Laws Regarding Health Insurance Offered by Employers
One of the employment benefits employee value most is health insurance, but it's a highly regulated undertaking for employers. Changes to some health insurance laws were made in February 2009 as part of the stimulus package passed by Congress and even more changes to health care benefits are expected in 2009.
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Potential changes to health insurance and how it might affect employers
President Barack Obama has stressed the necessity of health care reform in 2009. The president's eight guiding principles for health care reform outlined in his 2009 budget could have a huge impact on employers. According to the budget, when the president reforms health care he will: (1) protect families’ financial health; (2) make health coverage affordable; (3) aim for universality; (4) provide portability of coverage; (5) guarantee choice; (6) invest in prevention and wellness; (7) improve patient safety and quality care; and (8) maintain long-term fiscal sustainability.
President Obama has previously mentioned several ideas for health care reform including new regulatory requirements, more government involvement, a national public health insurance plan, and a “pay or play” plan for employers.
A public insurance plan would set a standard for quality coverage and compete with private insurance plans. Under a “pay or play” plan, an employer would either have to “play” by offering insurance to employees that meets minimal standards for health coverage or “pay” by contributing to a public fund to help cover uninsured individuals.
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American Recovery and Reinvestment Act of 2009
On February 17, 2009, President Obama signed a stimulus bill called the American Recovery and Reinvestment Act of 2009 (ARRA), into law. ARRA contains several provisions relating to health care benefits including:
COBRA. The Consolidated Omnibus Budget Reconciliation Act (COBRA) was designed to protect employees and their families from losing health benefits if the employees lost their jobs. Under COBRA, an individual may usually keep health coverage through a previous employer’s health plan for up to 18 months by paying 102% of the cost of coverage. The stimulus package provides for a subsidy in which the government will pay 65% of employees’ COBRA premiums for up to 9 months.
Audio Conference: Effective Immediately: How the Stimulus Package Changes COBRA
HIPAA. The Health Insurance Portability and Accountability Act (HIPAA) was originally passed in part to address another area of employee concern about their health benefits -- whether they could obtain coverage for health conditions they or their families had before they obtained benefits under a new health plan. The ARRA also expands HIPAA’s privacy and security regulations. Under the stimulus package, business associates of covered entities will be directly subject to HIPAA. The stimulus plan also extensively changes HIPAA on other issues, including security breaches and related notification requirements, the rights of individuals regarding their protected health information, and increased enforcement and penalties for violations.
Other laws. The ARRA also includes funding for health information technology (with an emphasis on computerizing health records), health care effectiveness research, disease prevention measures, community health centers, and training for primary care providers.
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Other federal laws regarding health insurance offered by employers
The following is an overview of a few of the major laws affecting health insurance plans offered by employers.
- ERISA. The Employee Retirement Income Security Act’s (ERISA) main purpose is to protect employees from losing their pensions due to harsh vesting rules or poor management, but the law covers health benefits as well.
- FMLA.The Family and Medical Leave Act (FMLA) gives eligible employees the right to take up to 12 workweeks of unpaid leave during any 12-month period for any of these reasons: (1) to care for their newborn child, (2) for placement of a child for adoption or foster care, (3) to care for a child, spouse, or parent with a serious health condition, or (4) to obtain treatment for and recover from their own serious health condition.
- Cafeteria Plans (Section 125 Plans). Cafeteria Plans are tax-advantaged accounts called cafeteria plans because employees can pick and choose from a number of different employee benefits they can fund with pre-tax dollars. They’re also called flexible spending accounts (or FSAs), and health FSAs if they offer a choice of health benefits.
- Other laws. Other federal laws and regulations dealing with more specific aspects of employer health care plans include the Mental Health Parity and Addiction Equity Act, the Medicare Modernization Act (MMA), and the Uniformed Services Employment and Reemployment Rights (USERRA). Several federal laws prohibiting employment discrimination also prohibit discrimination in employee benefits, one of the most important terms and conditions of employment. Those include the Age Discrimination in Employment Act (ADEA), the Americans with Disabilities Act (ADA), Title VII of the Civil Rights Act of 1964, and the Equal Pay Act.
Audit your health benefits policies and practices with the Employment Practices Self-Audit Workbook
Same-sex marriages, civil unions, and domestic partner benefits
This area of the law is rapidly evolving in our nation’s courts and legislatures. Laws prohibiting discrimination based on sexual orientation, including domestic partner benefits, appears to be a very hot issue in a number states in 2009. Some states (and even some cities) have legalized same-sex marriages and/or civil unions, while others have amended their constitutions to forbid them. Some companies, moreover, have chosen to offer benefits to their employees’ same-sex partners, and others cover both same-sex and opposite-sex but unmarried unions. The best course of action is to consult a competent employment benefits attorney to determine which laws apply.
Audio Conference: Same-Sex Marriages: Overcoming Policy, Benefit and Payroll Challenges
State laws on employee benefits
States have continued to weigh in on employment and benefits issues. There’s been a steady trend for states to require that employers or insurance companies cover certain medical conditions, with coverage mandates increasing over the years.
States also have a history of regulating workers’ compensation insurance, a parallel health insurance system for work-related injuries and illnesses. Employers should check with competent benefits counsel to learn which state regulations they may need to follow as they implement their benefits program.
State-by-state comparison of 50 employment laws in all 50 states
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Related articles on Health Care Benefits Offered by Employers featured in HR Hero Line, The Employment Law Post, and HR Hero White Papers
- Senate Finance Committee Maps Routes to Health Care Reform
(Benefits & Compensation Law Alert, June 2009)
- Health Care Reform: Taxing Health Benefits Could Cause Unintended Consequences
(Iowa Employment Law Letter, June 2009)
- Senate Report Outlines Possible Approaches for Health Care Reform
(Human Resources News, May 2009)
- Health Care Outlook for Employers
(HR Hero White Papers, April 2009)
- New Requirements on Group Health Plans Starting April 1
(West Virginia Employment Law Letter, April 2009)
- IRS Issues New COBRA Guidance for Employers
(Human Resources News, April 2009)
- What the Obama Stimulus Plan Means for Employers: COBRA, Benefits, and More
(HR Hero White Papers , March 2009)
- Mental Health Parity Act Effective Date Delayed
(Employers State Law Alert, February 2009)
- What Obama's Economic Stimulus Plan Means for Employee Benefits Plans
(Benefits and Compensation Law Alert , February 2009)
- New Law Addresses Mental Health Coverage Parity
(Utah Employment Law Letter, December 2008)
- IRS Issues New Guidance for HSAs
(Federal Employment Law Insider, August 2008)
- Employer Wellness Programs Need a HIPAA Checkup
(Oklahoma Employment Law Letter , July 2008)
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