(1) January 1, 2013
(2) March 1, 2013
(3) January 1, 2014
(4) January 1, 2015
(5) January 1, 2018
Milestones already in place
While several provisions of the new Affordable Care Act (ACA) have already
gone into effect, there are several key dates business owners need to be
aware of in the coming months and years. We’ve compiled a list, as
well as several useful resources, to help you navigate important health
care reform milestones.
Health flexible spending arrangement contribution limit
The ACA will limit the amount of participant pre-tax dollars that can
be used to cover health expenses through flexible spending accounts (FSAs).
FSA participants will have a salary reduction limit of $2,500 for plan years beginning on or after January 1, 2013. 2
W-2 reporting requirement
All employers that issued at least 250 Form W-2s in 2011 will need to
report the value of health care coverage that employees participated in
during the 2012 plan year on the employee’s Form W-2. Some items,
such as stand-alone dental, vision, and health savings account contributions,
are excluded from this reporting requirement. Although the value must be
reported, it is not taxable for the business or employee.7
Future regulatory guidance could require small businesses with fewer than 250 employees to meet the W-2 requirement.7
Medicare retiree drug subsidy tax deduction eliminated
Employers will no longer be able to deduct retiree drug expenses for which
they receive a Medicare Part D retiree drug subsidy payment.8
Notice about state health insurance exchanges
Employers subject to the Fair Labor Standards Act are required to notify
employees of state health insurance exchanges and potential eligibility
for premium credits. Each U.S. state must establish a health insurance
exchange by January 1, 2014, that provides a marketplace for individuals
and small employers. The U.S. Department of Health and Human Services (HHS)
will operate a federally-facilitated exchange (FFE) for states that do
not establish an exchange, and premium tax credits will be available for
those who buy individual coverage in an exchange. 8
The Kaiser Family Foundation offers additional information about exchanges at kff.org; however, no guidance has yet been provided by DOL for this requirement.
Play or pay
Employers with at least 50 full-time employees must offer minimum essential
health coverage to their full-time employees or face a penalty.8
$2,000 If the employer does not offer minimum essential to all full-time (30 hour) employees, and at least one employee obtains a premium subsidy through an exchange, the penalty is $2,000 per year, per full-time employee, excluding the first 30 employees. Note: This calculation is also used as a cap for employers offering coverage that is considered unaffordable or does not meet the minimum value standards (see $3,000).
$3,0008 If an employer offers coverage that is considered unaffordable or does not meet minimum value standards, the fine is calculated as $3,000 for each full-time (30 hour) employee purchasing coverage through an exchange and receiving federal tax credits, up to a cap of $2,000 multiplied by the number of full-time employees, excluding the first 30 employees.8
Required contribution to the temporary reinsurance program
During the first three years the exchanges are available (2014–2016),
a temporary reinsurance program for the individual insurance market will
be funded by a required contribution from all group major medical plans.
The per capita amount is paid for each enrollee by the insurer or third-party
administrators on behalf of self-funded plans. Additional guidance regarding
this contribution is expected in October 2012.8
Small business tax credit changes
Small business tax credits will expand to 50 percent of a small business’s
premium costs for two consecutive years. These credits are available to
businesses with average wages between $25,000 and $50,000, and fewer than
25 full-time workers (or 50 half-time workers) that offer health insurance
through a health insurance exchange.1
Second wave of Health Insurance Reforms
In addition to these milestones, there will be a second wave of Health
Insurance Reforms that are effective for group health plans, including: 8
- Pre-existing condition exclusions will no longer be permitted.
- There will be no annual dollar limits on benefits.
- Small group fully-insured plans are required to offer essential health
benefits (does not apply to grandfathered plans).
- Limits will be placed on out-of-pocket expenses (does not apply to grandfathered
- Health insurers will be subject to modified community ratings and guaranteed-issue
- Waiting perids in excess of 90 days will be prohibited.
More information regarding this wave of reforms is expected as January
1, 2014, approaches.
IRS reporting requirements for employers
Your business will be required to report information regarding the health
coverage of your employees, including basic employee data, dates and type
of coverage; cost-sharing; and any other information required by the IRS.
These requirements apply to coverage offered on or after January 1, 2014,
but the first report will not be due until 2015. More information on the
requirement and its regulations is expected as January 1, 2015, approaches.
