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| Summit Insurance Services and Kelly Insurance Agency Newsletter |
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| Healthcare Reform and Legislative Update | July 2010 |
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Affordable Care Act Tax Provisions | |
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Did you know? |
Did you know we also handle commercial insurance? Contact Us for more information and a complete coverage analysis.
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In order to best serve our clients, we continue to stay on top of the new healthcare reform legislation. We review every update, news flash, and related legislation. As insurance professionals, we find that although there is a tremendous amount of information regarding the legislation, there are still many questions to be answered regarding the implementation and impacts of the plan. You can count on Summit Insurance Services/Kelly Insurance Agency and your agent to provide you the most relevant, current, and concise information available.
We hope that you find the attached update valuable. As your trusted resource, we understand the impact the changes coming our way due to healthcare reform. Please do not hesitate to contact your agent or me with any questions you may have regarding reform or any other insurance related topic.
We are here for you and strive to exceed your expectations.
Sincerely,
Summit Insurance Services and Kelly Insurance Agency |
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One of the major goals of the Patient Protection and Affordable Care Act (PPACA) is to insure millions of new Americans. To accomplish this goal, the government is expanding Medicaid to 133% of the federal poverty level, providing premium subsidies and tax credits to individuals up to 400% of poverty, and requiring employers with more than 50 full-time employees to provide health insurance coverage or face stiff penalties. There are also penalties for individuals who choose to remain uninsured. To make sure people know about all of their options, determine who has the required coverage, and enforce any applicable penalties, the government will need to collect all sorts of additional information - information that you as an employer will be asked to provide in a number of new required reports. Here are just a few:
Summary of Coverage Requirement (2010)
Beginning with the first plan year on or after September 23, health plans must provide a new Summary of Coverage to all employees. There are very specific criteria for this new summary - it must be no more than 4 pages in length, can be no smaller than 12pt font, and must be written in a "culturally linguistically appropriate manner". The
summary must be distributed to employees at the time of enrollment in either a paper or electronic form, and a notice of material changes must be provided to employees at least 60 days prior to the effective date. While this requirement is effective beginning this year, required regulations have not been issued yet, and the government has 12 months to identify all of the criteria for the new Summary of Coverage.
Value of Coverage Reporting (2011)
Beginning in January of 2012, employers will be required to calculate and report the value of their employersponsored coverage on their employees' W-2 forms. This rule is generally effective for coverage offered beginning January 1, 2011 and includes the value of major medical coverage, executive physicals, HSA contributions, on-site medical clinics (only if they provide more than minimum care), Employee Assistance
Programs, Medicare supplemental policies, and employer contributions to health care FSAs. Interestingly, health FSA salary reductions are not included in this report, even though they will be included in the "Cadillac tax" calculation beginning in 2018.
TIP: In calculating the value of benefits, both the employer and employee cost portions must be included. To make this easy, employers can use their COBRA rate calculations with little modification - simply remove the 2% administrative surcharge from the COBRA premium to determine the overall value to report to the IRS.
Exchange Related Reporting (2013)
Starting in 2013, employers must provide a new notice to employees at the time of hiring and to all of their existing employees no later than March 1, 2013. This notice will inform employees about the new health insurance exchange that will be available January 1, 2014, tell them how to qualify for a premium subsidy through the exchange, and warn them that they will lose the employer's contribution for health coverage if
they enroll in a plan through the exchange and do not qualify for a "free choice voucher".
Play or Pay Reporting (2014)
Beginning in 2014, "applicable large employers" will be required to provide a report to the Secretary of Treasury and to each full-time employee by January 31st of each year. This report must identify the employer, include the number of full-time employees for each month during the year, and provide a certification as to whether the employer offers minimum essential coverage as defined by the statute to its full-time employees. If the employer does provide minimum essential coverage, the report must also include the length of any waiting period, the months of the year that coverage was offered, the monthly premium for the lowest cost option in each enrollment category, and the employer's share of total allowable costs of benefits. Here's where it gets tricky: if the employee contribution exceeds 8% of any employee's applicable household income, the report must also include the option for which the employer pays the largest portion of the premium along with the portion paid.
Some Advice
PPACA is giving employers a lot to think about:
Should they hang on to their current plan in order to maintain grandfathered status or consider making a plan change?
What plans should they offer to employees, and how much should they pay to avoid any potential penalties?
Do they even want to offer health insurance at all?
On top of all of these decisions, employers will be required to do a lot of paperwork that they didn't have to do before, whether they choose to offer benefits or not. Some of these reports are effective immediately, so the best advice we can give you is to be proactive - don't let the deadlines sneak up on you. Work with your insurance broker to make sure you're aware of all of the required reports, and keep an eye on the
legislation -not all of the rules have been written yet, and many of these requirements are likely to change. Finally, if you feel that any of these new requirements will create a hardship for your business, don't be shy - let your elected officials know how you feel.
Sincerely,
Summit Insurance Services and Kelly Insurance Agency |
| Seminar On Employment Law to be held on July 29th at 10:00am
Summit Insurance Services and Kelly Insurance Agency offers quarterly seminars to clients focusing on topics that are relevant to running a successful Human Resources Department. These sessions provide a brief overview and take away materials that help highlight changes with legislation as well as covering common mistakes and misconceptions. Sessions are kept small which encourages great discussion. We look forward to seeing you at this event or future seminars. Please contact us if you would like to attend on July 29th E-mail |
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