Know the Requirements in Place
Actions to Take Today with Health Care Reform
Health care reform is in place today and there are new rules that may have a direct impact on your business or your benefits program. Review the following requirements and communicate these changes to your employees.
Small Employer Health Insurance Credit
- What is it – A tax credit is available to certain small businesses that provide health insurance to their employees. From 2010-2014, the value of the credit was up to 35% (if tax-exempt, 25%) of the employer’s contribution. For tax years beginning in 2014, the maximum credit amount increases to 50% of premiums paid by the employer (if tax-exempt, 35%). As of 2014, the credit can be claimed for only two consecutive years, beginning on or after 2014.
- What to do – Apply for the credit if you are eligible. Consult with your tax advisor for more information.
Simple Cafeteria Plan
- What is it – Eligible small employers will be able to establish new simple cafeteria plans. Under the new law, these plans are considered as meeting the nondiscrimination requirements, as long as the plan sponsor meets certain eligibility, participation and minimum contribution requirements. For purposes of this rule, a small employer is one that has employed 100 or fewer employees during either of the preceding two years.
- What to do – Consider establishing a cafeteria plan if you’re eligible and don’t already have one in place.
Extension of Dependent Coverage
- What is it – Plans that cover dependent children must cover all children (married and unmarried) of the insured until the child reaches age 26.
- What to do – Ensure the coverage option is in place and that your employees are aware of it.
End of Pre-Existing Condition Limitations
- What is it – Health insurance companies are required to make their policies available to individuals with no pre-existing condition exclusions applied. This took effect for people under age 19 for plan years beginning on or after Sept. 28, 2010. Beginning in 2014, it applies to all individuals.
- What to do – Ensure your coverage complies and your employees are aware of this mandate.
W-2 Forms – Employer Reporting of Health Coverage Costs
- What is it – Beginning in 2012, employers who file more than 250 W-2 forms must disclose the value of their employer-provided health benefits for each employee on the employee’s annual W-2 form. The IRS will issue guidance in the future that may expand the requirement to affect more employers.
- What to do – Ensure you have a means to provide these cost values on your employees’ W-2 forms if and when this requirement applies to you.
Summary of Benefits and Coverage Documents
- What is it – Beginning with the first open enrollment period on or after Sept. 23, 2012, health insurers and group health plans were required to provide a summary of the provisions of their plan to applicants and enrollees, following the format specified by the U.S. Department of Health and Human Services. This requirement may be enforced with a substantial fee for each day of non-compliance.
- What to do – Ensure your employees receive a copy of each Summary of Benefits and Coverage, as required and appropriate.
- What is it – The deduction previously permitted for amounts received by an employer as a subsidy for retiree prescription drug plans was eliminated for tax years beginning after Dec. 31, 2012.
- What to do – If you received this subsidy, you may incur higher tax liabilities.
Health Flexible Spending Account (FSA) Plan Caps
- What is it – Salary reduction contributions for health FSAs are capped at $2,500 per employee, per year, for cafeteria plan years beginning on or after Jan. 1, 2013. Non-elective contributions are not impacted, and unused amounts carried over during a grace period, or under the rule that allows $500 in unused amounts to be used in the following plan year, are not counted toward the $2,500 cap amount.
- What to do – FSA plans should have been amended to comply with the cap. Ensure that your employees are aware of this cap as they plan their expenses for the coming plan year.
- What is it – Effective Jan. 1, 2013, a 0.9% increase in Medicare taxes went into effect for employees who earn more than $200,000 and file as single and employees who earn more than $250,000 and file jointly.
- What to do – You are required to withhold the additional tax for employees who fall in this category.
For more information about the requirements, speak with a tax advisor, your health insurance carrier(s), or a Colonial Life representative or broker.