Health Care Reform - The Impact on Employers and Employer-Sponsored Health Plans

After the U.S. Supreme Court decision and the re-election of President Obama, the Affordable Care Act is certain to be a reality for many years to come. Since its inception in 2010, the Affordable Care Act has dramatically impacted health plans, insurers and health care providers. That impact will only grow in the coming years. The Affordable Care Act brought immediate changes for dependent children enrollment, lifetime and annual maximums, rescission of coverage and pre-existing conditions. In addition, non-grandfathered health plans were required to provide additional benefits, such as first dollar preventive care coverage, emergency room parity and external appeal rights. While grandfathered health plans could avoid some of these new provisions, they were restricted from making many financial and benefit changes. As a result, one of the critical initial decisions for many employers following the passage of the Affordable Care Act was whether to structure their health plan to remain a “grandfathered” health plan. In the years since, the tide has turned to favoring non-grandfathered plans, as employers and sponsors chose financial and design flexibility, over the cost of providing the additional benefits. 

In 2014, the Affordable Care Act will unleash another dramatic shift in health coverage, as well as a monumental decision for employers. The individual and employer penalty provisions – the linchpin of the Affordable Care Act – will take effect. Beginning January 1, 2014, a new penalty tax applies to large employers who fail to offer health coverage to their full-time employees. For those large employers who do offer coverage to their full-time employees, a separate penalty tax applies if the coverage that is provided is not affordable or does not meet minimum value standards. Beginning in 2013, employers must determine how the employer and individual penalty provisions affect them and their health plans. Our health and welfare team has prepared a briefing on the employer penalty issues. This briefing includes an hour-long presentation, which can be accessed here.

Even though the employer penalty does not apply to certain small employers, they will be impacted by changes in the small group market and the ability to purchase coverage through the government exchanges. At the same time, the state and federal exchanges are projected to be operational for enrollment in individual policy coverage effective January 1, 2014. Lower income individuals who do not have access to employer coverage that is both affordable and provides minimum value will be eligible for tax credits to pay for health coverage purchased through the Exchange.  

The bottom line is that all employers – small and large—will be impacted in 2014 by the changing structure of the health care market and their employees’ changing expectation of how health coverage will be provided. Employers and plan sponsors will need to evaluate and revise their health plan design to address these changes. At a minimum, large employers will need to revise their health plans to comply with the affordability and minimum value standards required by the employer penalty. Changes in eligibility, benefits, wellness initiatives, benefit options and premiums will all likely be necessary.

In addition to the employer penalty provisions, a number of other Affordable Care Act changes take place over the next few years – including reinsurance fees, the patient-centered outcome research fee, the elimination of all pre-existing conditions, and coverage for clinical trials. In 2018, the penalty tax on “Cadillac” health plans also takes effect. The government continues to release regulatory guidance which shapes (and in some cases changes) how these provisions will apply to employers and insurers.    

Listed below is a compilation of our health and welfare team’s alerts, publications, and webinars. These links will be updated periodically, so please check back for the latest developments.

Knowledge Center

DateTitleKnowledge Type
19 June 2013
Health and Welfare Update and Planning for 2014 Events
31 January 2013
2013 Health & Welfare Seminar | What Every Employer Needs to Know About the Employer Penalty Taxes Under Health Care Reform Podcasts
04 October 2012
Kilpatrick Townsend Health and Welfare Team Files HHS Comments Concerning the Application of the Reinsurance Fee to Employer Group Health Plans
Source: Kilpatrick Townsend & Stockton LLP
Other Publications
19 July 2012
Health and Welfare Planning: ACA Implementation Continues Podcasts
09 July 2012
What’s Next for Employers After Supreme Court Upholds Affordable Care Act
Source: Corporate Compliance Insights
Articles
10 May 2011
2012 Health and Welfare Planning: Health Reform - One Year Later Podcasts
01 January 2011
Nondiscrimination Rules Delayed For Insured Health Plans Legal Alerts
07 September 2010
Reimbursing OTC Drugs and Applying for Mini-Med Waivers Legal Alerts
27 August 2010
The Next Generation of Appeals Procedures – New Federal External Review Process and Model Notices Legal Alerts
27 July 2010
Internal Appeals and External Review Processes under the Affordable Care Act Legal Alerts
19 July 2010
Preventive Care Rules under the Affordable Care Act Legal Alerts
24 June 2010
Affordable Care Act Patient Bill of Rights Guidance Application to Non-Grandfathered and Grandfathered Plans Legal Alerts
16 June 2010
Will Grandfathered Health Plans Become An Endangered Species? Legal Alerts
27 May 2010
Treasury’s Qualifying Therapeutic Discovery Project Credit Program Provides Short Window For Application Legal Alerts
19 May 2010
Government Resource Links
Source: Kilpatrick Stockton LLP
Other Publications
17 May 2010
Health Care Reform – Availability Of Coverage For Adult Children Legal Alerts
14 May 2010
Congress Adds New Investment Tax Credit for Qualified Therapeutic Drug Products Legal Alerts
13 May 2010
Health Care Reform Chart Other Publications
11 May 2010
Early Retiree Reinsurance Program - HHS Releases Interim Final Regulations Legal Alerts
29 April 2010
2011 Health and Welfare Planning Other Publications
29 April 2010
2011 Health And Welfare Planning: Employer Compliance With Health Care Reform And Other Key Developments Events
29 April 2010
2011 Health And Welfare Planning: Employer Compliance With Health Care Reform And Other Key Developments Podcasts
30 March 2010
Health Care Reform – Impact On Employers And Employer-Sponsored Health Plans Legal Alerts
KTS ERISA Corner Blog Blogs

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