Employer Compliance in 2013 under the Affordable Care Act

by Bradley Arant Boult Cummings LLP
Contact

Having survived the election and a Supreme Court challenge (for the most part), the Affordable Care Act (ACA) is here to stay. Employers should evaluate the requirements under ACA that apply to their group health plans for 2013. This alert provides a brief overview of requirements for 2013 as well as considerations for next year.

  • Health Care Flexible Spending Account (Health FSA) Limit. Health FSAs reimburse participants for eligible medical expenses from contributions made to their accounts. Under ACA, employers must now limit employee salary reduction contributions to a Health FSA to $2,500, generally beginning January 1, 2013 (for calendar year plans). This limit may be increased for future cost-of-living adjustments. Employers have until December 31, 2014, to amend their plans to reflect the limit, but plan operations should reflect the limit for plan years beginning after December 31, 2012.
  • Form W-2 Reporting for Health Coverage. ACA added a new reporting requirement for the IRS Form W-2. Now, the cost of employer-sponsored health coverage must generally be reported on an employee's Form W-2 beginning with the 2012 Form W-2 issued in January 2013, subject to certain exceptions for small employers.
  • 0.9% Additional Medicare Tax. Employers and employees currently each pay a Medicare tax of 1.45% on wages. Beginning in 2013, employers must withhold an additional 0.9% payroll tax as part of the employee portion of the Medicare tax for certain higher income employees. Although the additional tax is imposed on wages in excess of $200,000 for single filers ($125,000 for married individuals filing separately and $250,000 for joint filers), employers must nevertheless withhold the additional tax on behalf of all employees who have annual wages in excess of $200,000, regardless of their marital or tax return filing status.
  • Patient Centered Outcome Research Fee. Beginning with plan years ending after September 30, 2012, until September 30, 2019, a new fee will be imposed on employers that sponsor self-funded group health plans and on the insurers of fully-insured group health plans. The amount of the fee is $1 per covered individual for the first plan year ending on or after September 30, 2012; $2 per covered individual for the following plan year; and an amount increased for inflation thereafter. For self-funded plans, employers will need to pay the fee using IRS Form 720 by the July 31 coinciding with or next following the end of each plan year.
  • Elimination of Tax Deduction for Retiree Drug Expenses. Previously, an employer sponsoring retiree prescription drug coverage was entitled to the tax-free treatment of the Medicare Part D subsidy received by the employer for a portion of its expenses incurred in sponsoring the coverage, as well as a tax deduction for the full amount of those expenses. Beginning in 2013, employers may no longer claim the tax deduction.
  • Limits on Deductible Compensation. ACA generally caps the employee compensation deduction amount at $500,000 under Internal Revenue Code Section 162(m) for certain health insurance providers. The cap applies to amounts paid on or after January 1, 2013, but for services performed on or after January 1, 2010.
  • Notice Regarding Exchanges. ACA added a new section to the Fair Labor Standards Act that generally requires employers to provide each employee by March 1, 2013, a written notice regarding the new American Health Benefit Exchanges (Exchanges). Fortunately, in a Frequently Asked Questions bulletin issued earlier this year, the Department of Labor (DOL) has extended the deadline until regulations are issued. The regulations are anticipated by late summer or fall of 2013. The DOL is considering providing a model notice. In the notice, employees must be informed of the existence of an Exchange, given a description of the services provided by the Exchange, and told how to contact the Exchange to request assistance. Employees must also be informed that they may be eligible for a premium tax credit or a cost-sharing reduction through the Exchange if the employer plan’s share of the total cost of benefits under the plan is less than 60%. Finally, employees must be informed that (a) if they purchase a qualified health plan through the Exchange, then they may lose any employer contribution toward the cost of employer-provided coverage; and (b) all or a portion of employer contributions to employer-provided coverage may be excludable for federal income tax purposes.
     

2013 will also be the year for employers to evaluate generally whether they will provide coverage in 2014 that will meet the minimum value and related affordability requirements under ACA to avoid the imposition of the penalty tax. In 2014, ACA provides for across-the-board prohibited annual limits on essential health benefits, coverage for adult children to age 26 regardless of other employer-sponsored coverage, automatic enrollment for certain large employers, required plan coverage for certain clinical trials, cost-sharing limitations, limits of up to 90 days on waiting periods, and certain nondiscrimination rules.

If you have any questions about these requirements, please contact David Joffe or one of the other attorneys in the Employee Benefits and Executive Compensation Group at Bradley Arant Boult Cummings LLP.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Bradley Arant Boult Cummings LLP | Attorney Advertising

Written by:

Bradley Arant Boult Cummings LLP
Contact
more
less

Bradley Arant Boult Cummings LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.