The federal agencies are now delaying the implementation deadline for the Summary of Benefits and Coverage (SBC) as required by PPACA. In August, a new SBC was designed to provide more information for employees to better understand and compare different health coverage options. The proposed regulations called for group health plan sponsors and insurers to begin distributing SBCs by March 23, 2012. However, the agencies have postponed this date and will revise the form because of the response and comments received from the initial guidance. Final regulations will include an implementation date that is expected to give group health plan sponsors and insurers sufficient time to prepare the SBC.

HHS, DOL and the Department of Treasury jointly issued Part VII of the FAQs on the implementation of PPACA, and specifically the Summary of Benefits and Coverage and mental health parity implementation.

Click here to read the FAQs.

This month, HHS halted implementation of the Community Living Assistance Services and Supports program, known as the CLASS Act, after officials deemed the program could not be self-sustaining, financially sound for 75 years, or affordable to consumers.

The CLASS Act would have been a voluntary insurance plan for working adults (regardless of age or health) and designed to expand options for those who become functionally disabled and require long-term services and support. Adults who met the eligibility criteria would have received a cash benefit to use for purchasing non-medical services and support necessary to maintain in community residence, averaging no less than $50 per day.

Group health plan sponsors must now provide Medicare Part D "creditable coverage" notices prior to Oct. 15 for 2011 and future years. The Medicare annual enrollment period for Part D (prescription drug coverage) has been changed to Oct. 15 - Dec. 7. Before this year, the enrollment period was Nov. 15 - Dec. 15 but was changed under PPACA.

Plan sponsors that offer prescription drug coverage are required to notify Medicare‐eligible plan participants (employees and dependents) as to whether their prescription drug coverage is "creditable coverage" which means the coverage is expected to pay on average at least as much as the standard Medicare Part D prescription drug coverage. These notices must be provided at least once annually, prior to the beginning of the Part D annual enrollment period, and also if the employer-provided coverage changes or if the individual requests a copy of the notice.

The CMS model notices for creditable coverage and non-creditable coverage have been amended to reflect the Oct. 15 date. Click here to access them.

This month, the Treasury Department and the IRS issued Notice 2011-73 to request comments on a proposed affordability safe harbor for employers under PPACA. As you know, effective Jan. 1, 2014, certain employers will pay a penalty if they don't provide "comprehensive, affordable health insurance coverage" to employees (referred to as the "shared responsibility" provision). The notice solicits comments on the safe harbor which would make it easier for employers to determine whether the health coverage they offer is in fact affordable.

Under PPACA, the shared responsibility provision applies to:

• Employers with 50 or more full-time employees that do not offer coverage and have at least one full-time employee who receives a premium tax credit will be assessed a fee of $2,000 per full-time employee, excluding the first 30 employees from the assessment.
• Employers with 50 or more full-time employees that do offer coverage but have at least one full-time employee receiving a premium tax credit will pay the lesser of $3,000 for each employee receiving a premium credit or $2,000 for each full-time employee, excluding the first 30 employees from the assessment.

Prior to the notice, concerns arose that employers would base their affordability calculations on the employees' household income (which employers generally do not have access to). The proposed safe harbor would permit employers that offer coverage to their employees to measure the affordability of coverage by using wages that the employer paid to an employee, instead of the employee's household income.

The safe harbor applies if the employee portion of the self-only premium for the employer's lowest-cost plan that provides minimum value does not exceed 9.5 percent of the employee's current W-2 wages from the employer. It would also only apply for purposes of the employer shared responsibility provision, and would not affect employees' eligibility for health insurance premium tax credits.

Click here to read Notice 2011-73.

Filing deadlines are approaching for the small business health care tax credit that was included in PPACA last year in which small employers who pay at least half of the premiums for employee health insurance coverage under a qualifying arrangement may be eligible for credit. There are two significant tax filing deadlines coming up for small businesses that requested an extension to file their taxes.

In general, businesses are eligible for the credit if they have fewer than 25 full-time employees with annual average wages below $50,000 and pay at least 50 percent of their employees' health insurance premiums. The IRS and HHS issued an outreach campaign this month to help employers understand the features and benefits of the credit, and provide notice on the following deadlines:

• September 15 (deadline has passed). Corporations that file on a calendar year basis and requested an extension to file to September 15 can calculate the small employer health care credit on Form 8941 and claim it as part of the general business credit on Form 3800, which they would include with their corporate income tax return.
• October 17. Sole proprietors who file Form 1040 and partners and S-corporation shareholders who report their income on Form 1040 have until October 17 to complete their returns. They would also use Form 8941 to calculate the small employer health care credit and claim it as a general business credit on Form 3800, reflected on line 53 of Form 1040.
• November 15. In addition, tax-exempt organizations that file on a calendar year basis and requested an extension to file can use Form 8941 and then claim the credit on Form 990-T, Line 44f.

However, businesses that have already filed can still claim the credit. For small businesses that have already filed and later determine they are eligible for the credit, they can always file an amended 2010 tax return. Corporations use Form 1120X and individual sole proprietors use Form 1040X.

Businesses that couldn't use the credit in 2010 can claim it in future years. Some businesses that already locked into health insurance plan structures and contributions for 2010 may not have had the opportunity to make any needed adjustments to qualify for the credit for 2010. So these businesses may be eligible to claim the credit on 2011 returns or in years beyond. Small employers can claim the credit for 2010 through 2013 and for two additional years beginning in 2014.

Click here for more information on the health care tax credit for small businesses.

