Following the recent election and the Supreme Court’s decision last summer to uphold the Patient Protection and Affordability Act (PPACA), attention has turned to implementing health care reform. Employers must carefully evaluate their benefit programs and practices to ensure compliance, even though final guidance on various provisions has yet to be issued or clarified.
"Most employers are already affected by early enactments of the law, but uncertainty still looms," said Pam Legge, senior vice president with BB&T - John Burnham Insurance. “Benefit consultants will be an important resource for companies as they evaluate their employee programs and implement changes to avoid penalties."
Reforms enacted in 2010 and 2011 extended dependent coverage to age 26, added certain preventive care services at no cost to members (with an expansion of services for women beginning in 2012), and eliminated pre-existing conditions for members under age 19.
"The most sweeping changes of the new law take effect in 2014 when most individuals must obtain acceptable health insurance coverage or pay a penalty," Legge said. "Employers are also impacted and those with 50-plus employees that do not offer coverage will face penalties if any employee receives a government subsidy for health coverage."
The penalty amount is up to $2,000 annually for each full-time employee, excluding the first 30. For employers who do offer coverage, but whose employees qualify to receive tax credits, a fine of $3,000 for each worker receiving the credit will be imposed up to an aggregate cap of $2,000 per full-time employee.
"There are new reporting requirements for employers and some that carry significant penalties for non-compliance," said Tim Durie, senior vice president of human resources with San Diego-based Newland Real Estate Group. Newland has a long history of offering a very generous benefit program to their employees and families. As with other employers, they are concerned about the additional cost and burden to comply with many of the new requirements.
"For plans renewing after September 23, 2012, employers must provide a uniform summary of benefits and coverage (SBCs) to all eligible employees, dependents and COBRA beneficiaries," Durie said. "Willful non-compliance the first year carries a penalty of $1,000 per enrollee. Employers must also report the aggregate cost of employer-sponsored group health coverage on employee W2s to be issued by Jan. 31, 2013."
The health care law limits salary reduction contributions to Flexible Spending Accounts (FSAs) to $2,500 per year beginning 2013, indexed by the consumer price index (CPI) for subsequent years. New taxes on high wage earners include increasing the Medicare payroll tax by 0.9 percent (the employer portion remains the same) and charging a 3.8 percent tax on unearned income.
"There are many provisions of the PPACA and the ones we’ve highlighted are the most onerous to employers," Legge said. "This is a critical time for employers to access reliable resources with the expertise to help them make the decisions necessary to keep their plans compliant and competitive."
BB&T's Health Care Reform Steering committee is led by industry experts nationwide who are dedicated to guiding clients through the requirements of the law. For information, call Pam Legge at (619) 525-2675.