Health Care Reform:  Upcoming HR Implications

The landmark health care reform bills that were passed this year will undoubtedly affect how businesses provide and administer health care benefits to their employees. This leads to substantial implications for human resources professionals including everything from compliance to reporting to specific employee coverage.

Although many provisions of the legislation will not take effect until 2014, the employer requirement to provide rest breaks and accommodations for nursing mothers takes effect immediately. There are also a number of requirements that will take effect 90 days after enactment, on Sept. 23, 2010, and more following on Jan. 1, 2011. Because of this, HR professionals must understand the coming changes and be prepared to communicate those that affect employees in the coming months:

Changes in Upcoming Months

• Available tax credits for small businesses to assist in premium cost
• Access to high-risk health insurance pool for those with pre-existing conditions
• Prohibitions on lifetime benefit spending limits and restrictions on annual limits
• Prohibition on rescissions of coverage, except in cases of fraud or intentional misrepresentation
• Certain care required to be covered with no cost-sharing requirements under new plans, including preventive care
• Allowing dependents to remain on parents’ policies up to age 26
• Elimination of pre-existing condition exclusions for children
• Reinsurance program for early retirees and their spouses, surviving spouses and dependents
• Nondiscrimination rules regarding highly compensated individuals applicable to new fully-insured plans
• New appeals process required for new plans
• Changes to Medicare and Medicaid

Changes as of January 1, 2011

• Ability to enroll employees in the CLASS Act federal long-term care insurance
• Employer requirement to report the value of health benefits on W-2s
• Penalty tax on individuals for spending HSA or Archer MSA funds on non-qualified medical expenses increases to 20 percent
• Over-the-counter medications no longer a qualified medical expense for FSAs, HSAs, HRAs or Archer MSAs without a prescription, unless insulin
• Grants for small employers that establish wellness programs
• Changes to Medicare and Medicaid

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Implications on Wellness Programs

Under the recently passed health care reform legislation, employers can offer increased incentives to employees for participating in a workplace wellness program or meeting certain health status targets starting in 2014. Grants will be made available for small businesses who implement comprehensive workplace wellness programs starting in 2011, and technical assistance will be made available to companies of any size.  

Wellness Incentive Increases

Existing wellness regulations under HIPAA permit wellness incentives of up to 20 percent of the total premium, as long as the program meets certain conditions. Under the new legislation, the potential incentive increases to 30 percent of the premium in 2014 for employee participation in the program or meeting certain health standards. Employers must offer an alternative standard for those employees whom it is unreasonably difficult or inadvisable to meet the standard. Following a governmental study on wellness programs, the incentive may be increased to as much as 50 percent.

Small Employer Grants

Under the new legislation, there will be a five-year, $200 billion program for implementing comprehensive workplace wellness initiatives starting in 2011. Grants will be available to eligible employers who provide their employees with access to a new workplace wellness program. Eligible employers include businesses that employ fewer than 100 employees who work 25 hours or more per week and did not have a workplace wellness program as of March 23, 2010. To be eligible for the grants, wellness programs must be made available to all employees and include:

• criteria related to health awareness including health education, preventive screenings and health risk assessments;
• efforts to maximize employee engagement;
• initiatives to change unhealthy behaviors and lifestyle choices; and
• a supportive environment at the workplace including workplace policies to promote healthy eating, increased physical activity and improved mental health

Technical Assistance

Companies of any size will be eligible for access to technical assistance, consultation, resources and other tools to help evaluate, analyze and monitor their wellness program set to be made available no later than two years after the date of enactment.