April 1, 2010Client Alert

Timeline of Health Care Reform Changes

On March 23, 2010 and March 30, 2010, President Obama signed the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010, respectively, (collectively “PPACA”) into law. Since its passage, Michael Best has issued client alerts addressing the changes affecting large employers. Copies of those alerts may be found here:

Health Reform Legislation Signed; Will Impact All Employers and Health Plans

March 24, 2010

Congress Passes Reconciliation Act Amending the Patient Protection and Affordable Care Act

March 31, 2010

Many of PPACA's changes became effective upon passage or will become effective in the next nine months. To that end, this alert provides a timeline of the provisions to highlight the changes upon which employers should focus. This timeline is intended to be read in conjunction with the table of changes released on March 31, 2010 (see link above). The page numbers in the timeline below are a reference to the page numbers within that table of changes.

PPACA Reform Timeline

Health Care Reform Provisions effective in 2010:

  • Credits to Small Employers (p. 9). Limited tax credit to small employers to purchase health coverage.
  • Retiree Health Subsidy (p. 8). Federal government to reimburse eligible plans (including multiemployer plans or VEBAs) 80% of “early retiree” (age 55+ but not eligible for Medicare) health claims between $15,000 - $90,000.
  • Taxation for Coverage of Older Dependents (p. 12). Coverage for dependents under age 27 on the group health plan is no longer subject to inclusion in the employee’s gross income. [Note: Dependent coverage is required to age 26, but the tax advantage exists through age 27.] For further information on this issue, please refer to our previous client alert titled, Health Reform Makes Important and Immediate Change in Tax Treatment of Employer-Provided Health Insurance Coverage in Wisconsin,” (April 2010).
  • Automatic Health Plan Enrollment (p. 3). Automatic enrollment requirement for employers with more than 200 employees applies. Note: Effective date unclear, appears it is effective immediately.
  • Health Plan Mandates (pp. 6-7, unless otherwise noted). For plan years beginning on or after September 23, 2010, group health plans must:
    • Implement new appeals process. Grandfathered plans excepted.
    • Provide dependent coverage to age 26 (p. 12).
    • Permit enrollees to designate any available doctor as a participating primary care doctor. Similar rules for pediatric care. Grandfathered plans excepted.
    • Permit female enrollees to obtain Ob-Gyn services without prior authorization. Grandfathered plans excepted.
    • Cover emergency services without prior authorization and as though they were
      in-network services. Grandfathered plans excepted.
    • Cover, without cost-sharing, certain preventive services (e.g., immunizations and infant screenings). Grandfathered plans excepted (p. 12).
    • Eliminate preexisting condition exclusions against children under 19.
    • Eliminate lifetime limits under health plans for “essential health benefits.” Annual limits are subject to a “restricted annual limit” (p. 11).
    • Eliminate coverage rescission provisions, except in cases of fraud or intentional misrepresentation of a material fact (p. 12).
  • No Questions on Firearms (p. 10). Wellness plans may not require participants to respond to questions about lawful firearm or ammunition ownership, storage, or use.
  • Fully-Insured Plans Subject to Nondiscrimination Rules (p. 12). Fully-insured plans become subject to Code Section 105 testing (p. 12). Grandfathered plans excepted.
  • Native Americans (p. 9). Certain Indian Health Service or other Tribal health benefits not considered gross income.

Health Care Reform Provisions effective in 2011:

  • Report Cost on W-2 (p. 5). Employers must notify employees of the aggregate cost of employer-sponsored coverage on IRS Form W-2 for tax years beginning after December 31, 2010 (practical effect may be to distribute W-2 with this information in January 2012).
  • Over the Counter Medicines (p. 11). Cost of over-the-counter medicine (other than doctor prescribed) may not be reimbursed through health FSA, HRA, HSA or Archer MSA.
  • HSA Excise Tax (p. 11). Excise tax on HSA distributions for non-medical purposes is increased to 20%.
  • Cafeteria Plans: Safe Harbor from Nondiscrimination Rules (p. 7). Simple Cafeteria Plan provisions become effective permitting eligible small employers to create cafeteria plan which is deemed to pass nondiscrimination requirements of Code Section 125.
  • Small Employer Grants for Wellness Programs (p. 10). Grants become available for small employers to establish wellness programs.

Health Care Reform Provisions effective in 2012:

  • Standardized Plan Summary (p. 13). Standardized short-form summary plan descriptions (standards must still be developed by the DOL) must be distributed.
  • Quality of Care Reporting (p. 13). Reporting on quality of care required. Grandfathered plans excepted.
  • Comparative Effectiveness Fee (p. 13). $1 per participant fee applies to fund new private, non-profit corporation to study comparative effectiveness.

