Health Care, Insurance, Tax Law, Workplace Issues

Doctor, Doctor, Gimme the News: Which Healthcare Reform Laws Go into Effect Soon?

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“Many employers have failed to invest much time or energy into analyzing how healthcare reform would impact their businesses, first anticipating that the Court would invalidate much or all of ACA, and then hoping for a Mitt Romney victory in November. Now that the uncertainty has been lifted, it’s time to get to work and focus on the many healthcare compliance obligations and possible economic impacts.” (Fisher & Phillips)

As the new year approaches so do a number of new employer obligations under the Patient Protection and Affordable Care Act. For your reference, here’s a look at five key provisions, and what to do about them:

1. New limits on flexible spending accounts:

The rule: “Effective after December 31, 2012, the Affordable Care Act will decrease the amount of money that can be aside for use in a flexible spending account (‘FSA’) to reimburse qualified medical expenses from $5,000 to $2,500.” (Spilman Thomas & Battle)

What to do: “Amend your plan documents. Your health FSA plan documents and enrollment materials will likely need to be updated to reflect this change. Fortunately, the IRS provided a grace period until December 31, 2014 to amend your health FSA. This deadline applies regardless of whether you sponsor a calendar or non-calendar year FSA. You may, however, wish to amend your documents earlier so as to avoid any confusion.” (McKenna Long & Aldridge)

2. Additional Medicare Tax:

The rule: “[On January 1, 2013] a new 0.9 percent Medicare payroll tax increase applies (from 1.45 percent to 2.35 percent) under the Patient Protection and Affordable Care Act on wages over $250,000 for married taxpayers filing jointly and $200,000 for single taxpayers. Self-employed individuals will have a similar increase in self-employment tax liability.” (McDermott Will & Emery)

What to do: “All employers must begin to withhold the Additional Medicare Tax on wages paid to employees in excess of $200,000 in a calendar year, regardless of the employee’s filing status. In other words, employers will not have to determine whether an employee is married and filing jointly or separately or how much a married employee’s spouse might earn.” (Proskauer)

3. Form W-2 reporting of employer-paid health coverage:

The rule: “Most employers that issued 250 or more W-2’s in 2011 must report the value of health benefits in Box 12 (Code DD) on the 2012 Form W-2, issued in January, 2013. Certain organizations, such as churches, are excluded from this requirement for 2012.” (Leonard, Street and Deinard)

What to do: “Employers should report the costs in Box 12 of Form W-2, using the code ‘DD.’ Employers are not required to report the costs on Form W-3 (the employer’s transmittal of Wage and Tax Statements to the Social Security Administration). Furthermore, these regulations do not impose a reporting obligation if the employer is not otherwise required to file a Form W-2 on behalf of any individual (such as for a retiree or former employee).” (Warner Norcross & Judd)

4. Patient Centered-Outcomes Research Institute trust fund

The rule: “The PCORI fee is imposed on health insurance issuers and employers that sponsor self-insured plans to finance the Patient Centered-Outcomes Research Institute trust fund established under the Affordable Care Act (ACA). The final rule applies to policy and plan years ending on or after October 1, 2012, and before October 1, 2019. The fee imposed on issuers of specified health insurance policies and sponsors of self-insured plans is $2 ($1 for policy years ending before October 1, 2013) multiplied by the average number of lives covered under the policy or plan.” (XpertHR)

What to do: “Employers sponsoring self-insured plans need to be aware of these issues now since 2012 plan data will be necessary to calculate the fee owing in 2013. The regulations describe how the new fee is to be calculated and paid by sponsors of self-insured plans for plan years ending on or after October 1, 2012 and before October 1, 2019, when the fee is scheduled to expire. The fee is based on the number of lives covered by the plan, which means the sponsor pays on the basis of participants (including COBRA recipients), as well as covered spouses, dependents and other beneficiaries.” (Fisher & Phillips)

5. Notice of exchange options:

The rule: “Employers will be required to notify employees of the availability of health insurance available through state-run exchanges as an alternative to any insurance provided by employers.” (Nexsen Pruet)

What to do: “The Notice must be provided to each current employee by no later than March 1, 2013, regardless of the plan year for the employer’s group health plan. For new employees hired on or following March 1, 2013, the Notice must be provided on their respective date of hire.” (McKenna Long & Aldridge)

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The updates:

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Related reading:

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