As a service to our members, AGC will be updating this website page regularly to provide employers in the construction industry with up-to-date information about the implementation and impacts of the sweeping health care reform legislation recently passed by Congress.

• Help Shape Health Reform in Oregon
   

• Health Care Reform Toolkit for Construction Employers
   

• Agencies Issue Guidance on Grandfathered Plans
   

• Legislation Enacted: Now What?
   

• AGCA Webinar: What Impact Will the New Health Care Law Have on Construction Contractors?
   

• Health Care Provisions Important to the Construction Employer Community
   

• Willis Webinar: Federal Healthcare Reform – What's Next? Focus on 2010 and 2011

 

Help Shape Health Reform in Oregon

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The Oregon Health Authority is developing a plan to lower costs, increase access, and improve the quality of health care.

One of the key parts of the plan is the health insurance exchange, which will serve as a central marketplace to purchase health insurance available to all Oregonians.

Come learn more about the plan for health and health care improvements in Oregon and tell us how the health insurance exchange will work best for you.

Join the public forums from 6–8 pm at these locations:

Corvallis: Wednesday, September 1 Benton County Fairgrounds 110 SW 53rd Street Corvallis, Ore.	Portland: Monday7, September 13 University Place – Columbia Falls Room 310 SW Lincoln Street Portland, Ore.
Baker City: Tuesday, September 7 Baker County Library 2400 Resort Street Baker City, Ore.	Medford: Wednesday, September 15 Red Lion Inn – Crater Lake Room 200 N Riverside Avenue Medford, Ore.
Florence: Thursday, September 9 Florence Events Center 715 Quince Street Florence, Ore.	Bend: Thursday, September 16 Central Oregon Community College Campus Center Building – Wille Hall 2600 NW College Way Bend, Ore.

The Oregon Health Authority is a leader in the effort to innovate for quality and affordable health care in Oregon, but putting the care back in health care, improving the health of Oregonians, and working to lower the cost of care so it is affordable and accessible to everyone.

If you’re unable to join us at a forum, visit them at www.oregon.gov/oha to learn about other options for submitting your input.

Health Care Reform Toolkit for Construction Employers

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The new health care law changes health care as we know it. In the coming years there will be many adjustments that construction companies need to be aware of in order to comply with the new law. In order to stay up-to-date with regard to employer responsibilities and the latest news as implementation unfolds, click AGC of America’s new Health Care Toolkit.

Agencies Issue Guidance on Grandfathered Plans

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Willis EB News Flash June 14, 2010

The new health care reform law specifies that certain group health plans that existed on March 23, 2010 (the date of enactment) are exempt from complying with certain provisions of that law. While it was clear that this “grandfathered” status could continue indefinitely, nothing in the law addressed whether changes to a health plan would cause a plan to lose grandfathered status and, if so, what types of changes might be made without threatening that status. Earlier today, the three federal agencies responsible for implementing this provision issued interim final regulations that answer this and other questions about the grandfather provision. A fact sheet explaining the regulations is also available.

BACKGROUND

Grandfathered plan status is important this year because it determines whether a plan must comply with certain provisions that are effective for plan years starting on or after September 23, 2010. Grandfathered plans are exempt from complying with the following health care reform provisions:

• Requirement for coverage of certain preventive health services and immunizations without cost-sharing

• Nondiscrimination standards apply to insured health plans (self-insured plans continue to be subject to prior nondiscrimination rules)

• Requirements to provide patient protections regarding emergency services, choice of primary care provider, and access to gynecological/obstetric services

• Requirement for internal and external appeals processes

It is important to note that the compliance exemptions for grandfathered plans relate primarily to insurance reform provisions like those listed above. Other provisions in the health care reform legislation that affect employer plans, including tax law changes and the employer and individual mandates, apply equally to grandfathered and non-grandfathered plans. In addition, several insurance reform measures apply to both grandfathered and non-grandfathered plans (e.g., coverage for adult children until age 26 and no lifetime dollar maximums). Grandfathered plan status will also be important when a second group of insurance reform provisions become effective in 2014 (see Willis Human Capital Practice Alert , Vol. 3, No. 3, “First Things First: Health Care Reform in 2010 and 2011”).

