Now that the Supreme Court has upheld the Patient Protection and Affordable Care Act (PPACA) along with the individual mandate, it’s time for employers to start preparing for upcoming compliance issues, says Janet Trautwein, executive vice president and CEO of National Association of Health Underwriters.
While certain provisions of PPACA have already been implemented, such as the new limits on coverage for over-the-counter drugs and medical-loss ratio requirements, there are certain mandates that are set to go into effect this year, and employers need to be ready for those changes, Trautwein says. Specifically, employers should be focusing on complying with the requirement to report the value of employer-provided health insurance on W-2 forms, which is one of the big changes in 2012.
While reporting for 2011 is voluntary, employers must include the value of group health plan coverage on W-2s issued after Jan. 1, 2013; however, there are exceptions to this rule Trautwein says. Employers that issue fewer than 250 W-2 forms per year are exempt, but that does not necessarily equate to 250 employees.
“You might have a number of part-time employees or even temporary – anyone you’re issuing a W-2 you have to count them in knowing whether or not this type of reporting applies,” Trautwein says. “This can be on an entity basis in terms of the way you count the 250 as opposed to – this is interesting actually – the controlled group rule, which governs almost every other aspect of the bill, so look at this and see whether this applies to you.”
By the time 2018 rolls around, employers will be required to pay a 40 percent excise tax, known as the “Cadillac tax,” for group plans with premiums that exceed certain thresholds. This also applies to self-insured plans, Trautwein says.
Under this provision, the tax is to be paid by the insurer for a fully insured group or third-party administrator in a self-insured arrangement, which would then be passed on directly to the employer.
“This is one of the worst provisions in the bill mainly because it takes an arbitrary number instead of looking at if your premiums are over a level, you’re going to pay an excise tax on every dollar above that level, whether you’re fully insured or self-insured,” Trautwein says.
Given future health care cost projections, nearly every group would fall into this Cadillac tax, and because of this, there is a push to repeal this part of PPACA, Trautwein says. Still, the repeal could very well not go through, and if that is the case, Trautwein recommends that employers work with their benefits advisors to stay under that threshold. Changes may be coming, but those benefits advisors are there to help employers during this transitional phase.
For more on PPACA, see: