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Employer's Guide to Healthcare Reform Law

By David Barron and Daniel Schuch  
   August 30, 2010

With so much being said and written about healthcare reform, many employers don't know where to begin to find practical information about how the law. How will if affect the workplace? What they should be doing to prepare, even now?

More importantly, employees are being bombarded with information they don't understand, or even downright misinformation, and are looking to their employers to help them wade through this complicated maze of new legislation. 

This article will hopefully clear up some of the confusion and provide a practical roadmap to what is already in effect and what is coming down the road.

What Should I Be Worrying About Now?

Although much of the healthcare law takes effect years down the road, there are a number of provisions which are of immediate impact to employers.  Three examples are addressed below: new whistleblowing protections, right to privacy for workplace nursing, and deciding whether to "grandfather" your health plan.

First, all employers should understand that the healthcare reform law dramatically expanded whistleblower protections in the workplace.   For example, an employee who makes a complaint about a perceived violation of the new healthcare law is protected from retaliation.  Similarly, if an employee opts out of an employer's plan and chooses to be covered in one of the new healthcare exchanges scheduled to start in 2014, that act is protected from retaliation. 

Second, in addition to the creation of whistleblower protections under the FLSA, the new law requires employers to provide:

  • Unpaid, reasonable break time to non-exempt nursing mothers to express breast milk; and
  • A place to express breast milk that is:
  • Not a bathroom;
  • Shielded from view; and,
  • Free from intrusion.

An employer with less than 50 employees will not be required to implement this provision if doing so would cause the employer an "undue hardship."  However, an employer with more than 50 employees will be required to follow the law, even if its employees are working on a client's premises or at a location where it is difficult to provide privacy.  The nursing mother protections created by the law are available for one year after the child's birth.

Lastly, this year poses a one time opportunity to grandfather a health plan from many of the changes required under the new healthcare law.  healthcare plans which were in existence as of March 23, 2010 (the day the law was enacted) can be exempted from a multitude of requirements imposed by healthcare reform so long as the plan does not substantially change the benefits offered, change insurers, or increase employee costs by a significant percentage (as defined in the regulations).

Employers should talk to their insurance brokers or carriers to determine whether grandfathering makes sense.  The benefit to grandfathering is an employer can avoid mandated changes such as first dollar coverage of preventive care, and new recordkeeping requirements.  The downside is that grandfathering means severe limits to passing on rate increases to employees, and an inability to shop carriers for a better rate.  With the seemingly annual rise in costs, these limits will make grandfathering a bad deal for many employers.

 

What Is Coming Down the Road?

The healthcare reform law has far reaching effects and drastic changes to the healthcare system.  Necessarily, these changes are spread out over an extensive period of time, with a gradual rollout.  A timeline of important dates to keep in mind for strategic purposes is listed below.

            2011

Beginning in 2011, employees will have a right to request a  W-2 form anytime during the year, once they have been terminated.  Although it is not likely that most employees will get an early start on their taxes, employers should be aware of this new possibility.  More importantly, for the 2011 tax year, employers will be required to start reporting on the W-2 form the value of the health insurance premiums paid for each employee.  This would include both the employee and employer's share of the premium.  Out of all the changes in the healthcare law, this one might be one of the most beneficial, as employees will finally get to see what their healthcare really costs (not just their share).  Contrary to rumors that have been circulating recently, these amounts will not be taxable.

Also in 2011, flexible spending amounts (FSA)'s will be changed to only allow reimbursement for prescription drugs and not over the counter medication.

            2013

Starting in 2013, there will be additional Medicare taxes on individuals making more than $200,000 per year and couples making more than $250,000 annually.  These Medicare taxes will not be paid by the employer, but instead only the employee.  In 2013, the law also implements changes to FSA's limiting the maximum amount available for such accounts to $2,500.

            2014

In 2014, the most significant changes to the healthcare law will take effect.  Every individual will be mandated to have health insurance and employers with more than 50 employees who do not offer heath insurance will be penalized.  Each state will implement healthcare exchanges where individuals can buy health insurance as part of a larger group for cost savings.  Employees earning less than 400% of the federal poverty level will receive federal subsidies to purchase health insurance.

            2018

The last step to be implemented is the 40% tax on expensive healthcare plans, dubbed "Cadillac plans."  These high cost health plans are defined as having a value of $10,200 for a single employee or $27,500 for a family.  The law contains certain exclusions for high risk jobs and other special occupations.

Healthcare reform will have a far-reaching effect on companies in the United States.  Armed with the information necessary to make educated decisions, however, companies will be able to implement the requirements of reform in a timely, and efficient manner and make good strategic decisions on how their business goals fit within the new law.

David Barron and Daniel Schuch are attorneys at Epstein Becker Green Wickliff & Hall, P.C. (www.ebglaw.com) and represent management exclusively in labor and employment matters.

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