GAINING AND LOSING GRANDFATHERED STATUS

The interim final regulations confirm that a plan – other than a collectively bargained plan – is grandfathered if it was existence and covered at least one individual on March 23, 2010. The interim final regulations also explain which collectively bargained plans are grandfathered plans. The largest part of the new rules is devoted to the many ways in which a grandfathered plan may lose that status. The fact sheet on the grandfather rules summarizes those ways as follows:

• Cannot Significantly Cut or Reduce Benefits. For example, if a plan decides to no longer cover care for people with diabetes, cystic fibrosis or HIV/AIDS.

• Cannot Raise Co-Insurance Charges. Typically, co-insurance requires a patient to pay a fixed percentage of a charge (for example, 20% of a hospital bill). Grandfathered plans cannot increase this percentage.

• Cannot Significantly Raise Co-Payment Charges. Frequently, plans require patients to pay a fixed-dollar amount for doctor’s office visits and other services. Compared with the copayments in effect on March 23, 2010, grandfathered plans will be able to increase those co-pays by no more than the greater of $5 (adjusted annually for medical inflation) or a percentage equal to medical inflation plus 15 percentage points. For example, if a plan raises its copayment from $30 to $50 over the next 2 years, it will lose its grandfathered status.

• Cannot Significantly Raise Deductibles. Many plans require patients to pay the first bills they receive each year (for example, the first $500, $1,000, or $1,500 a year). Compared with the deductible required as of March 23, 2010, grandfathered plans can only increase these deductibles by a percentage equal to medical inflation plus 15 percentage points. In recent years, medical costs have risen an average of 4-to-5% so this formula would allow deductibles to go up, for example, by 19-20% between 2010 and 2011, or by 23-25% between 2010 and 2012. For a family with a $1,000 annual deductible, this would mean if they had a hike of $190 or $200 from 2010 to 2011, their plan could then increase the deductible again by another $50 the following year.

• Cannot Significantly Lower Employer Contributions. Many employers pay a portion of their employees’ premium for insurance and this is usually deducted from their paychecks. Grandfathered plans cannot decrease the percent of premiums the employer pays by more than 5 percentage points (for example, decrease their own share and increase the workers’ share of premium from 15% to 25%).

• Cannot Add or Tighten an Annual Limit on What the Insurer Pays. Some insurers cap the amount that they will pay for covered services each year. If they want to retain their status as grandfathered plans, plans cannot tighten any annual dollar limit in place as of March 23, 2010. Moreover, plans that do not have an annual dollar limit cannot add a new one unless they are replacing a lifetime dollar limit with an annual dollar limit that is at least as high as the lifetime limit (which is more protective of high-cost enrollees).

• Cannot Change Insurance Companies. If an employer decides to buy insurance for its workers from a different insurance company, this new insurer will not be considered a grandfathered plan. This does not apply when employers that provide their own insurance to their workers switch plan administrators or to collective bargaining agreements.

The new regulations include transition rules which allow some changes that become effective after March 23, 2010 to be treated as if they were already in effect on March 23. The transition rules also allow for plans to preserve grandfathered status by reversing certain changes made before the regulations’ publication date (likely to be July 17, 2010).

Willis’ National Legal & Research Group (NLRG) is reviewing the new guidance and will provide analysis and suggested compliance strategies in a future publication. In addition, on June 22, 2010 at 2:00 p.m. (Eastern) NLRG will present a teleconference reviewing these new regulations and explaining how they will affect employers’ health plans. Details on the teleconference will be available shortly.

The information in this e-mail is not intended to represent legal or tax advice and has been prepared solely for informational purposes. You may wish to consult your attorney or tax adviser regarding issues raised in this publication.
 

Legislation Enacted: Now What?

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Information provided by HR Focus, a publication of Willis Human Capital Practice
Issue 34 • 05/13/2010

The president signed the Patient Protection and Affordable Care Act (PPACA) on March 23, 2010. Shortly thereafter, both Houses of Congress approved a companion budget reconciliation “fix-it” measure (the Health Care and Education Reconciliation Act of 2010; the whole package is commonly referred to as Healthcare Reform) that was signed into law on March 30, 2010.

