As we have discussed in prior posts, health reform requires group health plans (other than grandfathered plans) to cover certain preventive health services without any cost sharing for plan years beginning on or after September 23, 2010. At first glance, this seemed like a fairly easy rule for most health plans sponsors, since many plans already provided first dollar coverage for most preventive services. However, administering the new requirements can be quite complex and further guidance is needed.
Here are a few of the issues we have encountered:
- Some of the preventive care lists require plans to cover over the counter drugs or vitamins. After health reform, these items can no longer be excluded from income without a prescription. If a plan participant buys these items without a prescription and receives reimbursement from the health plan, does the plan sponsor need to report imputed income to them?
- Counseling services are among the preventive services required, including tobacco counseling, alcohol misuse counseling, obesity counseling, etc., but it is not clear how this will work, since these are not services typically covered by an employer’s major medical plan.
- First dollar preventive care coverage is required for pediatric dental and vision. It is not clear how these requirements will apply to major medical plans, which do not usually cover such services.
- For some services, it will be difficult to draw a line between preventive (covered without cost share) and treatment (cost sharing may apply).
These challenges are particularly daunting, because failure to follow the new preventive care mandates subjects a plan sponsor to the new automatic tax reporting of IRS Form 8928, with potential excise tax penalties of up to $100 a day per participant.
Today’s post was contributed by Maureen Maly.
Appreciate the 12/3 post on preventive care mandate.
Respecting the first bulleted item in the post, I’m not sure it’s clear (yet) whether the preventive care recommendations that reference OTC medicines (e.g., aspirin) actually require the plan to cover the expense of that OTC medicine or, whether what’s required is for the plan to provide a preventive care benefit that includes a provider delivering this recommendation. This issue was described as ‘not yet addressed’ by several government attorneys in August 2010 when publicly describing the the preventive care mandate guidance published in the Federal Register on 7/19/2010.
If it turns out that the mandate does not extend to actually covering the recommended OTC medicine, then the dilema presented by the OTC tax treatment may be avoided.
Thanks for your comments. We’ll be watching this issue closely.
Appreciate the 12/3 post on preventive care mandate.
Respecting the first bulleted item in the post, I’m not sure it’s clear (yet) whether the preventive care recommendations that reference OTC medicines (e.g., aspirin) actually require the plan to cover the expense of that OTC medicine or, whether what’s required is for the plan to provide a preventive care benefit that includes a provider delivering this recommendation. This issue was described as ‘not yet addressed’ by several government attorneys in August 2010 when publicly describing the the preventive care mandate guidance published in the Federal Register on 7/19/2010.
If it turns out that the mandate does not extend to actually covering the recommended OTC medicine, then the dilema presented by the OTC tax treatment may be avoided.
Thanks for your comments. We’ll be watching this issue closely.