The Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act, which were recently enacted, targets retiree health plans with new requirements and the potential of excise taxes. These reforms may discourage the adoption of new plans and result in the termination of existing plans.
Significant new minimum coverage rules will affect retiree health plans, regardless of whether the plan is insured or self-insured. These requirements include:
- A ban on lifetime limits.
- Pre-existing condition limits are eliminated for children age 18 or younger
- Annual dollar limits must be deleted
- Coverage of children must extend to age 26
- Mental health parity rules will now apply
- Preventive care coverage, with no cost-sharing, will apply
- Pre-authorization requirements are prohibited
Individuals with annual income exceeding $85,000, or $170,000 if married and filing jointly, will pay a premium surcharge for Part D prescription drug coverage.
The “donut hole” will be gradually phased out. This applies to the gap in coverage for Medicare Part D prescription drugs. Beginning in 2011, manufacturers of pharmaceutical drugs must pass along graduated and larger discounts on drugs for beneficiaries in the coverage gap. By 2020, beneficiaries will pay only 25 percent of their prescription drug costs.
For those ages 55 or older who are not covered by Medicare, a new program will soon (June 2010) reimburse early retiree costs falling between $15,000 and $90,000. The subsidy will be 80 percent of the cost. Program payments must be used to lower plan costs, such as reducing premiums, co-insurance or deductibles. The program will end in 2014 or until the government has spent $5 billion.
What You Need to Do
Review and analyze your current retiree health benefit plans. Determine if changes should be made to your current plans (or it is even beneficial to continue to maintain a plan or to freeze the plan to new retirees) and the effects that it could have on you and your employees.
For More Information
For more information on this topic, please contact Michael Conger at (816) 360-4145 or mconger@polsinelli.com. |
