Health Care Reform Changes Effective 

For 2014 

The Affordable Care Act is designed to ensure that all Americans have access to quality affordable health care, and is intended to create transformation within the health care system necessary to contain costs in the future.  Below is a summary of considerations with regards to the Affordable Care Act. 

Individuals and Families

1.  Open Enrollment for the Health Insurance Marketplace began in 2013.

2.  As of January 1, 2013 the floor for deducting medical expenses as an itemized deduction increases to 10% of AGI if you and your spouse are under age 65 at the end of the year. If either you or your spouse is age 65 or older, expenses exceeding 7.5% of AGI may be taken, as under pre-2013 rules.

3.  In 2014 there will be a tax credit for the insurance premiums obtained through the Health Insurance Marketplace.  This tax credit was designed to make health insurance more affordable.  There will be income limitations on qualifying for the credit.

4.  Starting in 2014, you and your family must have health care coverage or have an exemption for coverage.  If one does not have either, a payment will be required to be made with the 2014 tax return.

5.  Health Savings Account ("HSA")

a.  The annual contribution limit for HSA plans for 2014 is $3,300 for an individuals and $6,550 for an individual with family coverage. These contributions are not subject to tax. 

b.  High deductible health plans allow for an annual deductible that is no less than $1,250 for self-only coverage or $2,500 for family coverage.  Annual out of pocket costs cannot exceed $6,350 for self-only coverage or $12,700 for family coverage.

6.  Flexible Spending Arrangement ("FSA")

a.  The annual contribution limit for an FSA is still $2,500 as per the date this letter was written.

b.  FSA plans are permitted to allow for a maximum grace period of 2 months and fifteen days following the end of the plan year for unused contributions to be used against expenses incurred in the subsequent plan year.

c.  Starting for 2013-2014, employers may amend their plan documents (has to be amended by the last day of the plan year to be effective for that year) to allow participants to roll forward $500 of amounts not utilized to the subsequent year.  This rollover will not affect the $2,500 annual contribution limit described above.    

Please note that the Plan has to choose to provide for either the grace period mentioned above, or the rollover of up to $500.    

Employers

1.  Small employers with 50 or fewer employees became eligible in 2013 to purchase affordable insurance through the Small Business Health Options Program.

 2.  Many employers are now required to report the value of provided health insurance on box 12 of the W-2 with a code of "DD".  See www.irs.gov/uac/Form-W-2-Reporting-of-Employer-Sponsored-Health-Coverage for more information.

3.  Small business owners could be eligible for the Small Business Health Care Tax Credit if you cover at least 50 percent of your full-time employee's premium and you have less than 25 full time employees with average wages under $50,000.

4.  Employers that self-insure may be required to pay a fee to fund the Patient Centered Outcomes Research Fund, see www.irs.gov/uac/Patient-Centered-Outcomes-Research-Trust-Fund-Fee:-Questions-and-Answers for more information.

5.  Effective 2015, employers that provide health coverage to employees must file an annual return reporting certain information for each employee covered.

6.  For calendar year 2015, employers with 50 or more full time employees could be subject to make a payment if adequate affordable coverage is not offered to full time employees and one or more of these employees get a premium tax credit.

For more information, visit www.healthcare.gov.

New Contribution Rates

The 2013-2014 Teachers' Retirement Systems (TRS) employer contribution rate is 16.25%. The 2014-2015 TRS rate is estimated to be between 17.25% and 17.75% of payroll. 

The 2013-2014 regular pension contribution rate for Employees' Retirement Systems (ERS) is 28.5% for Tier 1, 26.1% for Tier 2, 20.9% for Tier 3 and Tier 4, 16.8% for Tier 5, and 11.4% for Tier 6.  The 2014-2015 ERS regular contribution rate is 27.4% for Tier 1, 25.2% for Tier 2, 20.2% for Tier 3 and Tier 4, 16.5% for Tier 5, and 10.9% for Tier 6.

The Police and Fire Retirement System regular pension contribution rates for 2013-2014 for Tier 1 is 14.2%-29.6%, Tier 2 is 12.4%-28.8%, Tier 3 is 12.4%-27.5%, Tier 5 is 7.6%-23.0%, and Tier 6 is 2.6%-16.3%.  For 2014-2015, regular pension contribution rate for Tier 1 is 13.9%-28.4%, Tier 2 is 12.2%-27.6%, Tier 3 is 12.2%-26.1%, Tier 5 is 7.5%-22.3%, and Tier 6 is 2.6% -15.6%. 

