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Health Reform Timeline

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Understand what's changing when with Blue Shield's Health Reform Timeline.

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Employer Responsibilities

Changes mandated by health reform are distributed between requirements for health carriers and requirements and benefits for employer groups.

Requirements and benefits for large business employers include:

Information about health reform benefits for your employees can be found on our Individual and Families page.

Employer Shared Responsibility Provisions

In the Affordable Care Act (ACA), there are three provisions effective in 2014 that are the responsibility of the employer. While Blue Shield can provide general information about these provisions, Blue Shield cannot provide employers or brokers with specific guidance. Please download our employer responsibility Frequently Asked Questions to answer many of the questions you may have regarding these provisions. The three employer responsibility provisions include:

  • Play-or-Pay: Starting on January 1, 2014, the Affordable Care Act (ACA) will require “Applicable Large Employers”–-companies that have employed an average of 50 or more full-time and/or full-time equivalent (FTE) employees during the preceding calendar year—to offer affordable health plan coverage to full-time employees (and coverage to their dependents) or face a penalty if an employee receives federally subsidized coverage from Covered California (aka: The Exchange). Both Fully Funded and Self-Insured clients are impacted by Play-or-Pay.

    In order to allow employers sufficient time to extend coverage to dependents, employers will not be subject to penalties in 2014 for failing to offer dependant coverage if it takes steps in 2014 towards complying with this requirement.

  • Tax Reporting by Applicable Large Employers: For tax year 2014, Applicable Large Employers must file a return with the IRS that reports the terms and conditions of the health care coverage provided to the employer’s full-time employees for the calendar year. In addition, written statements must be provided to employees showing the information reported to the IRS. The first information returns will be filed in 2015. The IRS will use this information to verify employer-sponsored coverage and administer ACA’s penalty provisions for Applicable Large Employers.
  • Employer Exchange Notice to Employees: Federal regulators have delayed a health care reform law provision requiring all Applicable Large Employers to provide all employees with a written notice about health insurance Exchanges (known in our state as Covered California). The new deadline for distributing these notices will be late summer or fall of 2013, which will coordinate with the open enrollment period for the Exchange. It's expected that regulators will provide model, generic language on their website for employers to download. 

The employer exchange notice must include:

  • A description of the state health insurance Exchange, including contact information for the Exchange;

  • A statement that employees may qualify for a tax credit to help pay for Exchange coverage if the employer’s plan does not provide minimum value (i.e., if the plan’s share of benefit costs does not equal or exceed 60% of the costs of coverage); and

  • A statement regarding the financial and tax consequences of purchasing coverage through the Exchange (i.e., that the employee will forego the employer-paid portion of the premium (if any) and the tax exclusion for the employer-sponsored coverage).

For more information regarding the employer exchange notice, download the FAQs that have been prepared by the Departments of Labor, Health and Human Services (HHS), and the Treasury.

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Affordable Care Act Taxes

The Affordable Care Act (ACA) requires  that certain fees be collected in order to fund certain aspects of health reform. The fees are summarized below: 

Insurer Fee

What:  An annual fee apportioned among health insurers based on a ratio designed to reflect their relative market share on the U.S. health insurance market. This fee is imposed on fully insured plans only.

Who:   Fully insured plans.

When: Effective January 1, 2014.

Transitional Reinsurance Fee

What:  An annual fee apportioned among insurers and self-funded employers designed to provide catastrophic coverage to carriers in the individual market exchange.

Who:   Insurers and self funded groups.

When: Effective January 1, 2014.

For Blue Shield plans:

Employer Groups of 51 or more employees:
Blue Shield’s Core Markets business began collecting the ACA taxes when required with renewals and new business documents generated on February 1, 2013 and thereafter.

Self-Funded Employers:
For self-funded customers, plan sponsors are responsible in remitting the Transitional Reinsurance Fee to the government. Should federal regulators issue new regulations and other regulatory guidance, Blue Shield will accommodate any additional changes required by the ACA

For more information, please download our ACA Taxes Fact Sheet (PDF, 58KB), and our ACA Taxes Frequently Asked Questions (PDF, 97KB).

