This summary of the key changes that became effective in
2013 and become effective in 2014 was provided by Brown & Brown. It is based upon federal regulations and
other guidance published as of February 12, 2014.
Health
Care Reform: What Employers Need to Know
Laura I. Fanuele
Senior Vice President - Employee Benefits
Brown & Brown Benefit Advisors
5 Regent St. STE 523
Congress
enacted the Patient Protection and Affordable Care Act in March 2010,
overhauling the United States health care system. The law is also referred to
as PPACA, the ACA, the Affordable Care Act and Health Care Reform. For
employers, the new law represents the most significant changes to their health
benefit plan since the passage of ERISA.
Many
provisions of Health Care Reform are already in effect. The purpose of this
bulletin is to summarize key changes that became effective in 2013 and become
effective in 2014. It is based upon federal regulations and other guidance
published as of February 12, 2014.
Plan
Changes
Employers
will be required to make several changes to their health plans for 2013 and
2014 to comply with Health Care Reform. The changes include the following:
1.
Medical FSAs
a.
Limit on Contributions For plan years beginning in 2013, a participant is not
permitted to contribute more than $2,500 to his or her medical flexible
spending account (FSA) under an employer’s Section 125 cafeteria plan. An
employer is required to amend its Section 125 plan to include this limit no
later than December 31, 2014.
b.
Optional Medical FSA Carryover Beginning as early as the 2013 plan year, an
employer can amend its Section 125 plan to allow an employee to carryover up to
$500 of his or her unused medical FSA balance for reimbursement in the
following plan year. This optional provision is an alternative to the 2½ month
grace period rule for medical FSAs. An employer can offer one provision or the
other but not both. Like the 2½ month grace period, the $500 carryover rule
creates complexity for employees enrolling in a high deductible health plan
(HDHP) with an HSA. Employers offering an HDHP with an HSA need to design the
2½ month grace period or $500 carryover in a way to ensure employees will still
be HSA eligible.
c.
Eligibility of Part-Timers Beginning in 2014, only employees who are eligible
for the employer’s group health plan should be allowed to participate in the
medical FSA. If an employee (e.g., a part-timer) is allowed to participate in
the medical FSA but not the employer’s group health plan, the medical FSA will
not be an “excepted benefit.” Excepted benefits that aren’t grandfathered under
Health Care Reform must offer first-dollar preventive care. Since medical FSAs
typically aren’t employer-funded, this creates a seemingly impossible
compliance requirement.