Each percentage in the tier is determined based upon the various retirement plans related to that tier.

GASB Statement No. 68, Accounting and Financial Reporting for Pension Plans - an Amendment of GASB Statement No. 27

In June 2012, GASB issued Statement No. 68, Financial Reporting for Pension Plans - an Amendment of GASB Statement No. 27, which is effective for fiscal years beginning after June 15, 2014. This Statement addresses how state and local governments should account for and report their costs and obligations related to pensions excluding other post-employment benefits (OPEB). The administration of the pension plans such as Employees' Retirement Systems (ERS) and Teachers' Retirement Systems (TRS) will be responsible for obtaining an actuarial valuation and providing the information to the local government for reporting. 

On the fund level modified accrual based financial statements recognition of pension expenditures and liabilities is equal to the amount expected to be liquidated with expendable available financial resources.  However, financial statements prepared on an accrual-basis of accounting or the government-wide financial statements, a net pension liability (NPL) will be reported. The net pension liability is the total pension liability (an actuarial present value of projected benefit payments attributed to past periods) net of the pension plan's fiduciary net position.

Statement No. 68 also establishes disclosure requirements for information about the plans in which an employer participates, the funding policy followed, the actuarial valuation process and assumptions used.

GASB Statement No. 69, Government Combinations and Disposals of Government Operations

In January 2013, GASB issued Statement No. 69, Government Combinations and Disposals of Government Operations, which is effective for period beginning after December 15, 2013, but earlier application is encouraged.  Government combinations may refer to mergers, acquisitions or transfers of operations.  In general, this Statement requires measuring assets and liabilities by carrying value in a merger, but by acquisition value in an acquisition.  This Statement also defines the term "operations" for purposes of this Statement's applicability, and requires the use of carrying value to measure the assets and liabilities in a transfer of operations.  In addition, this Statement requires disclosures to enable financial statement users to evaluate the nature and financial effects of these transactions. 

GASB Statement No. 70, Accounting and Financial Reporting for Nonexchange Financial Guarantees

In April 2013, GASB issued Statement No. 70, Accounting and Financial Reporting for Nonexchange Financial Guarantees, effective for periods beginning after June 15, 2013, but earlier application is encouraged.  This Statement requires a government that extends nonexchange financial guarantee to recognize a liability when it is more likely than not that the government will be required to make a payment on the guarantee.  The statement also requires a government that issues an obligation guaranteed in a nonexchange transaction to recognize revenue to the extent of its reduction in guaranteed liabilities.  

GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date

In November 2013, GASB issued Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date.  This Statement was issued to address an issue with the transition provisions of Statement No. 68, Accounting and Financial Reporting for Pensions, and is required to be applied simultaneously with the provisions of Statement No. 68.  The Statement amends paragraph 137 of Statement No. 68 to require that, at transition, a government recognize a beginning deferred outflow of resources for its pension contributions, if any, made subsequent to the measurement date of the beginning net pension liability. 

Further detail regarding the GASB Statements can be viewed at  http://gasb.org.

Changes To Federal Grant Requirements

On February 24, 2012, the Office of Management and Budget (OMB) issued for comment an "Advance Notice of Proposed Guidance" that would have an effect on state and local governments and nonprofit organizations expending federal funds.  After issuing the advance notice, and reviewing suggestions and comments received, OMB issued, in January of 2013, the proposed guidance titled "Proposed OMB Director Uniform Guidance: Cost Principles, Audit and Administrative Requirements for Federal Awards" as part of the government's federal grants improvement initiative.  Finally, on December 26, 2013 the final regulations were issued entitled "Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards."  This 100+ page document contains the rules not only for grant management at the entity level, but also the audit requirements, and supersedes previously issued circulars from OMB including but not limited to Circulars A-87, A-110, A-122, and A-133.  The audit requirement changes are effective for audits of fiscal years beginning on or after December 26, 2014. 

Entities and auditors should be reviewing this document to become familiar with the new requirements. 

The Federal Audit Clearinghouse has also revised their website and Internet Data Entry System (IDES) which is used to file Data Collection Forms (SF-SAC) and single audit reporting packages with the federal government.  They have also revised the Data Collection Form itself for fiscal years 2013, 2014 and 2015.  The updated form was released on January 7, 2014.  All users will have to register with the new website, using a name and email address.  Previously, a report ID number and report specific password were used to access the system and submit a reporting package.  Now, each user will have a unique user ID and password.  The certifying official for the auditor and auditee will have to log in under their unique ID and password to certify the submission. 

The website can be found at https://harvester.census.gov/fac.

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