Employers and New Health Care Requirments

Health care reform creates a variety of new rules and requirements for employers.

In the wake of March 23, 2010, the day the Patient Protection and Affordable Care Act (PPACA) was signed into law, employers find themselves flooded with questions regarding health care.  It’s prevalent in all businesses - small and large - and many are left wondering How is this going to affect my business?

Unfortunately, there’s no simple explanation.  Employers will need to be informed on what is expected and required of them regarding health care and their company, or they may be subject to certain penalties or other ramifications.  Many new requirements are being implemented and now’s the time to determine what you, the employer needs to know.  Although these are not the only topics that will change the way you run your company, here are a few issues you may need to address in your day-to-day operations:

1.   W-2 Reporting

Beginning in tax year 2011, employers will be required to report the aggregate cost of employer-sponsored coverage they provide to each employee on their annual Form W-2.  Although this is a non-taxable benefit to the employee, they may better appreciate the benefits provided to them by understanding the true value of their health care coverage.

2.   FSA Adjustments

Flexible spending accounts (FSA) will also be affected as the IRS takes aim at qualifying health care expenses.  Effective January 1, 2011, distributions from an FSA will only be allowed to reimburse the cost of prescribed medicines or drugs.  Currently, over-the-counter (OTC) medicines and drugs can be reimbursed without a prescription and this will continue through the end of the year.  However, this new regulation will not affect the reimbursement for the cost of insulin, which will continue to be allowed for reimbursement.  As a result of this regulation, non-prescribed (excluding insulin) reimbursements may be subject to a 20 percent penalty.

3.   Providing Health Insurance to Employees

Proposed for implementation in 2014, employers with more than 50 employees will pay a per-employee penalty if they do not offer health coverage or if they offer coverage and at least one full-time employee receives a premium subsidy.  While the law does not impose penalties to companies with fewer than 50 employees, those companies are required to inform employees of the coverage options available to them through the employer-sponsored health plan, insurance exchanges, any subsidies the employee may be eligible for and methods for purchasing insurance coverage.

As the implementation of these changes begin to take place, be sure to get informed on how they will affect your business.  Many changes have already taken place, but more are on the way.  Remember, health care reform will affect you – just make sure you know how.

To get informed on more of these topics, additional information can be found at www.bcnw.com/getinformed.

Morey Jones

Marketing Coordinator | Account Executive