As we reported on June 28, 2012, the U.S. Supreme Court upheld the individual mandate under the Patient Protection and Affordable Care Act (the "ACA"). As a result of the Court's decision, the ACA remains in effect (with the exception of a provision relating to Medicaid expansion) and the reforms and coverage mandates applicable to group health plans will continue to become effective as scheduled. Employers must press forward with their compliance efforts as we approach open enrollment season for many plans.
In addition to confirming that their group health plans comply with each of the ACA's requirements that became effective previously (e.g., adult child dependent coverage mandate, prohibition on lifetime dollar limits on essential health benefits, prohibition on pre-existing condition exclusions for plan participants under the age of 19), employers should be focusing on the following:
1. Summary of Benefits and Coverage ("SBC") Requirements — Grandfathered and non-grandfathered group health plans must begin providing SBCs as follows:
- With respect to participants and beneficiaries who enroll or re-enroll through an open enrollment period, on the first day of the first open enrollment period that begins on or after September 23, 2012.
- With respect to participants and beneficiaries who enroll in coverage other than through an open enrollment period (e.g., newly eligible enrollees and HIPAA special enrollees), the first day of the first plan year that begins on or after September 23, 2012 (i.e., January 1, 2013 for calendar year plans).
For more information about the SBC requirements (including information about the new 60-day advance notice of mid-year material modification requirement), see our previous article titled "Agencies Release Final Regulations and FAQs Regarding Summary of Benefits and Coverage ("SBC") Requirements."
2. Restricted Annual Dollar Limits on Essential Health Benefits — For plan years beginning on or after September 23, 2012 but before January 1, 2014, no group health plan may impose an annual dollar limit on essential health benefits below $2,000,000. For plan years beginning on or after January 1, 2014, a blanket prohibition goes into effect whereby no annual dollar limits may be imposed on essential health benefits. These provisions of the ACA apply to both grandfathered and non-grandfathered group health plans. Note: Decreasing or imposing a new overall annual dollar limit may result in a loss of grandfathered status. Accordingly, applicable guidance should be carefully examined before decreasing or adding an overall annual dollar limit.
3. Preventative Health Services for Women — For plan years beginning on or after August 1, 2012, non-grandfathered group health plans must include certain in-network women's preventative services without cost-sharing. These services are in addition to the preventative services that were required to be provided without cost-sharing for plan years beginning on or after September 23, 2010 (e.g., mammograms and colonoscopies) and include the following:
- well-woman visits;
- gestational diabetes screening;
- human papillomavirus (HPV) DNA testing for women age 30 and older;
- sexually transmitted infection counseling;
- human immunodeficiency virus (HIV) screening and counseling;
- FDA-approved contraceptive methods and contraceptive counseling;1
- breastfeeding support, supplies and counseling; and
- domestic violence screening and counseling.
4. $2,500 Health Flexible Spending Arrangement ("FSA") Contribution Limit — For plan years beginning after December 31, 2012, cafeteria plans must limit employee salary reduction contributions to health FSAs to $2,500, as adjusted for inflation in future years. (Prior to the ACA, there was no statutory limit.) Cafeteria plans may be amended retroactively to comply with the new limit if the amendment is adopted on or before December 31, 2014 and provided the cafeteria plan is operated in compliance with the limit for plan years beginning after December 31, 2012. Note: This contribution limit does not apply to other FSAs (e.g., dependent care or adoption assistance) or a pre-tax premium option under a cafeteria plan.
1Certain religious employers are exempt from the requirement to cover contraceptive services. Certain non-exempt, non-grandfathered group health plans established and maintained by non-profit organizations with religious objections to covering contraceptive services may take advantage of an one-year enforcement safe harbor (i.e., until the first plan year beginning on or after August 1, 2013) by timely satisfying certain requirements set forth by the U.S. Department of Health & Human Services.