ACA Deadlines Are Looming, But Employers Still Lack Clear-Cut Guidelines, Say Experts


At a recent webcast entitled How Will the Election Impact the Affordable Care Act?, sponsored by the International Foundation of Employee Benefit Plans, presenters Charles K. Kerby III and Kathryn L. Bakich highlighted upcoming deadlines based on the Patient Protection and Affordable Care Act (ACA). Some of these deadlines are the March 23, 2013, date for employers to send notices about state exchanges to employees; the recently-extended Dec.14, 2012, for states to submit to the government plans for state-based exchanges; and the Oct. 1, 2013, implementation and open enrollment start date for state exchanges.

The presenters pointed out that the balance of power in Washington after the recent elections is essentially unchanged, with a Democrat in the White House, and with Republicans still controlling the House (although with a loss of some seats) and Democrats still controlling the Senate. This means it is full steam ahead for ACA implementation, and its impact on employers depends on major decisions that have to be made by state governments, such as whether or not a particular state will run its own health care exchange, and whether or not they will accept the ACA’s Medicaid expansion provisions.

Lack of clarity. However, a pervasive theme of the presentation was the dearth of clarity and guidance from the federal government so far on ACA requirements. It is unclear from a reading of the ACA, they said, how the term “full time employee” should be defined, and what constitutes “minimum essential coverage.” Furthermore, the presenters questioned how collective bargaining would factor into resulting equations, pointing out that, unlike the Massachusetts Connector health care plan, there is no exception in the ACA for collectively bargained employees.

Furthermore, with regard to how essential health benefits (EHB) will ultimately be defined, little detail has been provided, Kerby pointed out. For example, he explained that for prescription drugs, there is no formulary mentioned, and for rehabilitative and habilitative services, it is unclear how many visits per year would be covered.

Kerby added that the HHS has “punted” to the states the option of selecting EHB plans for 2014 and 2015, and, of the 23 preliminary or final EHB benchmarks the states had come up with by the webcast date, 17 had chosen to use the largest plan from among their top three state small group insurance products (which Kerby said would be a little more affordable and less generous), three had decided to use a state employee plan, and three have chosen an HMO plan. Ten are reported to be awaiting federal guidance. Also, current regulations on risk adjustment are very vague, he said.

Watering down of ACA is possible. Kerby and Bakich cautioned that various ACA reforms and deadlines may be altered, depending on bargaining pertaining to the much talked-about fiscal cliff. The IRS estimates that the U.S. will probably hit the debt ceiling (the current debt limit is $16.394 trillion) in January or February of 2013, and a “grand bargain” by Washington politicians to avoid that by increasing revenue and reducing annual deficits and cumulative debt could mean that premium subsidies will shrink, to apply, possibly, only to those earning 300 percent of the federal poverty level (FPL), as opposed to the current 400 percent (Bakich pointed out that 70 percent of families nationwide are below the 400 percent poverty level), and there may be less generous Medicaid eligibility, perhaps to cover only those earning up to 75 percent of the FPL.

Possible extensions. In addition, implementation of ACA provisions that were supposed to kick in at the beginning of 2014 may be extended to 2015, and it is possible there would be a cap added to the tax exclusion for employer-provided health coverage. The auto-enrollment effective date has already been delayed to 2015, at the earliest, Kerby pointed out. Also, premiums may currently be based on age, to a degree of three to one, and the insurance industry is pushing for a change from that limit to a degree of five to one.

An extension of deadlines would seem realistic at this point. Right now, the presenters reminded audience members, under the ACA as already-issued guidance now stands, the Department of Labor, IRS and the Department of Health and Human Services (HHS) have to issue, update, and refine guidance on group health plan mandates; the HHS and the states will have to implement insurance reforms and Medicaid expansion by Jan. 1, 2014; and the IRS has to implement the cost effectiveness research fee (plan sponsors and insurance carriers must pay to fund a short-term program on medical cost-effectiveness research, based on the number of covered lives for plan/policy years ending after Sept. 30, 2012, and before Oct. 1, 2019) by July 31, 2013, and implement the premium tax credit, large employer penalties and the individual mandate by Jan. 1, 2014.

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