HRAs in effect prior to Sept. 23, 2010, as a class, are exempt from applying individually for an annual limit waiver for plan years beginning on or after Sept. 23, 2010 but before Jan. 1, 2014, according to guidance issued Aug. 19. The exemption was granted because HRAs set limits on the amount that can be spent, and the HHS Center for Consumer Information and Insurance Oversight (CCIIO) believes those limits would always be less than the applicable restricted annual limit amounts.

However, an HRA that is exempt from applying for an annual limit waiver still must comply with the record retention requirement and the Annual Notice requirement to participants and subscribers, which were established in the supplemental guidance issued June 17, 2011. CCIIO is drafting alternate Annual Notice language for HRAs that have not yet issued their Annual Notice.

Click here for the supplemental guidance.

Click here for the technical instructions.

Click here for the updated fact sheet.

This month, the Departments of Labor and HHS proposed rules for the "uniform summary of coverage" that is required under PPACA. Heath insurers and group health plans (including grandfathered plans) must provide consumers with clear, consistent and comparable information about their health plan benefits and coverage beginning in 2012. Specifically, the proposed regulations provide rules implementing PPACA provisions that would ensure consumers have access to two forms that will help them understand and evaluate their health insurance choices.

These forms include:

• A Summary of Benefits and Coverage
• A uniform glossary of terms commonly used in health insurance coverage

Summary of Benefits and Coverage

The summary document will include the key features of the plan or coverage such as the covered benefits, cost-sharing provisions, and coverage limitations and exceptions. Consumers will receive the summary when shopping for coverage, enrolling in coverage at each new plan year, and within seven days of requesting a copy from a health insurance issuer or group health plan.

The Summary of Benefits and Coverage will also include a new, standardized health plan comparison tool called "Coverage Examples" that illustrate what proportion of care expenses a health insurance policy or plan would cover under common benefits scenarios. The Center for Consumer Information and Insurance Oversight (CCIIO) will provide standards for plans and issuers to simulate claims processing for each scenario so consumers can see an illustration of the coverage they get for their premium dollars under a plan.

Uniform Glossary of Terms

Under the proposed regulations, insurance terms will be the same across all plans. Insurance companies and group health plans will be required to make available a uniform glossary of terms used in health insurance coverage, for example "deductible" and "co-pay." This will allow an easier comparison of insurance plans, and the Departments of HHS and Labor will post the glossary on both www.HealthCare.gov and www.dol.gov/ebsa/healthreform/.

Click here to read the proposed regulations.

Click here to read the Model Summary of Coverage.

Click here to read the fact sheet.

Senator Ben Cardin (D-MD) and Senator Mike Enzi (R-WY) introduced S. 1404, the Medical Flexible Spending Account Improvement Act of 2011, a bill that would allow employees to pay taxes on and withdraw any unused funds in their employer-sponsored FSAs at the end of the year. Current rules require that any leftover balance in an FSA must be forfeited to the employer at the end of the plan year, hence the "use it or lose it" rule. This bill is the Senate companion to H.R. 1004, introduced earlier this year by Representative Charles Boustany (R-LA) and Representative John Larson (D-CT).

In an effort to repeal Section 9003 of PPACA that requires individuals to obtain a physician prescription to receive reimbursement through an FSA and HSA to purchase OTC medications, bipartisan legislation was introduced as well. The Restoring Access to Medication Act (S. 1368 / H.R. 2529) is lead by Senators Pat Roberts (R-KS) and Ben Nelson (D-NE), and Representatives Lynn Jenkins (R-KS) and Shelley Berkley (D-NV). Additional senators and representatives have joined in cosponsoring the legislation.

We encourage you to contact your legislators in Washington, and ask them to actively endorse these bills.

To locate contact information for your members of the House of Representatives, click here.
To locate contact information for your Senators, click here.

As you know, every state is mandated to establish its own exchange by Jan. 1, 2014, or have the federal government run a health insurance exchange on its behalf under PPACA. In addition, states must have detailed operating plans in place at least one year prior to the full implementation of the insurance exchange. This month, HHS issued two proposed rules to provide a framework for states to implement these marketplaces.

The proposed rule sets forth the federal requirements that states must meet if they elect to establish and operate an exchange. It also outlines the minimum requirements health insurance issuers must meet to participate in an exchange and offer qualified health plans, and provides basic standards employers must meet to participate in the Small Business Health Options Program (SHOP).

The proposed rule leaves most key decisions up to the states, though it sets some minimum standards for every exchange – including limits on the role of insurance companies and agents. The marketplaces must post information online about price and quality, offer specific standardized plans and set an annual open enrollment period. Those who qualify for assistance also will use the exchanges to receive federal subsidies or tax credits to purchase insurance, or to gain access to Medicaid.

States have until Jan. 1, 2013 to show they will have an exchange up and running the next year, although the proposal suggests that states showing progress will be granted "conditional approval." Still, states that can't – or won't – set up their own marketplaces will have the federal government step in and do it for them. States that get ready later can still set up their own exchange as long as they give the federal government a year's notice, the rules say.

The exchanges will officially open Jan. 1, 2014, but consumers will be able to begin the process of signing up for coverage before, during an "open enrollment" period similar to those currently set up by employers offering health insurance. Such enrollment periods are designed to encourage people to sign up for coverage right away, rather than waiting until they become ill. That's important because in 2014, not only does the law require nearly all Americans to carry coverage, it also requires insurers to take all applicants, even those with medical conditions.

To give people time to understand the exchanges and make their choices, the initial open enrollment period will begin Oct. 1, 2013 and run through Feb. 28, 2014. In subsequent years, open enrollment will run from Oct. 15 to Dec. 7. People will be able to purchase insurance outside of open enrollment under specific circumstances, such as when adding a child by birth or adoption, or in cases where they lose employer coverage or coverage through a spouse.

HHS is accepting public comments, and final regulations are expected later this year.