Employer Health Reform Issues Brief: Communicating Health Reform for the 2011 Plan Year
Smart first steps for employers
Group health plans must communicate applicable mandatory notices to employees related to specific provisions of the Patient Protection and Affordable Care Act. The mandatory notices, which must be provided by the first day of the plan year occurring after September 23, 2010, are:
- Grandfather Status – To maintain status as a grandfathered health plan, a written notice must indicate the plan believes it is a grandfathered health plan and provide contact information for questions and complaints.
- Lifetime Limit – Written notice must state that the lifetime limit on the dollar value of all benefits no longer applies and that an employee or dependent whose coverage ended by reaching the limit under the plan is again eligible to enroll in the plan. The notice must also specify a 30-day opportunity for these individuals to enroll.
- Dependent Coverage to Age 26 – A plan must provide written notice of a 30-day opportunity to enroll children who will now be eligible for coverage.
- Patient Protection – When applicable, written notice must indicate rights related to (1) choosing a primary care provider or pediatrician, or (2) obtaining obstetrical or gynecological care without prior authorization. This provision does not apply to grandfathered plans.
Model notices for all of the above are available from the Department of Labor at www.dol.gov/ebsa.
Key implication: Plan design
The need to include certain mandatory notices will be based on whether:
- The employer’s plan will maintain grandfathered status for the new plan year
- Lifetime limits are part of the current plan design
- Designation of a primary care physician and/or prior authorization for obstetrical or gynecological care are part of the current plan design
- Coverage for employees’ children is available under the current plan design but eligibility ends before age 26.
There are other Health Reform provisions that may require plan design changes for the 2011 plan year.
- Are preexisting condition exclusions for children part of the current plan design?
- Are any new preventive care services being covered and/or cost-sharing requirements being eliminated?
The answers to these questions will point to the communication approach – compliance or informational – to employees.
Smart first steps for employers to consider
Plan design: Determine grandfather status and review other plan provisions to determine which mandatory notices are required.
Communications: Creating a special section about Health Reform in annual enrollment materials for the 2011 plan year will help address the question employees are likely asking: How does Health Reform impact me? In addition to the six potential areas outlined above, there are also key employee communications related to changes in:
- Health Care Flexible Spending Account. Beginning in 2011, over-the-counter drugs will not be reimbursable. Employees should be advised to keep this in mind when determining their contribution amounts for 2011.
- Health Savings Account (HSA). If the employer offers an HSA, it will need to let employees know that the penalty for non-qualified HSA distributions is increasing to 20 percent from 10 percent beginning in 2011.
If any of the Health Reform provisions mentioned above are currently in compliance under the existing plan design, employers may take the opportunity to point this out to employees. For example, if the current plan has no lifetime limits, this positive fact can be stated. This approach not only educates employees about Health Reform, it educates them about their benefit coverage, too.
It’s important to note that 2011 is just the first step in a continuing sequence of communications employers will need to provide employees about Health Reform. Subsequent Issue Briefs will cover these requirements.
As used in this document, “Deloitte” means Deloitte Consulting LLP, a subsidiary of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries.