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2012 Will Be a Big Year for Health Care Reform

January 20, 2012

Supreme Court will hear challenges to the PPACA. On Mar. 27, 2012, the U.S. Supreme Court will hear several hours of oral argument on whether the Patient Protection and Affordable Care Act of 2010, commonly called Health Care Reform, is constitutional. The primary challenge arises from the Act’s “individual mandate,” a provision effective in 2014 which requires individuals to buy health insurance or pay certain penalties. Opponents of Health Care Reform argue that Congress does not have the power under the Constitution to order individual citizens to purchase any particular product, including health insurance. Supporters claim that if Congress cannot regulate health care – the nation’s largest single industry – then its constitutional power to regulate interstate commerce is hollow. The Court’s decision is likely to come in late June and will, no doubt, play a substantial role in the 2012 Presidential Campaign.

What’s happened recently with Health Care Reform? The first wave of mandated changes for all plans included:

  • The extension of coverage for children until they reach age 26;
  • The prohibition of pre-existing condition exclusions for children up to age 19;
  • The elimination of lifetime limits, and the phase-out of annual limits, on “essential health benefits”; and
  • The prohibition on rescissions of coverage (not an issue with most collectively bargained plans).

In 2012, plans that do not enjoy “grandfathered status” will have to expand covered preventive care services, and implement more comprehensive appeals procedures, including an outside independent review. Because the grandfathering rules are very fact-specific, you should contact the Benefits Group at Willig, Williams & Davidson if you have questions about whether or not your plan is grandfathered.

2012 also is the first year that employers will need to track the cost of health care coverage so that they can report it on the Forms W-2 that they issue to their employees in Jan. 2013. Multiemployer plans, however, will not have to report the value of health benefits to contributing employers, nor will the employers have to report the value of these benefits on the Forms W-2 issued to their employees covered under a multiemployer plan.    

Considerations for collective bargaining. Health Care Reform establishes an entirely new framework for delivering health benefits coverage in 2014. Effective that year, individuals will be able to purchase coverage through a health care exchange established by their state, and may be entitled to premium assistance tax credits. Employer coverage will remain an option, but employers that do not offer any coverage, or offer inadequate coverage, will have to pay certain penalties.  

If you are negotiating a Collective Bargaining Agreement that will extend through 2014, you may want to consider a health care re-opener to deal with these changes. Note that the open enrollment period for the exchanges likely will be in the fall of 2013, so any re-opener should be planned for no later than the summer of 2013.

In approaching negotiations, you should weigh whether your members may benefit more from purchasing coverage on an exchange or from pursuing more traditional employer-provided coverage. For example, if your members are lower-wage workers with high premium copayments for their current employer coverage, using the combination of premium assistance tax credits and health care exchange coverage may be a real option. If, however, your members are higher-wage workers (earning more than 400% of the federal poverty level), and their employer coverage is comprehensive, then more traditional bargaining over the employer’s plan may remain the best way to promote your members’ health security.

If you have questions about Health Care Reform, and how to approach bargaining in the current health care environment, please contact the Benefits Group at Willig, Williams & Davidson.

 

   
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