Health care law begins to kick into high gear

The biggest changes to the U.S. health insurance system in decades continue to unfold this fall, with government-run exchanges set to begin selling health plans for 2014 to millions of individuals and small businesses Oct. 1.

The Obama Administration’s July decision to make 2014 a transition year for the law’s employer mandate and some employer reporting requirements buys larger employers some extra time to try to understand the law, refine their options, put systems into place, and get ready to comply with the employer mandate in 2015. But the rest of the law is moving forward as scheduled. And even with some employer requirements pushed to 2015, businesses of all sizes still face immediate pressures to prepare. Here’s a look at some upcoming deadlines.

Oct. 1, 2013: Exchanges open. Government-run health insurance marketplaces, also known as exchanges, must be up and running by Oct. 1 in all states to let individuals and small employers enroll in private health care plans for 2014. Seventeen states and Washington, D.C., will operate their own exchange or partner with the federal government on an exchange. Thirty-three states have chosen to let the federal government run the exchange in their state for 2014. Among other responsibilities, exchanges will play a central role in determining which individuals qualify for federal tax subsidies to help buy coverage through an exchange.

Oct. 1, 2013: Employee-notification rules. All employers covered by the Fair Labor Standards Act are required to provide written notice to employees about health care coverage options through the new health insurance marketplaces/exchanges. According to temporary guidance issued by the Department of Labor this spring, employers must provide notice to existing employees by Oct. 1, 2013; at the time of hire for employees hired between Oct. 1, 2013, and Dec. 31, 2013; and within 14 days of the employee’s start date beginning in 2014. The National Restaurant Association's Health Care Law Primer offers more details.

Jan. 1, 2014: Individual mandate. With limited exceptions, all Americans are required to obtain “minimum essential coverage” -- through their employers, exchanges, Medicaid/Medicare or elsewhere -- for themselves and their dependents or face potential tax penalties. In 2014, individuals will face a penalty of $95 per adult and $47.50 per child with a maximum of $285 or a family, or 1 percent of family income, whichever is greater. Individuals will be required to state on their federal tax returns that they have health care coverage and identify the source. It's likely that many employees will look to their employers for information about the mandate; see the NRA's Health Care Law Primer for answers to some common employee questions.

Jan. 1, 2015: Employer mandate. Employers who average 50 or more full-time-equivalent employees over the 12 months of 2014 are considered “applicable large employers” for 2015 and will be required to offer full-time employees and their dependents the opportunity to enroll in a qualifying health plan starting in 2015, or face possible penalties. The 50-FTE formula isn’t easy. It requires monthly calculations based on the number of full-time employees (defined as those who average 30 or more hours a week during a calendar month) and the hours worked by part-time, seasonal and other employees. The NRA's Health Care Law Primer outlines the calculation, and also includes information to help employers determine which employees are considered “full time” for purposes of health care coverage offers in 2015.

Jan. 31, 2016: Large-employer reporting requirements. Employers covered by the employer mandate will be required to file their first annual information return with the Internal Revenue Service by Jan. 31, 2016, about any health care coverage offered during 2015. Similar information must also be sent to employees. The IRS will use the data to calculate and assess penalties against large employers. Employees will use the data to report their health-care coverage status on tax returns. The required information could be extensive, including data on full-time employees, premium costs, and whether plans meet new “minimum value” standards. The law also requires insurers for fully insured plans and employers with self-funded plans to file similar data about health care coverage with the IRS and employees, including details on who accepted coverage offers, and for how long. The Treasury Department and IRS are expected to release a proposed rule addressing this part of the law this summer.Other parts of the law also move into place in 2014, including a new 90-day limit on maximum waiting periods for all group health plans and an end to preexisting-condition limitations in health plans. All employers must report the value of health benefits on employees’ W-2 forms for tax year 2013.