Legal challenges loom ahead (see related article below), Republicans have vowed to repeal and revise the legislation, and many provisions do not actually take effect for several years – none of which alters the fact that many employer issues must be addressed in the coming months. Employers are understandably anxious to learn how their businesses will be affected by the new law. Specifically, what impact will federal legislation have on health care benefits offered, health care costs and on availability of other benefits for employees?

Willis is preparing a series of communications to assist employers with those issues for the immediate future and for the next few years. For more on health care reform, including detail about application of the law’s grandfather rules, plus a timetable and an in-depth analysis of the law click here. In addition to our regular HR FOCUS and Willis EB Alerts, we will bring detailed information and updates to our clients through webcasts, conference calls, timelines and more frequent publications geared toward employers’ implementation needs.

This publication outlines a few issues that employers need to be aware of in preparation for the effective dates of many of the new provisions that apply for the 2011 plan year.

Immediate Issues for the 2011 Plan Year

Listed below are some of the provisions that employers may need to address for the 2011 plan year. (NOTE: the law was written to go into effect with plan years beginning on or after September 23, 2010. This means that for plan years starting in October, November or December 2010, key health care reforms will need to be addressed late in 2010.)

Early Retiree Reinsurance
For those employers who provide retiree medical coverage for their employees, a temporary program will be created (beginning 90 days after final passage) by the federal government to provide reinsurance for a limited threshold of claims for retirees over 55 who are not yet eligible for Medicare. If your plan does provide for retiree coverage you will want to make a claim against the reinsurance pool as soon as information becomes available describing the process, as most commentators feel that the pool will be widely underfunded relative to demand (reprising the Cash for Clunkers funding problems).

Covering Adult Children
Group health plans that offer coverage for dependent children must allow employees to cover their children until they reach age 26, regardless of student status. The legislation does not require coverage of children or dependents at all. But if a plan does cover dependents, it must include coverage for dependent children up to age 26. Grandchildren (children of a covered dependent) are not covered by the new mandate.

Whether plans have to cover those dependents at the current dependent rate or at anything less than the individual COBRA equivalent rate is unclear. That is subject to the interpretation of the Department of Health & Human Services (HHS), which will be drafting regulations implementing this provision. New changes to federal tax law have been made so as to generally shield parents from additional tax liability for the value of health benefits received by an adult child.

Although coverage for dependent children generally must remain available through age 26, there is a special rule for grandfathered plans. Under this rule, until 2014 grandfathered plans may exclude children who are eligible for other employment-based coverage. (In other words, grandfathered group health plans would only have to cover dependents that do not have another source of employer-sponsored coverage.)

Also, nothing in the federal health care reform package changes rules under state law. Consequently, insured programs currently subject to states’ coverage mandates that extend beyond age 26 would continue to apply. (For example, in New Jersey insured coverage generally applies for dependents to age 31.)

The expansion of health coverage eligibility for adult children applies to group health plans – both insured and self-funded. Although employers are likely to see increased plan costs due to the anticipated higher enrollment numbers, tax code changes should also help simplify payroll administration. Plan sponsors will need to carefully review and update all of their health plan materials (e.g., summary plan descriptions, plan documents, enrollment materials, employee handbooks and related miscellaneous documents) to ensure that participants are accurately advised of the newly expanded enrollment opportunities.

Eliminating Lifetime Maximums
The law eliminates lifetime maximums on “essential benefits” as to be defined in regulations. Although this will presumably happen automatically with insured plans (with pricing increases to match), self-funded plans will need to have some serious discussions with their stop-loss carriers and determine the appropriate levels for stop-loss in the future.

Restricting Annual Maximums
The law prohibits annual dollar maximums. The regulations will tell the tale here as well. Despite lifetime and annual limit prohibitions, the legislation explicitly provides that the plans can set lifetime and annual limits in some cases for specific covered benefits to the extent not otherwise prohibited by law. A plan could cap, for example, the amount if will pay for all prescription drugs. Such caps may, however, run up against laws such as the ADA and Mental Health Parity Act, which prohibit discrimination on the basis of a disabling condition or mental health treatment. Our best assessment is that specific conditions cannot be targeted. Nevertheless, while the feasibility of any limits will ultimately depend on regulatory interpretation of the law, it does appear that plans will still be able to manage their downside risk with annual and lifetime limits for various benefits.

