By David Barron and Daniel Schuch, Epstein Becker Green Wickliff & Hall P.C.
For months the topic of health care reform has bombarded American media outlets, inundating the general public with a never-ending cycle of facts, figures and opinions. Despite the wealth of information said and written about health care reform, the million-dollar question remains: “How will health care reform affect me and my company?”
This article is intended to provide employers with a practical roadmap to navigate the complicated maze of legislation that is health care reform, with a focus on what lies ahead and what is already in effect.
I. IN EFFECT NOW…
Although many changes associated with health care reform take effect years down the road, there are a number of provisions which are of immediate impact to employers. Three of the more important changes are addressed below: (1) new protections for nursing mothers; (2) new protections for whistleblowers; and, (3) the “grandfathering” of existing health care plans.
First, employers need to understand that the health care reform law amended the Fair Labor Standards Act (“FLSA”), requiring 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:
1. Not a bathroom;
2. Shielded from view; and,
3. 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.
Second, in addition to the creation of nursing mother protections, the health care reform law amends the FLSA to dramatically expanded whistleblower protections in the workplace. Under the amendments, an employee who makes a complaint regarding a perceived violation of the new health care 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 health care exchanges scheduled to start in 2014, that act is protected from retaliation. The Occupational Safety and Health Administration (“OSHA”) of the Department of Labor has been charged with the responsibility to enforce the new whistleblower protections under the FLSA.
Lastly, this year poses a one-time opportunity to grandfather a health care plan from many of the changes required under the new health care law. Health care 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 health care 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 rate increases onto 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.
II. What Lies Ahead?
The health care reform law will change the country’s health care system. Necessarily, these changes are spread out over a broad period of time. 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 any time 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 health care law, this one might be one of the most beneficial; as employees will finally get to see what their health care 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 accounts (FSA) 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 only by the employee. In 2013, the law also implements changes to FSAs limiting the maximum amount available for such accounts to $2,500.
2014
In 2014, the most significant changes to the health care law will take effect. Every individual will be mandated to have health insurance and employers with more than 50 employees who do not offer health insurance will be penalized. Each state will implement health care 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 heath care 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.
Health care reform will have a far-reaching effect on companies in the United States. Armed with the information necessary to make educated decisions, companies will be able to implement the requirements of reform in a timely, efficient and strategic manner.
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.