July 2010
By: Walter J. Liszka, Esq.
Under the new rules of the Healthcare Reform law, there are some potentially very costly impacts that can affect that employer if the employer chooses to offer healthcare. Those impacts are as follows:
Coverage for young adults. Any group or individual healthcare plan that provides dependent coverage must continue to make that coverage available for an adult child - regardless of marital and tax dependent status - until that person turns 26. This type of coverage does not need to be provided to an eligible adult child if that child is enrolled in his or her own employer's group health plan. Unfortunately, starting in 2014, even if an adult child has coverage available through his or her own employer, the parent's plan will not be able to exclude that adult child until his/her 26th birthday. Even though coverage may be required for the eligible adult child, it will not be considered as taxable income either to the employee or the child even if the child does not qualify as a taxable dependent of the employee when the child turns 27. Most current plans provide coverage for children until they attain the age of 23 or 25 as long as that individual is enrolled as a full-time student. Obviously, this change in the Healthcare Reform Act will nullify such provisions.
No caps on lifetime benefits. All lifetime limits on individual and group health plans must be eliminated on what is defined by the U. S. Department of Health and Human Services as "essential health benefits." Currently there are many employer plans that impose a $1,000,000 to $5,000,000 lifetime limit on coverage. Obviously, under the new law, these must change. There will be required changes on any annual benefit limitations as well for any items that are deemed as "essential health benefits" and all these annual benefit limitations must be eliminated by 2014.
Pre-existing conditions. For all plan years beginning on or after September 23, 2010, there can be no exclusions of coverage for pre-existing conditions for healthcare participants under the age of 19, regardless of the provisions of the Health Insurance Portability and Accounting Act of 1996. Furthermore, effective 2014, there can be no exclusions for pre-existing conditions for anyone's coverage regardless of age. Under the current Health Insurance Portability and Accounting Act of 1996, there would not be any limitations on coverage for pre-existing conditions if an individual had health insurance coverage for the previous twelve (12) months without a break in coverage exceeding sixty-three (63) days.
Automatic enrollment. Employers with 200 or more employees will be required to automatically enroll new employees into their health plans commencing in 2014. It is understood that while this automatic enrollment will be mandated on an employer, individual employees may choose to opt out of insurance plans but must do so with clear documentation.
The "lay of the land" with regard to employer obligations under health insurance are drastically changing. Time will tell whether the changes are beneficial or detrimental to both employers and employees.