Eliminating Preexisting Condition Exclusions for Children
No limitation or exclusion for preexisting conditions may be applied to a child under age 19 (this mandate expands to apply to all enrollees in 2014).

Excluding OTC Medications
Starting with taxable years beginning after December 31, 2010, health flexible spending accounts (FSAs) can no longer reimburse participants for non-prescribed over-the-counter drugs/medicines (OTC items), other than insulin. Similarly, OTC items will no longer be qualifying medical expenses reimbursable under Health Savings Accounts (HSAs), Archer MSAs or Health Reimbursement Arrangements (HRAs), unless the OTC item is prescribed by an appropriately licensed health care provider or is insulin.

HSA Penalties
The penalty on health savings account withdrawals for reasons other than reimbursement of medical expenses goes from 10% to 20%.

Reporting Value of Health Coverage
Beginning with W-2s for 2011 (the ones that will be issued in 2012), the value of each employee’s health coverage must be stated.

Eliminating Rescissions
Rescinding coverage in cases other than fraud or intentional misrepresentation is prohibited.

 

AGCA Healthcare Webinar

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AGCA Webinar: What Impact Will the New Health Care Law Have on Construction Contractors?
May 6
10–11:30 am

This FREE AGC of America webinar will detail the recently enacted health care bill and the sweeping changes to the delivery of health care in the United States. Focusing on the impact on employers in the construction industry as well as their responsibilities and requirements to offer health care benefits to their employees, AGCA has partnered with a prestigious law firm experienced in this matter to analyze the impact of the bill on construction employers and suggest preparations that employers should begin implementing to comply with the new law. Plus, AGCA's chief economist, Ken Simonson, will close out the event with a preview of the impact the legislation will have on the demand for future health care construction.

This webinar is eligible for credit towards your continuing education requirements for the Oregon Construction Contractors Board.

The webinar will cover the following:

• new employer responsibility requirements

• new insurance reforms

• impact of tax changes

• wellness programs

• impact on collectively bargained employees

• impact on heath care construction

Speakers:

• Ken Simonson, Chief Economist, AGC of America

• Ilyse Schuman, Shareholder, Littler Mendelson

Pricing:

• AGC members: FREE

• Non-member: $79.00

Click here for more information and to register.

For additional guidance, please review AGC’s analysis:

• Health Care Bill Post-Law

• Health Care Reform is Final...Now What?

 

The Health Care Reform Bill is Final...Now What?

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• Health Care Bill Post-Law

• Health Care Reform is Final...Now What?

March 29, 2010

On March 23, 2010, President Obama signed into law the Patient Protection and Affordable Care Act (H.R. 3590) and shortly thereafter the Health Care and Education Reconciliation Act of 2010 (H.R. 4872), which changes health care as we know it. In the coming years there are many adjustments that construction companies need to be aware of in order to comply with the new law.

Please note: While this article is intended to provide you with information, it was written with the members in mind, so please feel free to pass it along to your membership.

The Process
On March 21, 2010, the House voted to pass the health care reform bill that was previously passed by the Senate in December 2009, which made the bill available for the president to sign into law. After passing the Senate bill, as is, the House then passed a “reconciliation” bill that made several changes to the law. It was then sent to the Senate, modified and passed again by the House. While there is a lot of information and commentary about state lawsuits and other efforts to repeal portions of the law, the fact of the matter is that on March 23, 2010, health care reform became “the law” and employers will have to begin complying. Now that the dust has settled on the bill, AGC will continue to seek regulatory guidance and compliance assistance tools for its members as information becomes available.

