Insured Plans:
In 2013, the plan sponsor of a self-insured plan is required to pay $2 multiplied by the average number of covered lives and from 2013-2019 the previous year's fee is multiplied by projected per-capita amount of National Health Expenditures. Plans are not required to pay fees beyond 2019.
Limitation on Health Flexible Spending Arrangements:
The bill limits the amount of contributions to health FSAs to $2,500 per year indexed by CPI starting in 2013.
Indirect Health Industry Fees Likely to Increase Plan Costs:
A fee of $28 billion on the pharmaceutical manufacturing sector will be phased in between 2011 and 2019. Starting in 2019 an annual fee of $2.8 billion will be imposed. The new law also
imposes, starting in 2013, an excise tax on medical device sales equal to 2.9% of the price of the device.
Sources: Information received from the Self-Insurance Institute of America and The Henry J. Kaiser Family Foundation
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The Patient Protection and Affordable Care Act of 2010 
