Legal Alert: Health Care Reform is Here to Stay

by FordHarrison

[authors: Tiffany D. Downs, Isabella P. Lee, Scott V. Wagner]

Executive Summary:  With the reelection of President Obama, health care reform is here to stay.  Challenges to the law are still pending; however, employers need to comply with existing requirements and begin preparations for compliance with future requirements.   In addition, new guidance and regulations are likely imminent.

Requirements that Take Effect in 2013

The most significant requirements of the 2010 Patient Protection and Affordable Care Act (PPACA) that will take effect in 2013 include: 

  • Cap on Employee Contributions to Flexible Spending Accounts.  Effective for plan years beginning in 2013, employees' contributions to Flexible Spending Accounts (FSAs) will be limited to $2,500 per tax year with annual inflation increases.  There is no limit on employer contributions.

  • Medicare Tax Increase.  The Medicare tax will increase by 0.9% (from 1.45% to 2.35%) on wages above $200,000 ($250,000 if filing a joint tax return), effective January 1, 2013.

  • Coverage of Women's Preventive Care.  Health insurers and group health plans will be required to cover women's preventive care services at 100%.

  • Notification Requirement:  Beginning March 1, 2013, employers must notify all employees of:
    • Information regarding the state Health Insurance Exchange; and
    • Information on tax credits and reductions in cost-sharing if the employer share of the total cost of benefits under the employer's plan is less than 60%.
  • Health Care Exchanges:  Last week, Health and Human Services Secretary Kathleen Sebelius announced that states now have until December 14, 2012 to submit a plan to federal regulators on how their state's health exchange would operate.  States generally have until February 15, 2013 to decide if they will instead set up their health exchange in partnership with the federal government.

New Guidance is Imminent

The election is expected to fast-track new health care guidance and regulations that likely have been postponed until after the election.  Expected guidance includes a transitional federal reinsurance program that partially reimburses commercial insurers underwriting coverage for high health cost individuals starting in 2014, which could cost as much as $90 per health care plan participant; the imposition of a $2000 per full-time employee penalty on employers that do not offer qualified coverage to employees; and subsidies to uninsured individuals earning less than 400% of the federal poverty level.

Regulations are expected soon, and compliance with the proposed regulations could be within 180 days of issuance or sooner.

FordHarrison attorneys will be conducting a complementary webinar discussing health care reform and the impact of the election on December 11, 2012.  To register for the webinar, please click on the following link:  If you have any questions regarding health care reform or other employee benefits issues, please contact Tiffany, Isabella, Scott, or any member of FordHarrison's Employee Benefits Practice Group.


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.

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