Is your company required to provide health insurance to employees?
The quick answer is “No,” companies don’t have to provide health insurance to employees. But if your company chooses not to, beginning on January 1, 2014, there may be stiff penalties to pay. Under the new law, employers with 50 or more employees who choose not to offer qualified health coverage to employees will have to pay $2,000 per full-time employee, excluding the first 30 employees from the assessment, each year if at least one full-time employee receives income-based premiums assistance to purchase coverage through an Exchange. The number of full-time employees can be determined by adding the number of employees who work an average of 30 hours per week in a month to the calculated number of part-time workers. This calculation requires employers to divide the total number of hours worked in a month by employees who work fewer than 30 hours per week, by 120. Originally, there was a requirement that only construction contractors with fewer than five employees be exempt from the penalty, but AGC worked with other construction trade groups to repeal this provision that targeted the industry. Now, all companies with fewer than 50 employees are exempt from the penalty.

Example 1

Scenario:

• 40 employees working 30 or more hours per week

• 20 employees working 20 hours per week (a.k.a. PT)

Calculation:

• 20 PT X 20 hours worked per week = 400 total hours worked per week

• 400 total hours worked per week X 52 weeks = 20,800 hours worked per year

• 20,800 / 12 months = 1733.333

• 1733.33 / 120 = 14.444 employees

• 40 full-time employees + 14.444 part-time equivalents = 54.44 total employees.

• 54.44 employees minus the 30 employee allowance = 24.44 employees

Conclusion:
This employer would have to provide qualified benefits to its employees or pay a penalty of $49,000 ($2,000 x 24.44 = $49,000).

Example 2

Scenario:

• 35 employees working 30 or more hours per week

• 20 employees working 20 hours per week (a.k.a. PT)

Calculation:

• 20 PT X 20 hours worked per week = 400 total hrs. worked per week

• 400 total hours worked per week X 52 weeks = 20,800 hours worked per year

• 20,800 / 12 months = 1733.333

• 1733.33 / 120 = 14.444 employees

• 35 full-time employees + 14.444 part-time equivalents = 49.44 total employees.

Conclusion:
The 30 employee allowance is not applicable here because the employer has fewer than 50 total full-time equivalent employees. Because this number is less than 50, the employer is exempt from the mandate and does not have to provide qualified coverage or pay a penalty.

Available small business pooling options and tax incentives designed to entice those small businesses to offer health coverage may do just that. For example, by 2014, a Travelocity-like health care exchange system will be created for businesses with fewer than 100 employees to pool together and shop for affordable healthcare plans. Until then, companies with 10 or fewer employees earning less than an average of $25,000 will be eligible for a tax credit of 35 percent of health insurance costs. Companies with 11–25 employees with an average wage up to $50,000 are eligible for partial tax credits. Once the exchange is created, the tax credit will increase to 50 percent for the first two years coverage is purchased through the exchange and then the credit would end. While these tax credits are retroactive to January 1, 2010, it has not been determined how the credit will be claimed.

In addition to the tax credits, grant programs will also be created to help small and mid-sized companies develop and strengthen workplace wellness programs.

What if your company already provides health insurance?
If your company already provides health insurance coverage for employees, there are still a few things to consider and anticipate. For example, beginning in 2014, employers who offer health benefits but have at least one employee who applies for a federal subsidy to purchase insurance on their own would be subject to a an annualized penalty of $3,000 for each employee who has qualified for subsidized coverage. Employees are eligible for the federal subsidy if the employer provided plan does not have an actuarial value of at least 60 percent or if the employee share of the premium exceeds 9.5 percent of their income. In addition, employers may still be required to help low and middle-wage earners who opt out to buy coverage on their own. Specifically, an employee who earns less than four times the federal poverty level, $88,200 for a family of four, will have the option to purchase coverage through the exchange. In turn, the company would have to provide a “free-choice voucher,” which must be equal to the amount paid to provide coverage to all other participating employees. Furthermore, companies with more than 200 employees will be required to automatically enroll new hires into the health plan, but the new hire can voluntarily opt-out after enrollment if they choose. There is no penalty for workers in a waiting period, but employers must limit the period to 90 days beginning in 2014.

Plans that were in effect on the date of enactment, March 23, 2010, are grandfathered-in and able to keep their existing coverage; however, they must still comply with the following requirements on their respective effective dates: no lifetime limits, restrictions on annual limits, restrictions on coverage rescissions, coverage of dependent adult children, coverage of dependent children with pre-existing conditions, coverage of adults with pre-existing conditions, and maximum 90 day waiting periods.

