Auto Industry Insurance Blog

After a year of debates in Washington, on March 25, 2010, Congress passed H.R. 4872, the Health Care and Education Reconciliation Act of 2010 (the “Reconciliation Act”).  The Reconciliation Act amends the Patient Protection and Affordable Care Act (“PPACA”), which became law on March 23, 2010.    

Employers around the country are scrambling to figure out what the upcoming changes mean for them and their employees. This may prove to be somewhat of a challenge as the federal regulators haven’t yet written the rules implementing the new law.  

This presentation will highlight some of the key changes that may affect employers, some as early as Fall 2010, and will summarize future changes that will start to phase in over the next few years.  Most of the major changes will go into effect January 1, 2014, including State sponsored exchanges (available to individuals and groups under 100 lives), implementation of a voucher system for low-paid workers, and numerous tax provisions.

This document covers insurance reform highlights only.  There are many other reforms not covered in this document such as tax reforms, adoption credits, school loan changes and modifications to Medicare and Medicaid/Cal.

Immediate changes (effective with renewals 10/1/10 and thereafter ):

1. Dependent Coverage:  Health plans that provide dependent coverage will be required to provide it up to age 26 (through 25).  There is no school requirement and the eligible dependents can be married.  The dependents children are not required to be covered.
2. Eliminates Pre Existing Conditions Exclusion for Children:  Health plans would be prohibited from excluding coverage of pre-existing conditions for children. This provision will apply to everyone in 2014.
3. Ban on Lifetime Limits:  The Law prohibits insurers from imposing lifetime limits on benefits.
4. Retirees:  Creates a temporary reinsurance program for employers providing health insurance to retirees over age 55 but not eligible for Medicare.

Immediate changes (effective with renewals 10/1/10 and thereafter ):

1. Dependent Coverage:  Health plans that provide dependent coverage will be required to provide it up to age 26 (through 25).  There is no school requirement and the eligible dependents can be married.  The dependents children are not required to be covered.
2. Eliminates Pre Existing Conditions Exclusion for Children:  Health plans would be prohibited from excluding coverage of pre-existing conditions for children. This provision will apply to everyone in 2014.
3. Ban on Lifetime Limits:  The Law prohibits insurers from imposing lifetime limits on benefits.
4. Retirees:  Creates a temporary reinsurance program for employers providing health insurance to retirees over age 55 but not eligible for Medicare.
5. Rescission:  Health plans will be prohibited from rescinding coverage for all health insurance markets (including self funding), except for cases of fraud or intentional misrepresentation.
6. Preventive Care:  All group and individual plans, including self funded plans, will have to cover specific preventive care services with no cost sharing. Immediate changes (effective with renewals 10/1/10 and thereafter ):
7. Rescission:  Health plans will be prohibited from rescinding coverage for all health insurance markets (including self funding), except for cases of fraud or intentional misrepresentation.
8. Preventive Care:  All group and individual plans, including self funded plans, will have to cover specific preventive care services with no cost sharing.

In 2011:

1. Over The Counter Medications:  OTC drugs will no longer be reimbursable under HSAs, HRAs and FSAs unless they are prescribed by a physician.
2. Long Term Care:  Establishes a national, government run, voluntary insurance program for purchasing long-term care services.
3. HSA Tax Increase:  Increases tax from 10% to 20% on distributions from HSAs not used for qualified medical expenses.
4. Medicare D:  Rebates for Medicare D donut hole of $250.  The gap is eliminated in full by 2020.
5. Temporary High Risk Pool:  A high risk pool will be created for uninsured individuals with pre-existing conditions who have not been covered for 6 months.
6. W-2 reporting:  Employers must disclose in the employee’s W-2 the aggregate cost of the employer-sponsored coverage.

In 2012:

1. Summary of Benefits:  All group and individual plans (including self-insured plans) will have to provide a summary of benefits and a coverage explanation that meets specified criteria to all enrollees when the apply for coverage, when they enroll or re-enroll in coverage.
2. DHHS reporting:  All group plans (including self-insured plans) and all individual and group carriers will have to submit reports to the secretary of DHHS on whether or not the benefits provided under their plans meet criteria to be established by the DHHS on improving health outcomes, preventing hospital re-admissions, improving patient safety and reducing medical errors, including wellness and health promotion activities.

In 2013:

1. Medicare Payroll Tax:  The Medicare payroll tax increase of .9% above $200,000 for individuals and $250,000 for joint filers will go into effect.  (The reconciliation act would also levy a new 3.8% Medicare tax on certain unearned income from individuals with AGI over $2000,000 a or $250,000 for joint filers).
2. Tax Returns:  The threshold for deducting unreimbursed medical expenses will increase from 7.5% of AGI to 10% of AGI (will be waived for those over age 65 and older through 2016).
3. State-based exchanges:  All employers must provide notice to their employees of the existence of the state based exchanges.
4. Flexible Spending Accounts:  FSA contributions for medical expenses are limited to $2,500 per year, with the cap annually indexed for inflation.

In 2014:

1. Automatic Enrollment: The legislation will require that employers with more than 200 employees automatically enroll full-time employees in health coverage. The legislation will allow employees to opt-out of the coverage after automatic enrollment.
2. Individual Mandate:  The Individual mandate requirement to purchase health insurance for all citizens and legal residents takes effect.  All employer plans, including self-insured plans, will have to provide documentation of coverage to all covered employees, and their dependents and the IRS.
3. Employer Requirement:  The legislation will require an employer with more than 50 FTEs to pay $2,000 per employee (excluding the first 30 employees) if the employer fails to offer health coverage and has at least one full-time employee receiving a premium tax credit. Employers that offer coverage but have one employee receiving a tax credit will also pay the penalty.
4. Waiting Period:  Waiting period of more than 90 days for coverage for new employees would be prohibited.

In closing, it is important to note that the complexity of the Health Care and Education Reconciliation Act (H.R. 4872) will undoubtedly lead to the need for further clarification regarding how various sections of the law will be implemented over the coming weeks, months, and years to come.  Alliant will continue to provide timely updates to this emerging legislation.

Should you have any questions feel free to call 800-390-9099 to speak to a member of the Specialty Equipment Insurance Alliance Benefits Team.

San Bernardino, Calif. – Citing the tremendous benefits to its members, the Specialty Equipment Insurance Alliance, (SEIA) an endorsed program of the Specialty Equipment Market Association (SEMA) announces its plans to attend one of the largest Sport Compact Industry events in the country, SpoCom. “With over 7,000 attendees it is clearly one of the epicenters of the Sport Compact scene and its participants align perfectly with the type of core customer we like to serve through our partnership with SEMA”, stated Franco Ganino, VP of Marketing.  

With over 1,100 trade only attendees, SpoCom creates the perfect environment where industry part manufacturers can get together with the jobber/installers who have made the Sport Compact industry what it is today. “Since the launch of our exclusive garage program, Installers Edge, we have been working hard at delivering turn key Garage Insurance packages to the dedicated Sport Tuner / Restyler and SpoCom brings it all under one roof”, says Albert Clark-Castaneda, Sales Associate and Alliant Insurance.

Many members don’t have the time or resources to deal with insurance matters during these difficult times or struggle to find an agent who is knowledgeable enough to design the coverage needed at an affordable price.  Through the Installers Edge Program member companies will gain access to Garage Liability, Property, Auto, Garage Keepers Legal Liability and Product liability using the aggregated buying power of SEMA’s national membership. Trevor Allan, Sales Associate at Alliant added, “Working with members of the SPC Counsil we are committed to the Sport Compact community and work hard at ensuring our insurance products meet their needs”.