Not only is PPACA ignorance no excuse, it’s unbelievably expensive…
Make no mistake: PPACA regulations include penalties for provisions that employers have probably never even heard of. Employers know that there are many new taxes and costs associated with sponsoring a group health plan under the new health care reform regulations, for example, most employers understand the exposure under the employer mandate or “play-or-pay” penalty. However, these penalty amounts can pale in comparison to the potential $100 per day, per affected-person penalty that exist on some of the least-publicized aspects of the law. And these penalties can be assessed for a variety of reasons.
Let’s take an example: An employer fails to realize that the new regulations prohibit him from continuing to offer a “non-integrated” Health Reimbursement Account (HRA), which is one that reimburses out-of-pocket medical expenses for both employees covered under his plan and those that do not elect this coverage. The employer thinks he is being very generous and, in addition, offers his employees a robust underlying medical program which covers employees expected costs well above the required 60% “Bronze” threshold set forth under health care reform.
What the employer doesn’t know is that the “non-integrated” HRA violates the requirements of PPACA. If the HRA plan’s eligibility isn’t tied to group health plan participation, the HRA isn’t protected from all of the required PPACA provisions of a group health plan such as covering preventive care at 100% and having no annual or lifetime limits.
Let’s say that this employer has 150 employees that are all covered under the non-integrated HRA plan. The employer would be subject to a $100 penalty per day per affected individual provision. This particular employer faces a potential annual penalty of over $5.4 million dollars.
When assessing compliance within PPACA, note that any of the following provisions, often overlooked, could result in a similar penalty assessment:
- Violating the non-discrimination rules (when released)
- Violating the annual and lifetime limits restrictions
- Failing to extend coverage to dependents to age 26
- Having retroactive rescission of benefits
- Failing to cover preventative care
- Failing to have a revised appeal process (including external appeals)
- Failing to provide timely notices,/li>
- Violating the restrictions on emergency room visits
- Violating restrictions on designation of primary care physicians
- Improper pre-existing condition exclusions
- Having excessive out-of-pocket costs
- Violations of the 90-day waiting period limit
The bottom line? Make sure your plans have been reviewed thoroughly for PPACA compliance to avoid costly penalties.
About the Author
Kathleen McSherry is a Senior Vice President at William Gallagher Associates in the Employee Benefit Group with a core focus on compliance and communications. Her responsibilities include educating clients on applicable local, state and federal regulations affecting their insurance programs and employees. She also acts as a liaison between WGA’s ERISA attorney and the entire benefits department.
617.646.0359 | Connect with Kathleen on LinkedIn