The Health Care Reform Act(s) and Projected Timelines For Employers.

Summary:

What has become known as “The Health Care Reform Package” was passed by both houses and signed into law by President Barack Obama. The package consists of the Patient Protection and Affordable Care Act (H.R. 3590) signed into law March 23, 2010 and the Health Care and Education Reconciliation Act of 2010 (H.R. 4872) singed into law March 30, 2010. Following is a projected time line for the start of events in the legislation.

2010

The health care reform package includes a tax credit for small employers. The credit will become effective around the end of June (beginning of July). The credit will be available on a sliding scale to small employers with less than 25 employees and average annual wages of less than $50,000 the full tax credit will be available to employers with 10 or fewer employees and annual wages less than $25,000. To qualify, the employers must also purchase and contribute at least 50% of the total premium costs of a health insurance plan for their employees.

2011

A cafeteria plan similar to the Simple Retirement Plan will be available and will provide a safe harbor with nondiscrimination requirements.

Employers will be required to report the value of health benefits provided to employees on their 2011 W-2 that will be issued to employees in January of 2012 for the 2011 calendar year.

Employers that provided a wellness program on March 23, 2010 with less than 100 employees will be eligible for wellness grants for up to years.

2012

By March 23, 2012 employers will be required to provide a Uniform Explanation of Coverage to its employees. This document will be in addition to the Summary Plan Description required by ERISA currently. Insurance carriers will be required to provide the summary document. Employers who self-fund however will still be required to create the same document each year meeting the guidelines established for the document. This requirement will be on-going and the document must be provided to employees each year no later than March 23.

Business will now be required to file a Form 1099 for all payments of over $600 to any payee. This will be for payments made after 2011 each calendar year.

2013

The employer Medicare Part D subsidy deduction will be eliminated for the amount that is excluded from the employer’s income. Basically, employers will lose the tax deduction for subsidizing Medicare Part D-eligible retirees prescription drug plans.

The Medicare payroll tax will increase from 1.45% to 2.35% on wages in excess of $250,000 for joint filers or $125,000 for those claiming married filing separately.

2014

Employers will now be required to offer coverage to their employees if they have 50 or more employees. Failure to do so will result in an annual $2,000 penalty per employee if at least one of their employees receives a tax credit. Further, employers who offer coverage but their employees elect not to take the company group plan(s) due to inadequate coverage or employee expense and receive tax credits for health care, those employers will pay penalties equal to $3,000 for each full-time employee receiving a tax credit or $2,000 times the total number of full-time employees, which ever is less.

Employers may offer a 30% premium discount or other reward for employees that participate in wellness programs that meet certain requirements.

Employers and insurers will be required to report to individuals and the IRS the name, address and social security number of all insured individuals covered under an insurance plan.