Among other reforms, the Affordable Care Act (ACA) imposes three requirements on group health plans and group or individual health insurance coverage that are referred to as “patient protections.” These patient protections relate to the choice of a health care professional and requirements relating to benefits for emergency services, and became effective for plan years beginning on or after Sept. 23, 2010.
The ACA’s patient protections do not apply to grandfathered plans. Also, the rules regarding choice of health care professional apply only to plans that have a network of providers.
On June 28, 2010, the Departments of Health and Human Services (HHS), Labor and the Treasury issued interim final rules regarding these health plan coverage mandates.
Choice of Primary Care Provider
If a group health plan or group or individual health insurer requires a participant to designate a primary care provider, the participant must be able to choose any participating primary care provider who is able to accept the participant as a patient. This rule includes the designation of a pediatrician as the primary care provider for a child.
The plan must provide a notice informing each participant of the plan’s terms regarding primary care provider designation. The notice must be provided when a summary plan description (SPD) or other similar description of plan benefits is provided to a participant or beneficiary. The interim final rules include model language for this notice.
Plans that provide coverage for obstetrical and/or gynecological care (ob-gyn care) and require the patient to designate an in-network primary care provider may not require preauthorization or referral for a female participant seeking ob-gyn care. However, a plan may still require the ob-gyn provider to follow any policies or procedures regarding referrals, prior authorization for treatments and the provision of services.
The plan must inform each participant of these rules and must provide the notice when an SPD or other similar description of plan benefits is provided to a participant or beneficiary. Model language for this notice is included in the interim final rules.
The ACA places additional requirements on plans and health insurance issuers that provide hospital emergency room benefits. Plans and issuers must provide those benefits without requiring prior authorization, and without regard to whether the provider is an in-network provider.
Also, the plan or issuer may not impose requirements or limitations on out-of-network emergency services that are more restrictive than those applicable to in-network emergency services. Cost sharing requirements, such as copayments or coinsurance rates imposed for out-of-network emergency services, cannot exceed the cost-sharing requirements for in-network emergency services.
Despite this rule, out-of-network providers may balance bill patients, as long as the plan or issuer has paid a reasonable amount for the services. The interim final rules provide that a plan or issuer has paid a reasonable amount for services if it provides benefits for out-of-network emergency services in an amount equal to the greatest of the following three possible amounts:
- The amount negotiated with in-network providers for the emergency service furnished;
- The amount for the emergency service calculated using the same method the plan generally uses to determine payments for out-of-network services, but substituting the in-network cost-sharing provisions for the out-of-network cost-sharing provisions; or
- The amount that would be paid under Medicare for the emergency service.
Each of these three amounts is calculated excluding any in-network copayment or coinsurance imposed.
Also, other cost-sharing requirements, such as deductibles or out-of-pocket maximums, may be imposed on out-of-network emergency services if the cost-sharing requirement generally applies to out-of-network benefits.
On July 24, 2014, the Internal Revenue Service (IRS) released the Affordable Care Act (ACA)’s employer health plan affordability contribution percentage for 2015 in Revenue Procedure 2014-37.
The affordability of an employer’s plan is assessed in three situations: the shared responsibility penalty for applicable large employers, the individual mandate and the premium tax credit for purchasing health coverage through an Exchange.
For plan years beginning in 2015, employer-sponsored coverage will generally be considered affordable under both the pay or play rules and the premium tax credit eligibility rules if the employee’s required contribution for self-only coverage does not exceed 9.56 percent of the employee’s household income for the year.
However, applicable large employers using an affordability safe harbor under the pay or play rules may have to continue using a contribution percentage of 9.5 percent to measure their plan’s affordability due to the language of the safe harbors.
ACA Reporting Requirements for Employers and Health Plans
- Form W-2 reporting-CURRENTLY EFFECTIVE
- Applicable large employer health coverage reporting (Code § 6056)-delayed until 2015.
- Reporting of health coverage by health insurance issuers and sponsors of self-insured plans (Code § 6055)-delayed until 2015.
- Transparency in coverage reporting and cost-sharing disclosures-delayed until at least 2015.
- Quality of care reporting-delayed, TBD
Form W-2 Reporting—currently effective
ACA requires employers to report the aggregate cost of employer-sponsored group health plan coverage on their employees’ Forms W-2. The purpose of the Form W-2 reporting requirement is to provide information to employees regarding how much their health coverage costs.
In general, all employers that provide “applicable employer-sponsored coverage” must comply with the Form W-2 reporting requirement. Applicable employer-sponsored coverage is, with respect to an employee, coverage under any group health plan made available to the employee by the employer which is excludable from the employee’s gross income under Code section 106.
The Form W-2 reporting requirement is optional for small employers for 2012 and 2013. Small employers will continue to be exempt from the reporting requirement for later years, unless and until the IRS issues further guidance. An employer is considered a small employer if it had to file fewer than 250 Forms W-2 for the prior calendar year.
Large employers (those that file 250 or more Forms W-2) were required to comply with the reporting requirement beginning in 2012 for the Forms W-2 that were due by the end of January 2013.
IRS Increases Affordability Percentage Under Employer Mandate for 2015-Quick Facts
- Applicable large employers (ALEs) that do not offer affordable health coverage to their full-time employees may be subject to penalties, beginning in 2015.
- New IRS guidance increases the affordability percentage from 9.5 percent to 9.56 percent for 2015.
- ALEs should review whether their health plans comply with the increased percentage.
The Internal Revenue Service (IRS) has released drafts of the forms for reporting health insurance coverage offered by applicable employers and for reporting minimum essential coverage of self-insured plans by insurers and employers.
Employers are encouraged to report their coverage information in 2015 for the 2014 year although they aren’t required to do this until 2016 reporting for 2015. Employers and insurers of self-insured plans must report every year. They can put employer and individual mandates on one form and report to the IRS and the individuals named in the report. This way the IRS can confirm individuals have followed the individual mandate. Employers with more than fifty full-time employees must report on employer mandate by including all employees offered coverage in the prior year.
There are 2 forms employers and insurers must give the IRS, one that serves as a cover letter and the other providing data on the mandates.
- Submit Form 1094-B to the IRS only
- Submit Form 1095-B to the IRS and named individuals for insured coverage only
If you are interested in viewing the current drafts of these forms, you can find them online at IRS.gov/draftforms and the finalized forms will be posted later along with instructions for filling them out.