From the HR Pros of the HR Support Center
Out of all the health care reform provisions and requirements of the Patient Protection and Affordable Care Act (PPACA), what are the top three action items your company should focus on?
The Supreme Court ruling in the summer of 2012 made many aspects of health care reform clearer for small business owners. For those of you who have been sitting on the sidelines hoping something major will change, now is the time to get in the game. There are many provisions that are already in effect, and several that are coming soon that are important to be paying attention to right now.
The three most important to take action on are medical loss ratio rebates, the Summary of Benefits and Coverage and W-2 reporting on the value of employer-provided health care coverage.
1. Medical loss ratio rebates
Health insurance companies are now required to spend at least 80% of their premiums on medical expenses. If they miscalculate or give doctors and other providers an incorrect amount, they must rebate the money: this is referred to as a medical loss ratio (MLR) rebate. If your company receives a MLR rebate, you are responsible for sharing the refund with employees who originally paid into the premium. It’s best to look to your benefits provider for guidance on how to manage MLR rebates.
2. Summary of Benefits and Coverage (SBC)
All employers with group health plans must provide new enrollment documentation to plan participants. These are required for the first open enrollment taking place on or after September 23, 2012. Penalties of up to $1,000 per participant per violation may apply if an employer fails to provide an SBC.
SBCs must be provided for each type of benefits package you offer—for example, if you offer an HMO and a PPO, each would need a separate SBC. They must also be within four pages double-sided. You can find SBC templates in the HR Support Center or on the Department of Labor website , or your benefits provider may supply SBCs for you.
Another requirement for SBCs is the non-English language translation assistance requirement. For employers who have employees who live in a county where 10% or more of the population are literate in the same non-English language, they must provide details with the SBC on how employees can get services for translation or support in that language. Such employers must also provide a version of the SBC in that language upon request. Please note that some differing state requirements may apply. Learn more about the SBC.
3. W-2 reporting on value of employer provided health care coverage
Large employers (more than 250 employees) are required to report the total cost of employer provided health care coverage, including the portion paid by the employer and the portion paid by the employee, in Box 12 of the W-2. Employers who filed 250 or fewer form W-2s in the previous calendar year are not required to follow this guidance, but may choose to do so. This reporting is for informational purposes only, so you will not be taxed on this coverage.
As more PPACA provisions become clear, there will be more information to come. Contact an HR or benefits professional if you have questions.
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This article is intended as a general overview, and should not be considered legal advice.
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