Summary of Major Changes in Health Care Reform

Issued January 15, 2013

With the 2012 presidential election over, the landscape of Health Care Reform will likely continue its course of implementation. We are committed to providing you with timely and accurate information and support to handle all your insurance needs associated with Health Care Reform.

While you may hear much about health care in the coming months, we can provide you up-to-date information you can count on when you need it. As a brief recap, the following are some of the major Health Care Reform changes thus far:

  • Additional Medicare Tax: To help fund Health Care Reform, employers are required beginning on January 1, 2013, to withhold an additional 0.9 percent Medicare tax on employee wages exceeding $200,000. This change is to the employee portion of Medicare only; the employer portion has not changed. Employers must match the first 1.45 percent of the Medicare tax, not the new 0.9 percent additional tax.
  • Form W-2 reporting: Employers with 250 or more Forms W-2 issued in the prior calendar year must report the value of certain employer-sponsored health benefits on employees' Forms W-2 issued in the current year. This provision became effective beginning with 2012 Forms W-2 issued in January 2013. We recently helped affected clients complete this requirement for their employees' 2012 Forms W-2.
  • Summary of Benefits and Coverage (SBC) and Uniform Glossary: To assist consumers in understanding their health insurance plan options, health insurance carriers as well as group health plans and their administrators are now required to provide applicants, enrollees, beneficiaries, and participants for certain plans with a Summary of Benefits and Coverage (SBC) and Uniform Glossary. The SBC is a summary of available health plans and must include topics such as covered benefits, cost-sharing requirements, limits on coverage, and excluded benefits. The Uniform Glossary provides a list of common health coverage terms, such as deductible and copayment, using consistent definitions.
  • Small Business Tax Credit: Certain qualifying small businesses that offer health insurance to their employees may be eligible for a Small Business Health Care Tax Credit. We offer Small Business Tax Credit resources to help you assess your eligibility and file for the credit.
  • Medical Loss Ratio Rebate: The Medical Loss Ratio provision of the Affordable Care Act requires that a minimum percent of premium payments collected by health insurance carriers be applied toward medical claims and quality improvement. Each year, health insurance carriers who do not meet the percentage threshold must rebate the excess premium to affected plan sponsors, policyholders or participants. The first rebates were issued by August 1, 2012. Employers who receive rebates have a number of options available to them. We can assist our clients in calculating the allocation for the group of identified participants.
  • Employer Shared Responsibility Provision: Effective January 1, 2014, employers who have 50 or more full-time equivalents (FTE calculation based on both full and part-time employees) may be assessed a fee if they fail to offer their employees health insurance coverage that meets the established minimum coverage requirements and is deemed affordable. Affordability is based on the employee premium contribution as a percent of wages. Employers who fail to offer qualified and affordable coverage and have one or more employees obtain an insurance premium subsidy may be subject to substantial financial fees ($2,000 per full-time employee above the first 30 full-time employees, or $3,000 per individual receiving a subsidy, depending upon varying conditions).

Please note that this list is not exhaustive. You should contact your tax advisor to review the provisions and how they might apply to your specific business.