Hunton Employment & Labor Perspectives

The IRS recently issued draft versions of the new Forms 1094-B, 1094-C, 1095-B and 1095-C (the “Forms”) along with related draft Instructions.

On Wednesday the Supreme Court agreed to hear two cases involving religious objections made by corporations to a provision of the 2010 Patient Protection and Affordable Care Act (the “Affordable Care Act”), which requires employers to provide health insurance for employees that covers contraceptives.  The central issue in both cases is whether a secular for-profit corporation may be exempt from complying with the contraception mandate under the Constitution because of the owner’s religious views.

Pundits have written much about the Affordable Care Act’s forthcoming Health Insurance Exchanges, but they have paid little attention to employers’ obligations to notify employees of those Exchanges.  The state-based Exchanges, also known as the Health Insurance Marketplace, are expected to go into effect on January 1, 2014, with open enrollment beginning on October 1, 2013.  Employees may purchase health insurance through these Exchanges.

The Patient Protection and Affordable Care Act provides that group health plans may not apply a waiting period of more than 90 days for plan years beginning after December 31, 2013 (January 1, 2014 for calendar year plans).  IRS Notice 2012-59, which was issued earlier this year, provides guidance on how employers should apply this rule.

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Employers, payroll vendors and executives should be planning for the additional Medicare tax that will apply to high wage earners beginning in 2013.  The 2010 Health Care Reform Act imposes an additional Medicare tax of 0.9% on employee’s wages in excess of the applicable dollar amount for the employee’s filing status (as shown below):

• Married, filing jointly —  $250,000
• Married, filing separately — $125,000
• Single — $200,000
• Head of household (with qualifying person) — $200,000
• Qualifying widow(er) with dependent child — $200,000

Thus, for employees above the threshold, the Medicare tax rate will increase from 1.45% to 2.35% (on the employee portion) for wages in excess of the threshold.  The employer portion of the tax will remain unchanged at 1.45%.

Is your payroll system ready for the new reporting requirements for group health benefit costs under The Affordable Care Act?  Under IRS guidance, the Form W-2 reporting of group health plan coverage costs will become mandatory this year.  Beginning with the 2012 Forms W-2 due in 2013, employers must report the aggregate value of certain employer-provided health coverage in Box 12 (with Code DD).  For many employers, this will involve substantial groundwork and will generally require that any needed payroll reporting changes be done before year-end.

Group health plan sponsors have an additional date to add to their calendars, thanks to the Patient Protection and Affordable Care Act (ACA). The new summary of benefits and coverage (SBC) disclosure rules for group health plans go into effect soon. Disclosures that tell participants what their plan covers and what it costs must be provided starting with enrollment periods and plan years that begin after September 22,  2012. Attached is an overview of what you need to know now about the new SBC requirements.

Is your cafeteria plan ready for the new health care flexible spending account (FSA) employee contribution limit?  Beginning in 2013, the Patient Protection and Affordable Care Act (ACA) limits the maximum amount that an employee can elect to contribute to a health care flexible spending account (FSA) to $2,500 per year.  While plan sponsors could, prior to ACA, impose limits on the amount of elective employee contributions to a health care FSA, there was no statutory limit.

Health plan sponsors should be aware of new fees taking effect soon that are imposed by the Patient Protection and Affordable Care Act (ACA).  Here is a quick review of the fees as described in the recent proposed Treasury Regulations.