On March 23, 2010, President Barack Obama signed the Patient Protection and Affordable Care Act (PPACA) into law, and on March 30, 2010, he signed the Health Care and Education Affordability Reconciliation Act of 2010 (HCEARA), which contained amendments to the PPACA, into law. The two laws make up an expansive health care reform package that will have many far-reaching effects on employers. While many changes that affect employers would go into effect in 2014 others will happen soon. Read the latest news on health care reform
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Primer on employee benefits
It’s common for employers to provide certain benefits for their employees, many of which are subject to strict rules under the Employee Retirement Income Security Act (ERISA), the Internal Revenue Code, and other laws. Employee benefits can include:
- paid holiday, vacation, and sick leave;
- medical, dental, and vision insurance;
- cafeteria plans (also known as flexible spending accounts or FSAs);
- disability insurance;
- life insurance;
- retirement plans;
- severance packages;
- stock options;
- health and wellness programs;
- employer-paid day care centers;
- education assistance programs and scholarship funds;
- prepaid legal services;
- employee assistance programs;
- long-term care insurance;
- telecommuting; and
- adoption assistance.
Laws affecting employer benefit plans
There are many laws employers need to take into account when evaluating their benefits packages. Some of these laws include:
- ERISA. The Employee Retirement Income Security Act (ERISA) sets standards for the establishment and operation of employee benefits plans. If you offer employees a health insurance plan or a retirement plan, chances are you’re covered by ERISA. Some ERISA requirements apply to both retirement and welfare benefit plans. (Welfare plans are generally those that provide health, life, or disability benefits.)
- ADA. The Americans with Disabilities Act (ADA) and ADA Amendments Act prohibit discrimination in benefits based on disabilities. For example, employer health plans can’t single out a group of disabled people for lesser benefits than individuals who aren’t disabled.
- Age discrimination laws. The Age Discrimination in Employment Act (ADEA) and the Older Workers Benefit Protection Act (OWBPA) protect older workers from discrimination in their employment benefits. Employers can be liable for discrimination against active employees as well as retirees. That means you can’t give lower benefits to employees or retirees based on their age.
- HIPAA. The Health Insurance Portability and Accountability Act (HIPAA) also bars discriminatory practices in the handling of benefits. Additionally, HIPAA imposes portability, privacy, security, and certain other requirements on group health plans. On February 17, 2009, President Barack Obama signed an economic stimulus bill called the American Recovery and Reinvestment Act of 2009 (ARRA), into law, which expands HIPAA’s privacy and security regulations. Under the ARRA, 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.
- 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. Under the ARRA, the federal government paid 65% of COBRA premiums for up to nine months for employees who were involuntarily terminated between September 1, 2008, and December 31, 2009. This subsidy has been extended several times by Congress.
- Other laws. When evaluating benefits packages, employers also must take into account IRS regulations, the Uniformed Services Employment and Reemployment Rights Act (USERRA), the Mental Health Parity and Addiction Equity Act, the Medicare Modernization Act (MMA), Title VII of the Civil Rights Act of 1964, and the Equal Pay Act.
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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 employers or insurance companies to 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.