Interaction of Health Care Reform with Other Laws

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March 8, 2013 — 1,839 views  
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The Patient Protection and Affordable Care Act (PPACA) or Affordable Care Act (ObamaCare) was incorporated in the United States health care law on March 23, 2010. The act is aimed at reducing the number of uninsured Americans and decreasing the cost of overall health care. The PPACA provides many mechanisms such as tax credits, subsidies, and mandates that help reduce overall health care costs. The act requires insurance establishments to cover every applicant and provide the same rates irrespective of gender or pre-existing conditions.

In July 2012, the US Supreme Court upheld the PPACA and revised the nation’s healthcare system to interact with pre-existing laws such as ERISA, HIPAA, and COBRA. HR professionals and employers need to understand how to comply with this law amid the pre-existing laws.

ERISA and PPACA

An increasing number of employers are getting legal and financial benefits through self-funded health plans. Self-funded health plans allow the company to develop flexible health schemes for their employees and save significant costs after receiving exemptions from federal and state governments. The ERISA and PPACA play an important role in health plan operations and governance. Both of these acts make the self-funded plans favorable compared to their commercial counterparts.

Self-funded insurance plans should meet the basic requirements of PPACA, like paying fees for funding research and covering certain preventive health services and automatic enrollment. Along with PPACA regulations, health insurance plans come under the regulation of ERISA (The Employee Retirement Income Security Act). The act serves as a law for consumer protection and establishes the minimum regulations and standards of employee benefit plans.

HIPAA and PPACA

One method the PPACA uses to encourage initiatives in wellness is by increasing the prohibition exceptions on health plan discrimination which is found in HIPAA (Health Insurance Portability and Accountability Act). If a health plan meets a specific requirement, HIPPA permits employers who are offering these health plans to give discounts on premiums or offer other types of financial incentives for their employees who take part in standard-based programs. But under HIPAA regulations, the programs cannot offer rewards more than 20% of employee coverage costs.

The PPACA complies with these HIPAA standards but has increased the penalty cap or employee rewards to 30%. The regulation will be put into effect from 1st of January, 2014. The act strengthens the employer’s positions and allows him to influence healthy lifestyles in his employees.

COBRA and PPACA

PPACA does not eradicate the COBRA requirements. If an employee has a COBRA qualified health plan, he must follow all its current rules. PPACA, however, reduces the coverage periods to just 90 days, which means that employees who have COBRA coverage in the past will not be required to keep it for more than three months. The PPACA guidelines will also make COBRA less expensive and more comprehensive by offering coverage through an employer-sponsored plan. It will also offer increased incentives from 20% to 30% to people who participate in COBRA wellness programs.

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