The IRS shut the door on 2010 with a pair of late changes to health care reform regulations that will significantly affect employers with health care plans this year.

Right before Christmas, the IRS announced it would delay enforcement of the new nondiscrimination rules that apply to nongrandfathered fully insured plans under the Patient Protection and Affordable Care Act (PPACA). These rules, which previously applied only to self-insured plans, prohibit plans from discriminating in favor of highly compensated individuals (HCIs) by having different rules or features in regards to eligibility or benefits, according to a news brief by the law firm Drinker Biddle. These nondiscrimination rules became effective for all plans beginning on or after Sept. 23, 2010.

However, the IRS has tabled any enforcement of this rule until it can craft guidance that clears up some lingering questions on the legislation, including how Section 105(h) eligibility and benefit tests should be applied to fully insured plans.

This is good news for fully insured employers, who would face harsher penalties than employers with self-funded plans under the new rules, according to the law firm Spencer Fane Britt & Browne LLP.

Under the previous regulations, HCIs in self-insured plans that did not comply would be individually taxed on some or all of their benefits. "By contrast, if a [fully] insured plan violates the nondiscrimination rules, there are no tax consequences to the affected HCIs," Spencer Fane's Robert A. Browning wrote in a recent news release. "Instead, the employer/plan sponsor is subject to an excise tax equal to $100 per day per non-highly compensated individual who is discriminated against." The employer also might face lawsuits by federal agencies or employees, Browning said.

Now, employers won't have to comply with the rules until sometime after March 11, when the IRS closes its comment period.

Debit Cards and OTC Medicines
The IRS also tweaked rules on using flexible spending account (FSA) and health savings account (HSA) debit cards when purchasing over-the-counter (OTC) medicines.

Previously, employees with plans that included FSAs or HSAs were permitted to purchase OTC products at pharmacies or grocery stores. Under PPACA rules that started Jan. 1, employees can only make OTC purchases with these accounts if they have an official prescription from their doctor, except for insulin.

In IRS Notice 2011-05, the agency clarifies that after Jan. 15, employees with debit cards tied to FSA and HSA accounts can continue to use their debit cards to purchase OTC medicines -- but only if they have a formal prescription, according to a report in Employee Benefit News.

As a new year begins, small businesses face an old problem: rising health care costs and few good options to combat them.

To get a handle on costs, more small employers are starting to delve into wellness programs, even though they face a steeper climb when compared with bigger companies with more resources, experts say.

One easy -- and cost-effective -- measure that small businesses can try is offering incentives to entice workers to improve their health and stay healthy, said Amanda Austin of the National Federation of Independent Business.

"Small businesses are more likely to not even be able to offer insurance in the first place, so to maintain insurance is their first struggle," Austin told FoxBusiness. "They can see between [10 percent and 40 percent] increases in health care costs annually, so they have to look into [incentive programs] to see if they will reduce costs."

Incentives don't have to be expensive to work, Austin said. For instance, while a small company can't set up its own fitness center, it can negotiate for membership discounts at local gyms for its employees.

Frantz Ward, LLP, in Cleveland, started a wellness initiative several years ago after its co-founder, Keith Ashmus, noticed their health insurance carrier was emphasizing healthy lifestyles and wellness incentives. The company started touting healthy habits and initiated "salad days" to encourage healthy eating. Also, Frantz Ward employees who complete the Weight Watchers program receive a $50 check from the company's insurance carrier.

Ashmus said the company hasn't seen a hard-dollar return on its program yet, but it's already been sparking other positive results. "The program is one way of building morale and keeping it high," he told FoxBusiness.

However, a new report indicates that some incentives designed to boost health and help employees make better choices might be losing their punch. The percentage of workers who said a financial incentive would be extremely or very useful when considering a more effective health care treatment dropped from 61 percent in 2009 to 55 percent in 2010, according to a new study by the Employee Benefit Research Institute (EBRI).  Despite the overall drop, financial incentives remain popular among young people, minorities and low-wage workers, according to a PLANSPONSOR report on the EBRI research.

While incentives often serve as the first step in jump-starting a small-scale wellness program, some companies are taking a bigger leap by exploring workplace health clinics -- traditionally a wellness feature available only to big employers.

A recent report published by the Center for Studying Health System Change notes that more employers are expressing interest in banding together to meet minimum threshold requirements needed to set up workplace clinics. These thresholds, which can number in the hundreds or thousands, often can put clinics out of reach for many small businesses. However, by sharing clinics, small and midsize employers can add this feature to their wellness packages, the report states.

Smaller employers also can take advantage of mobile medical vans that travel to different worksites. While this service is not widespread, some experts find the concept very promising, according to the report.

As consumer-driven plan designs become more commonplace, employees are beginning to seek better information to help them make sound health care decisions.

That's where the employer needs to step in, experts say.

In a recent report published by FierceHealthPayer, the Employee Benefit Research Institute (EBRI) found that nearly 22 million Americans are covered by consumer-driven health plans (CDHPs). A separate report by United Benefit Advisors notes that the number of CDHPs in 2010 grew at a rate of 18.1 percent nationally. Looking ahead, another industry report by Towers Watson predicts the number of CDHPs will grow another 7 percent in 2011.

As employees shift into these plans, the need for reliable facts on the cost of treatment grows. A steep obstacle to consumer-driven models, however, is the lack of health care pricing transparency in the U.S. health system, experts say.

"The way health care costs are hidden from the people who need to understand them has got to change," Christopher Parks, founder and CEO of change: healthcare, a company that provides health care pricing information to consumers, told Human Resources Executive Online.

Not surprisingly, employees in consumer-driven plans are more likely to research the costs of health procedures than participants in traditional plans, according to the EBRI survey.  For instance, 53 percent of CDHP enrollees regularly check to see if their plan would cover a particular treatment, compared with 47 percent of traditional participants.

Several companies, including change: healthcare and Outofpocket.com have developed online tools that offer better access to health care information. 

While these can be helpful, the information pipeline should start with the employer, some experts argue.

"An employer should be spending a fair amount of time making certain they give employees choices that allow them to maximize opportunity for savings," said Helen Darling, president and CEO of the National Business Group on Health.

Despite the growing desire for more health cost information by CDHP participants, a culture of "cost ignorance" still exists nationally, according to a recent analysis of prescription drug purchases reported by the Society for Human Resource Management. The study, sponsored by UnitedHealthcare, found that while 60 percent of Americans who purchase prescription drugs are concerned about costs, 70 percent of those same consumers aren't aware of a drug's cost before they purchase it.

Experts say employers can take a few simple steps to maximize the cost savings offered by CDHPs, such as:

• Providing up-to-date, timely and accurate health care information to employees
• Creating a plan design with a balance of cost sharing and employee engagement
• Offering solid network discounts