Health Care Reform Provisions effective in 2013:

  • Provide Notice of Exchange (p. 5). Employers must provide employees notice of the existence of state exchanges.
  • Cap on Health FSA Contributions (p. 7). Health FSA contributions limited to $2,500.
  • HIPAA Standard Transaction Rules Changes (p. 10). Plans must comply with a single set of operating rules for eligibility verification and health claims status designed to simplify health insurance administration.
  • Co-ops Created (p. 1). Non-profit co-ops created for individual and small employer market.
  • Additional Individual Taxes (p. 11). Increased FICA and SECA taxes go into effect.
  • Medicare Part D Subsidy Deductions (p. 11). Deduction for Medicare Part D subsidy eliminated.

Health Care Reform Provisions effective in 2014:

  • Individuals Must Have Minimum Essential Coverage (p. 9). All U.S. citizens must have “minimum essential coverage” through individual market or employer or certain other coverage (e.g., Medicare or CHIP) to avoid incurring tax penalties.
  • Penalty if Large Employer Does Not Offer Minimum Essential Coverage (p. 2). Large employers must provide “minimum essential coverage” or employer faces tax penalty.[1]
  • Penalty if Offer Coverage But Employee Receives Premium Tax Credit (p. 3). An employer that offers “minimum essential coverage” may nevertheless have an employee obtain subsidized coverage through an exchange. An employer may face a penalty of up to $3,000 for each such individual.
  • Free Choice Vouchers to Qualified Employees (p. 5). Employers offering “minimum essential coverage” must begin offering free choice vouchers to those employees who are eligible to receive them.
  • State Exchanges (p. 1). Establishes state exchange for individual and small employer market. Eligible individuals can begin to receive premium assistance credits for coverage obtained through an exchange.
  • Reports to Government on Plan Coverage; Summary Report to Employees (p. 4). Employers obligated to comply with government reporting standards must begin to do so and provide summary reports to employees of same.
  • No Lifetime Limits; Restricted Annual Limits (p. 11). Annual limits under health plans for “essential health benefits” are eliminated.
  • No Discrimination based on Clinical Trials (p. 6). Group health plans must permit participation in and cover routine patient costs to an individual due to participating in clinical trial for treatment of cancer or other life-threatening disease or condition. Grandfathered plans excepted.
  • Limits on Waiting Periods (p. 6). Waiting periods for coverage can no longer exceed 90 days for Plan Years beginning on or after this date.
  • Limits on Preexisting Condition Exclusions (p. 7). Preexisting condition exclusions eliminated completely.
  • Cap on Health FSA Contributions (p. 7). Health FSA contributions limitation may now be adjusted for inflation.
  • Reinsurance Fees for TPAs (p. 8). Third party administrators of group health plans and insurers contribute to a reinsurance program for individual policies administered by a non-profit for high risk cases in state.
  • Fees on Certain Plans / Insurers (p. 8). Annual fee on a “covered entity” that provides health insurance. Excludes self-funded employer but does not specifically exclude fully-insured plan. Certain VEBAs are excepted. First payment due no later than 09/30/2014.
  • Wellness “Carrot / Stick” Limits Raised (p. 10). Twenty percent cap on wellness discounts raised to 30% of employee-only coverage. HHS, IRS and DOL permitted to increase amount to 50%.
  • HIPAA Standard Transaction Rules Changes: New Transactions (p. 10). Plans must comply with operating rules for electronic funds transfers and health care payment and remittance advice to allow for automated reconciliation of electronic payments.
  • Limits on Cost-Sharing and Deductibles (p. 7). In order for plan to be considered “essential health benefits” plan must have limits on cost-sharing provisions (tied to HSA limits). Annual limits on deductibles in small group market of $2,000 for plans covering single individuals and $4,000 for other plans.

Health Care Reform Provisions effective in 2015 or later:


  • Health Care Choice Compacts (p. 1). States can form “health care choice compacts” to allow purchase of individual policies across state lines.
  • HIPAA Standard Transaction Rules Changes: New Transactions (p. 10). Plans must comply with operating rules for health claims or equivalent encounter information, enrollment and disenrollment in a health plan, health plan premium payments, and referral certification and authorization transactions.


  • Employers Eligible for Exchange (p. 1). Large employers (employers with at least 101 employees) allowed into state exchanges.


  • “Cadillac Tax” on certain Plans (p. 11). So-called “Cadillac tax” on high-cost health plans becomes effective.

[1] Includes 5-employee construction industry employers with annual payroll in excess of $250,000.

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