Cadillac plan tax
A tax will be imposed on insurers and employers with self-funded health
plans with annual premiums that exceed $10,200 for individuals and $27,500
The Cadillac tax is 40 percent of the excess of the annual value of a health plan’s cost above the threshold amounts set forth above.10
To learn more about health care reform and coverage available in your
state, visit healthcare.gov,
Milestones already in place:
March 23, 2010
Availability of small business tax credits: If you offer your workforce health insurance and employ fewer than 25 full-time workers (or 50 part-time workers), your business may be eligible for the Small Business Health Care Tax Credit.1 For more information about these credits visit irs.gov/newsroom/article/0,,id=22
January 1, 2011
Availability of SIMPLE cafeteria plans: SIMPLE cafeteria plans are a new way for small businesses with 100 or fewer employees to save money. These plans allow employees to pay their portion of health insurance premiums and other eligible benefits, such as contributions to flexible spending accounts, with pre-tax dollars. As an employer, you can take advantage of this option to save on the employer portion of FICA, FUTA and workers’ compensation insurance premiums.2
August 1, 2012
Women’s preventive care requirements: Nongrandfathered group health plans are required to offer preventive coverage to women without cost-sharing for plan years beginning on or after August 1, 2012. Certain religious employers are exempt from the requirement to offer contraceptive coverage, and others may qualify for a one-year delay. 3
Medical Loss Ratio rebate distribution: Major medical insurers that did not meet the new medical loss ratio (MLR) requirements were required to issue rebates to policyholders by August 1, 2012. In most cases, it is the employer’s responsibility to distribute the participant portion within three months of receiving the rebate. If your plan was due a rebate, you should have received it by now and may need to distribute employee portions. The details on distribution depend on the type of plan offered (e.g., church plan, ERISA, etc.).4
For more information, visit these websites:
September 23, 2012
New summary of benefits
Major medical insurers began sending all benefits enrollees and applicants a new summary of benefits booklet and coverage notice to explain their benefit plans and coverage. If your business has a self-funded plan, you will be required to provide the new summary for annual enrollment periods on or after September 23, 2012, as well as all other enrollments for plan years beginning on or after January 1, 2013.5
October 1, 2012
Patient-Centered Outcomes Research Institute (PCORI) fee
Starting with plan years ending on or after October 1, 2012, issuers and plan sponsors will be required to pay a new fee for each covered beneficiary with the fee going to the PCORI fund.
The funds will help contribute to research that evaluates and compares health outcomes and clinical effectiveness, and the risks and benefits of two or more medical treatments and/or services. Since the fee is treated as an excise tax, it is filed through IRS Form 720. Payment of the fee for the first year is due July 31, 2013.6
The PCORI fee is $1 per covered beneficiary for the first year.6
- 1The White House, Small Business Health Care Tax
Credit, accessed on August 8, 2012, from whitehouse.gov/healthreform/small-business/tax-credit.
- 2Internal Revenue Service (2012), Section 125 Cafeteria
Plans, accessed on September 25, 2012, from irs.gov/pub/irs-drop/n-12-40.pdf.
- 3Healthcare.gov (2012), Affordable Care Act Rules
on Expanding Access to Preventive Services for Women, accessed on September
25, 2012, from healthcare.gov/news/factsheets/2011/08/womensprevention08012011a.html.
- 4Internal Revenue Service (2012), Medical Loss Ratio
(MLR) FAQs, accessed on September 25, 2012, from irs.gov/uac/Medical-Loss-Ratio-(MLR)-FAQs.
- 5Federal Register (2012), Summary of Benefits and
Coverage and Uniform Glossary, accessed on September 25, 2012, from gpo.gov/fdsys/pkg/FR-2012-02-14/pdf/2012-3228.pdf.
- 6Federal Register (2012), Proposed rules: Fees on
Health Insurance Policies and Self-Insured Plans for the Patient-Centered
Outcomes Research Trust Fund, accessed on September 25, 2012, from http://www.gpo.gov/fdsys/pkg/FR-2012-04-17/pdf/2012-9173.pdf.
- 7Internal Revenue Service (2012), Form W-2 Reporting
of Employer-Sponsored Health Coverage, accessed on September 25, 2012,
- 8 Kaiser Family Foundation (2012), Implementation
Timeline, accessed on August 23, 2012, from healthreform.kff.org/timeline.aspx.
- 9Internal Revenue Service (2012), Request for Comments
on Reporting of Health Insurance Coverage, accessed on September 25, 2012,
- 10Kaiser Family Foundation (2012), Cadillac Insurance
Plans Explained, accessed on August 29, 2012, from kaiserhealthnews.org/Stories/2010/March/18/Cadillac-Tax-Explainer-Update.aspx.