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Long-Term Care and 2010 Health Care Reform                <<Previous Page

(Page 2 of 2 of Health Care Reform: What Employers and Employees Need to Know)

The health care reform law includes the Community Living Assistance Service and Supports Act (the CLASS Act), a new program that provides limited payments for long-term care. The CLASS Act is a federal insurance program, like Social Security or Medicare. Unlike those programs, however, participation is voluntary for both employers and employees.

Beginning in January 2011, employers who choose to participate in the program may allow employees to opt in or may automatically enroll employees and allow them to opt out of the program. Employees pay the full price of the premiums, which are withheld as a regular payroll deduction. Once employees have paid into the program for at least five years, they are eligible for cash benefits (estimated at about $50 per day) if they are limited in at least two daily living activities, such as bathing, dressing, or caring for themselves.

Changes to HSAs and FSAs

Beginning in 2011, over-the-counter drugs are no longer reimbursable through flexible savings accounts (FSAs) or health savings accounts (HSAs) unless the drugs are prescribed by a doctor. The health care reform law also caps annual contributions to an FSA to $2,500 beginning in 2013. And employees under the age of 65 who make non-qualified withdrawals from their HSA (in other words, don't use the money for health care purposes) will have to pay a 20% penalty.

Reporting and Notice Requirements

The health care reform law imposes several new informational requirements on employers. They include:

Play or Pay: The Employer Mandate

Beginning in 2014, the individual mandate will kick in. Everyone will have to be covered by health insurance or pay a fine; those who can't afford insurance will be eligible for assistance.

The employer mandate kicks in at the same time. Employers with at least 50 employees must provide health care benefits or pay a penalty. Employers who provide benefits may still have to pay a penalty, depending on the cost of benefits to employees and employee ability to pay. Here are the basics:

Larger employers will also have to automatically enroll employees in their health insurance plan.

by: Lisa Guerin, J.D.                                              

Source:  ©2010                                                                                                                                         <   Previous Page

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