If you’re a business owner who offers health insurance benefits to your employees, there are a few things you need to know for this tax year as well as the upcoming one. Bloomberg BNA published an article that offers an overview of the changes coming up in 2013 and what they mean for employers.
These changes only apply to employers who have over 250 w-2 employees, since those with under 250 w-2s are exempted (at least until additional guidance is given).
For Tax Year 2012
- Employers who offer group health plan benefits must report the value of those benefits on each employee’s Form W-2. There are certain exceptions, including dental and vision benefits, most health flexible spending accounts (FSAs), health reimbursement accounts (HRAs), health savings accounts (HSAs), and on-site clinics, employee assistance plans or wellness programs where the employer does not charge a COBRA-like rate for access.
- All plan participants must receive a Summary of Benefits and Coverage (SBC), which describes each benefit coverage option, cost-sharing, exclusions and limitations, provider information, and formulary information. Changes to the SBC must be communicated to participants 60 days in advance of the effective date of the change. Again, excepted benefits, such as stand-alone dental or vision plans and certain health FSAs or HSAs are excluded from the requirement. However, an SBC does need to be provided for an HRA.
- Group health plans must establish internal and external review procedures consistent with minimum standards and an internal appeals process. Claimants are allowed to appeal certain types of claims to an independent review organization (IRO), which performs independent external reviews of adverse benefit determinations.
- For plan years ending after September 30, 2012, through 2013, self-insured health plans and fully insured health plans (through the insurer) will be assessed a $1 per participant fee to fund research regarding patient-centered outcomes for medical treatment. The fee increases to $2 per participant for subsequent years through plan years ending on or before September 30, 2019.
- The U.S. Department of Health and Human Services will be developing reporting requirements for all non-grandfathered health plans regarding the quality of care to improve quality and effectiveness of healthcare.
For Tax Year 2013
- The maximum annual contribution limit permissible under a Health FSA, effective for plan years beginning on or after January 1, 2013, is $2,500.
- Effective January 1, 2013, the deduction for the portion of health care expenses that are reimbursed to the employer through the Medicare Part D subsidy program will no longer be available. And although the Retiree Drug Subsidy will remain in existence, an employer’s ability to deduct the amount of the subsidy will end. This applies to insured and self-insured health plans regardless of their grandfathered status.
- For tax years beginning after December 31, 2012, the FICA Medicare tax rate will increase by 0.9% for wages over $200,000 ($250,000 for married couples filing jointly). An employer will be required to collect the employee’s portion of this FICA Medicare tax.
- By March 1, 2013, plans must provide notice to employees and new hires of the upcoming existence of state insurance exchanges. The required content of this notice has yet to be released.
We will continue to update you as details develop for 2013.
A 2013 requirement to provide a notice to employees has been updated. The notice must include the following:
informing the employee of the existence of an Exchange, including a
description of the services provided by such Exchange, and the manner in
which the employee may contact the Exchange to request assistance;
if the employer plan’s share of the total allowed costs of benefits
provided under the plan is less than 60 percent of such costs, that the
employee may be eligible for a premium tax credit under section 36B of
title 26 and a cost sharing reduction under section 18071 of title 42 if
the employee purchases a qualified health plan through the Exchange;
(3) if the employee purchases a
qualified health plan through the Exchange, the employee may lose the
employer contribution (if any) to any health benefits plan offered by
the employer and that all or a portion of such contribution may be
excludable from income for Federal income tax purposes.
Expect a updated finalized version this summer or
fall. At that point a new mandatory date will be provided.