On March 23, 2010, President Obama signed into law the Patient Protection and Affordable Care Act (the "Act") which will dramatically change how health care is provided in this country. Over the next five (5) years, employers will face a dizzying array of changes to their employer-sponsored health care plans. To ensure compliance with the Act, employers must implement new administrative and reporting practices for their employer-sponsored plans, alter their plan coverage, remove certain restrictions on plan benefits, and even amend their plan documents and descriptions. While many of the provisions of the Act do not come into effect until 2014, many provisions become effective this year and the Act further mandates many changes to employer-sponsored plans that can be implemented today to ensure a smooth transaction over the coming months and years.
Below are several of the most important changes which generally become effective as of the first day of a plan year beginning six (6) months after the date of enactment of the Act, or September 23, 2010.1 Plans that were in effect March 23, 2010, the day the Act was signed into law, are generally "grandfathered" indefinitely from certain requirements of the Act so long as at least one employee was enrolled in the plan as of that date.2
Failure to comply with the Act can result in stiff penalties being assessed against the employer. For example, the failure of an employer-sponsored plan to provide coverage for its employees' children under the age of 26 may result in a One Hundred Dollar ($100.00) per day per employee excise tax assessment. For additional information, please contact the author, Elliot P. Fitzgerald or Mary Elizabeth Davis, Head of the Spotts Fain Employment Law Group.
1. Thus, the foregoing changes are effective for employer-sponsored plans where the plan year is a calendar year, on January 1, 2011. For employer-sponsored plans with plan years beginning after September 23, 2010, compliance with the Act is required beginning with the new plan year in 2010. For employer-sponsored plans with plan years beginning before September 23, 2010, compliance with the Act is required beginning with the new plan year in 2011.
2. Importantly, a plan's grandfathered status is not lost by new enrollments or other enrollment changes made after March 23, 2010. It remains unclear, however, whether grandfathered plans may be amended and the extent to which any amendments may negate a plan's grandfathered status.
3. Effective in 2014, all pre-existing condition exclusions are banned.