Health-Care Reform and CUs

How will the sweeping reform of health care affect CUs for the next 18 months?

August 9, 2010

The Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 together comprise the new health-care reform law.

This sweeping reform of health care will be implemented over the next eight years. Given the broad scope of the reform there will be significant guidance from the Internal Revenue Service, Department of Health and Human Services, and the Department of Labor with regard to the application of the provisions in the months and years to come.

Subscribe to Credit Union MagazineLet’s look at the provisions that may affect your credit union in the next 18 months.

Grandfathered plans

There are grandfathering provisions in the law pertaining to medical plans in existence on March 23, 2010, the day the bill was singed into law.

For these plans certain reform provisions do not immediately apply.

Small business tax credit

Credit unions with 25 or fewer full-time-equivalent employees and an average salary of $50,000 or less may be eligible for a tax credit of up to 25% of the employer-paid premium for group medical insurance provided the employer pays 50% or more of the cost.

Early retiree reinsurance

An early retiree reinsurance pool of $5 billion dollars is to be established and will run until 2014 or until the funds are exhausted.

This program will reimburse employers or their insurance company for 80% of claims between $15,000 and $90,000 if they offer medical insurance to retirees between the ages of 55 and 65 who are not yet eligible for Medicare.

Pre-existing conditions

Effective upon the signing of the law, pre-existing conditions for individuals 19 or younger are eliminated.

Pre-existing condition limitations are removed for all individuals Jan. 1, 2014.

Extended coverage for dependents

Plans renewing on or after Oct. 1, 2010, will be required to provide coverage for dependent children up to the age of 26.

There’s no requirement pertaining to financial support or post-secondary education.

The adult child can be married. However, the provision does not extend to the spouse or children of the dependent adult.

This coverage can be excluded until Jan. 1, 2014 if the adult child is eligible for other employer sponsored coverage.

Prohibitions on lifetime and annual limits

Lifetime limits for essential benefits will be eliminated for plans renewing after Sept. 23, 2010. However, the law provides for reasonable annual limits on other services.

Rescission of coverage

Plans can no longer rescind coverage except in cases of fraud or material misrepresentation of facts on an application.

Cost-sharing and preauthorization limits

Also effective with plan years commencing after Sept. 23, 2010, there will be no cost-sharing for some preventive care and preauthorizations for emergency services will no longer be required.

W-2 reporting

Employers will be required in 2011 to report on each employee’s W-2 the cost of their contribution for health coverage.

Over-the-counter medications

Over-the-counter medications, with certain exceptions, will become ineligible for reimbursement under flexible savings accounts, health reimbursement accounts, and health savings accounts unless there’s a prescription.

The Patient Protection and Affordable Care Act is making significant changes to our current health care system. Many questions remain about these and other provisions contained within the law.

Mike Evert is group benefits brokerage product manager for CUNA Mutual Group. Contact him 800-356-2644, ext. 8746.