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Medical Loss Ratio (MLR)

The provision - Health reform requires health carriers to spend a certain percentage of premium revenue on medical expenses. This percentage is determined from a calculation called the Medical Loss Ratio (MLR) where medical expenses must be a certain percentage of premiums. For individuals and small group health plans – carriers must spend no less than 80% of premium revenue on medical expenses. For large groups – carriers must spend no less than 85% of premium revenue on medical expenses. If carriers do not meet the required MLR, they will be required to pay rebates to employers and individuals.

For Blue Shield plans - Blue Shield reported our 2011 MLR on June 1, 2012.  For more information on MLR and rebate eligibility, please see MLR: Why It Matters to You.

For more information, please see our Frequently Asked Questions  (PDF, 69KB).

Summary of Benefits and Coverage

The provision - Health Reform requires that all health carriers make available uniform coverage documentation, intended to enable consumers to more easily understand the coverage they already have and/or help them make “apples-to-apples” comparisons of available options when purchasing new coverage. Requirements include:

  • Summary of Benefits and Coverage (SBC) – benefit summary describing plan benefits, cost sharing and limitations.

  • Coverage Examples - included along side the SBC, illustrating customer costs based on a specific plan’s benefits for common medical scenarios.

  • Glossary – a standard document with definitions for common medical and insurance terms.

  • Carriers are also required to notify members whenever there is a material modification to a benefit, known as a Notice of Modification (NM).

For Blue Shield plans - A distinct SBC form has been developed for every plan offered by Blue Shield. Blue Shield of California will be creating the SBC documentation, including coverage examples.

For more information, please see our Frequently Asked Questions  (PDF, 69KB).

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Non-Discrimination Rules

The provision - This provision prohibits fully-insured employer groups from offering discriminatory coverage to their employees, officers, and shareholders. This means that highly-compensated individuals in the company cannot be offered coverage that is not available to a significant number of other employees.

Although this mandate when into effect on September 23, 2010, the government has suspended enforcement indefinitely until regulations are finalized.

This mandate does not apply to self-funded (ASO) employer groups.

For Blue Shield plans - Blue Shield refers to these plans as “Executive Medical Plans” or “Executive only carve-outs”.  Blue Shield ceased selling Executive Medical Plans and carve-outs on September 23, 2010, and will continue that policy while waiting for the final regulation on this mandate.

W-2 Reporting

The provision - Small group, large group, and self-funded employers are required to calculate and report the aggregate cost of applicable employer-sponsored coverage on their employees' W-2 forms. The reporting requirements began with the 2012 tax year for employers who issue 250 or more W-2’s. 

The government has exempted employer groups that issue fewer than 250 W-2s from the W-2 Reporting requirements of the Affordable Care Act .Prior to the IRS exemption notice, small and mid-sized employers would have been required to report the aggregate costs of benefits on their employees’ form W-2s beginning in 2013. This requirement is now pending further guidance from the IRS

For Blue Shield plans – Employers are responsible to implement this provision. Blue Shield will not be sending any additional health benefit information to groups beyond the end of year summaries which we currently issue.

Due to the complexity of the calculation methods, we also recommend that employers seek guidance from their attorneys, tax professionals, and payroll vendors in the calculation of reportable benefits.

Comparative Effectiveness Fee

What:  A private, Nonprofit Patient-Centered Outcomes Research Institute to develop evidence on the effectiveness and appropriateness of medical treatments. This research is supported in part by a fee imposed on both insured and self-insured health plans.

Who:  Individual and Family, Small and Large Group plans, both fully insured and self funded.

When: Effective October 1, 2012 – October 1, 2019. 

Blue Shield impact: Blue Shield is paying this fee on behalf of all fully   funded plans.  Self insured plans are responsible to pay the fee themselves.

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