Health reform's immediate impact: Your benefits

NEW YORK (CNNMoney.com) -- Under the new health care legislation, experts say the first changes Americans with employer-based insurance will see is in their benefits.

Companies don't have to make any immediate tweaks to their plans, but they will have to incorporate a few of the federally mandated changes by open enrollment time late in 2010, said Tracy Watts, partner with employee benefits consulting firm Mercer.

The changes made this year will come into effect in 2011, with more phased in over the next few years until the law becomes fully implemented by 2018 or later.

Some of the changes will increase costs for employers, she said. Consequently, companies could share more of that burden by charging employees higher premiums and deductibles.

So here's what you can to expect in 2011.

Dependent coverage to age 26: This is one of the most significant changes, said Watts.

Currently there are different laws in different states regarding the timeframe for dependent coverage. Typically employers provide coverage for dependents 'till age 22 or 23.

In 2011, employers will have to provide coverage for dependents of employees who don't have access to other employer-based health care coverage 'till age 26 with the exception of a few states which mandate this coverage until age 28 or 29, she said.

Watts said this measure could raise costs for companies, depending how many workers they have with dependents this age.

"This measure goes into the 'cost increase' column for employers and could potentially result in higher premiums for employees overall," she said.

No lifetime dollar limits: Many employer-based health insurance plans have lifetime maximum limits on insurance of $1 million or $2 million. The new law eliminates all lifetime caps, said Watts.

"This is a very good benefit for employees," said Watts. "In the event of a catastrophic accident or illness, employees no longer have to worry that their benefit will run out."

No reimbursement for over-the-counter drugs: Currently, employees can get reimbursed for the money they use to buy over-the-counter drugs from their flexible spending accounts (FSA) or Health Savings Account (HSA) to buy over-the-counter medications.

These accounts typically enable individuals and families to pay for out-of-pocket medical expenses not covered by their insurance plans with tax free dollars.

The new law removes reimbursements when the accounts are tapped for buying non-prescription drugs, said Watts.

Higher penalty for misusing Health Savings Accounts: Under the new law, employees who use their HSA money for a non-qualified medical expense will face a higher penalty, said Watts.

"The most frequent example of a non-qualified expense is if you use your HSA money to buy a flatscreen TV," said Watts.

Under the new law, the penalty jumps from 10% to 20 % of the value of the offending claim, according to Watts.

Report health coverage on W-2 forms: Employers will have to report the value of an employee's health care plan on W-2 forms.

"This is not the value of your claims but the value of the coverage you elected," said Watts.

"Beginning in 2014, there is an individual [health] coverage mandate under the legislation," said Watts.

So the W-2 would be a way to verify medical coverage, she said.

"Also, in 2018, there will be an excise tax on medical coverage above certain cost thresholds," she said. "The W-2 will be a way to track coverage values for that purpose."

Cap on Flexible Spending Account contributions: Although this change does not kick in until 2013, the new law will limit employee contributions to FSAs to $2,500 a year.

Many employers have their own caps on FSA contributions and the cap for federal employees is $5,000.

"This seems like a significant change but our surveys shows that the average amount put into an FSA is typically $1,500 a year," said Watts.