The Health Care Reform Blog

Dept. of Health & Human Services Issues Interim Final Regulations for Children to Age 26

The new health care reform law permits young adults to remain on their parents’ health care plan(s) until age 26.   Yesterday, the Departments of Health and Human Services, Labor, and Treasury have issued regulations implementing the Affordable Care Act by expanding dependent coverage for adult children up to age 26.

Key elements include the following:

• Plans and issuers that offer dependent coverage must offer coverage to enrollees’ adult children until age 26:
• even if the young adult no longer lives with his or her parents
• is not a dependent on a parent’s tax return, or
• is no longer a student. 
• there is a transition for certain existing group plans that generally do not have to provide dependent coverage until 2014 if the adult child has another offer of employer-based coverage aside from coverage through the parent
• the new policy providing access for young adults applies to both married and unmarried children, although their own spouses and children do not qualify.
• The Rule is Effective for Plan or Policy Years Beginning On or After September 23, 2010.  Secretary Kathleen Sebelius called on leading insurance companies to begin covering young adults voluntarily before the implementation date required by the Affordable Care Act (which is plan or policy years beginning on or after September 23^rd).  Early implementation would avoid gaps in coverage for new college graduates and other young adults and save on insurance company administrative costs of dis-enrolling and re-enrolling them between May 2010 and September 23, 2010.  Over 65 companies have responded to this call saying they will voluntarily continue coverage for young adults who graduate or age off their parents’ insurance before the implementation deadline.  The Department of HHS Website has a comprehensive list of those insurance companies that have agreed to the early implementation.
• All Eligible Young Adults Will Have A Special Enrollment Opportunity.  For plan or policy years beginning on or after September 23, 2010, plans and issuers must give children who qualify an opportunity to enroll that continues for at least 30 days regardless of whether the plan or coverage offers an open enrollment period.  This enrollment opportunity and a written notice must be provided not later than the first day of the first plan or policy year beginning on or after September 23, 2010.  The new policy does not otherwise change the enrollment period or start of the plan or policy year.
• Same Benefits/Same Price.  Any qualified young adult must be offered all of the benefit packages available to similarly situated individuals who did not lose coverage because of cessation of dependent status.  The qualified individual cannot be required to pay more for coverage than those similarly situated individuals.

See the following links:

• Press Release by Secretary Kathleen Sebelius: A Long Overdue Change to Help Young Adults Get Coverage 
  
• Department of Health and Human Services FactSheet: Young Adults and the Affordable Care Act: Protecting Young Adults and Eliminating Burdens on Families and Businesses  
  
• Department of Health and Human Services Regulations: Interim Final Rules for Group Health Plans and Health Insurance Issuers Relating to Dependent Coverage of Children to Age 26 under the Patient Protection and Affordable Care Act  (OK, I know it's 67 pages.... read the FAQ's below!)
• Department of Health and Human Services: FAQ's

IRS Issues Rule on Tax Treatment of Health Care Benefits for Children Under Age 27

Under the new health care reform law, health coverage provided for an employee's children under 27 years of age is now generally tax-free to the employee, effective March 30, 2010.

The IRS recently announced, in Notice 2010-38, that changes will now allow employers with cafeteria plans to permit employees to begin making pre-tax contributions to pay for this expanded benefit.  This is effective immediately.

Generally, employees who have children who will not have reached age 27 by the end of the year are eligible for the new tax benefit from March 30, 2010, forward, if the children are already covered under the employer’s plan or are added to the employer’s plan at any time. For this purpose, a child includes a son, daughter, stepchild, adopted child or eligible foster child. This new age 27 standard replaces the lower age limits that applied under prior tax law, as well as the requirement that a child generally qualify as a dependent for tax purposes.

The notice says that employers with cafeteria plans may permit employees to immediately make pre-tax salary reduction contributions to provide coverage for children under age 27, even if the cafeteria plan has not yet been amended to cover these individuals. Plan sponsors then have until the end of 2010 to amend their cafeteria plan language to incorporate this change.

In addition to changing the tax rules as described above, the Affordable Care Act also requires plans that provide dependent coverage of children to continue to make the coverage available for an adult child until the child turns age 26. The extended coverage must be provided not later than plan years beginning on or after Sept. 23, 2010. The favorable tax treatment described in the notice applies to that extended coverage.

Follow this link to IRS Notice 2010-38 - Tax Treatment of Health Care Benefits Provided With Respect to Children Under Age 27

New Reporting Requirements for Employers Under Health Care Reform

The new legislation poses several new reporting requirements upon employers.  Here are a few of them:

1  As of January 1, 2011, employers will be required to report the value of medical benefits, dental, vision, and supplemental insurance coverage on the Form W-2 that is provided to each employee annually.

2.  As of March 23, 2012, group health plans will be required to provide participants with a uniform summary of benefits and coverage.  Interestingly, the summary must be written in a “culturally and linguistically appropriate manner.”  I am not sure what that really means, but it sure sounds cool.  Failure to provide this summary will result in a $1,000 fine per participant.   We can expect standards in this area to be established by this time next year.

3.  In 2014, employers with 50 or more employees will have to file annual reports containing

1) The employer’s name and employer identification number,

2) A certification as to whether the employer offers to its full-time employees (and their dependents) the opportunity to enroll in minimum essential coverage under an eligible employer-sponsored plan,

3) The number of full-time employees for each month during the calendar year, and…

4) Tune up your HR technology systems for this one: the name, address and TIN of each full-time employee during the calendar year and the months during which such employee was covered under a health plan. In addition, the employer must provide a written report to each employee listed in that report that includes the name and contact information for the person filing the return and the information required to be shown on the return for such employee.

Recent COBRA Extension and Health Care Reform

On my StrategicHRBlog, I posted an update to the changes to the COBRA subsidy as a result of the recent COBRA Extension Act signed by President Obama.  So what does this have to do with health care reform?  If we have to keep enacting legislation to provide a subsidy for people to help them pay for their health insurance when they are unemployed, isn't there a fundamental problem to begin with?  Some will say health insurance is too expensive.  Some will say, it shouldn't be tied to employment.  Some will say, it's the recession.  Some will say it's national health care in disguise.  Others with say, thank goodness.

What every is said, I hope the new health reform law sorts this all out.

Nursing Mothers Entitled to Breaks PPACA

One of the most significant changes to the FLSA as a result of the PPACA is that the FLSA is now amended to require that employers, with more than 50 employees, provide breaks for female employees to express their milk, and to provide a location other than a restroom in which to do so. 

The new requirement provides that nursing mother can take breaks pretty much any time they feel they need for the first year after the child’s birth.  And, these breaks are paid when they occur during work time.

The exception for small employers would apply when the employer felt it could not comply with the requirements would impose undue hardship on the employer’s business.

It should be interesting to see how this interpretation of undue hardship goes.  And, yes there are still a lot of unanswered questions here.

Comprehensive Resource for Health Reform

The most comprehensive resource I have found on health care reform so far is the special site that the Kaiser Family Foundation has set up.  The Kaiser Health Reform Gateway contains an enormous amount of information on the new in usable format including:

• A summary of the law
• A timeline of the effective dates of provisions
• A side-by-side comparison of the various proposals
• Online tools and interactive calculators.

The Kaiser Family Foundation has long been a trusted source of information about benefits, economic issues and social policy in this space.

Welcome to Diane Pfadenhauer's Health Care Reform Blog

As an employment lawyer and HR pro for almost 25 years, I know when something BIG comes along.  Health Care Reform is REALLY BIG.  There will be regulations, policies, and compliance issues galore.  This site is intended to be a place for free, accessible information publicly available on health care reform - for employers.