So, what should be done now?
The good news is that most of the major changes won’t occur until January 1, 2014, so there isn’t much that employers have to do right away. There are several plan changes that insurance companies are required to make on your plan’s renewal date, so expect to receive communication regarding these changes and communicate them to your employees and new hires appropriately. The timeline below provides an explanation of when changes are expected to occur that may affect employers.

 

Tax Years 2010-2013	Employers with fewer than 25 employees many take advantage of tax credits in exchange for providing healthcare benefits.
June 23, 2010 through December 31, 2013	Employers will be able to participate in an incentive program to provide coverage for retirees over the age of 55 who are not eligible for Medicare. A temporary high-risk insurance pool will be created to provide health care to individuals with pre-existing medical conditions who have been uninsured for at least six months.
Effective for plan years beginning on or after September 23, 2010 or for calendar year plans beginning January 1, 2011.	Insurers will not be able to deny coverage to children who have pre-existing medical conditions. Insurance companies will have to provide coverage for dependent children up to the age of 27, regardless of educational or marital status. However, the adult child must not be eligible to enroll in another eligible employer-sponsored health plan. Plans can no longer set “lifetime limits” on essential benefits regarding how much they will pay, except in cases of fraud. Health insurance plans will be required to cover preventative services such as immunizations for children and cancer screenings for women. Policies cannot be cancelled for those who get sick.
January 1, 2011	The federal tax on individuals who spend money from Health Savings Accounts (HSAs) on ineligible medical expenses will double to 20 percent. The Aggregate cost of applicable employer-sponsored coverage must be reported annually on the employee’s Form W-2.
January 1, 2013	The limit on how much individuals can contribute to flexible spending accounts (FSAs) will be set at $2500. The Medicare tax rate will increase from 1.45% to 2.35% on earnings over $200,000 for individuals and $250,000 for families.
January 2, 2014	Companies with 50 or more employees will be required to pay a penalty ($2,000 annualized) for each employee if the company does not provide a health insurance plan. (The threshold for construction companies was increased from 5 to 50 as a part of the reconciliation process.) Companies with 50 or more employees would pay a fine if any of their full-time workers qualified for federal health care subsidies. A state-based health care exchange system will be created as a marketplace for uninsured individuals and small businesses to comparison shop for insurance policies. Health plans will be required to meet minimum benefits standards covering a minimum of 60 percent of costs. All annual limits must be eliminated from health plans. Adults with pre-existing conditions can no longer be denied coverage. Employers must automatically enroll employees into the company’s health plan. Employees may opt out later. Waiting periods of more than 90 days are not permitted.
January 1, 2018	A 40 percent tax would be imposed on healthcare plans that cost more than $11,850 for individual coverage and $30,950 for family coverage. This amount is higher for construction employers than most other industries because construction is one of many high-risk industries and excludes the value of dental and vision benefits. States may choose to allow large companies with 200 or more employees to purchase coverage through the exchanges.

Note: While this article focuses mainly on the requirements for employers, for companies that self-insure, both the insurer and employer requirements are applicable.

For more information please contact Tamika C. Carter, Associate Director, Construction HR, 703-837-5382.
 

Health Care Provisions Important to the Construction Employer Community

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March 25, 2010

Click here for a document distributed by AGC of America that reviews some specific provisions important to the construction employer community in the Patient Protection and Affordable Care Act (Public Law 111-148).

Although the bill was signed into law Tuesday the Senate continues to work on the Reconciliation package and they are expected to finish debate and pass it tomorrow. The changes within the Reconciliation bill are highlighted in the attached document and the most noticeable change is the removal of the Merkley Language, the Reconciliation bill would restore the small business exemption for the construction industry.

AGCA will continue to update the document.

Willis Webinar: Federal Healthcare Reform – What's Next? Focus on 2010 and 2011

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Click here for a webcast originally given on April 5, 2010 by Willis.

Willis Human Capital Practice
Legislative and Regulatory Update Webcast

Speakers:

• Peter Gruenberg, Human Capital Practice Leader

• Jay M. Kirschbaum, JD, LLM, FLMI

• Elizabeth E. Vollman, JD, National Legal & Research Group