Recently, I was on a panel with other healthcare experts brought together to discuss the impact of recent legislation and regulation, including the Patient Protection & Affordable Care Act of 2010 (PPACA). Moderated by Barbara Zabawa of Whyte, Hirschboeck, Dudek S.C., other panelists included Laura Brown from the Office of the Commissioner of Insurance, Pete Frittitta of R&R Insurance Services, Inc., and Randy Pinnow of Kolb+ Co. The panel discussion was part of a day long workshop on Human Resources (HR) issues.
One part of the discussion focused on the impact this legislation continues to have on benefits accounts. For example, over-the-counter drugs not prescribed by a doctor are already excluded from reimbursement through a Flexible Spending Account (FSA), Health Savings Account (HSA), or Health Reimbursement Arrangement (HRA). This exclusion continues to challenge employees who may no longer purchase these necessities tax free.
Coming soon are limits for medical FSA contributions. Effective January 1, 2013, employees will be able to contribute no more than $2,500 to a medical FSA in a Plan Year. Of course, a husband and wife with access to separate FSAs can each max out their Plan and increase their family’s limit to $5,000.
Coming in 2018, an excise tax will be imposed on high-cost insurance plans. This will affect plans with aggregate expenses that exceed $10,200 for individual coverage and $27,500 for family coverage. There are lingering questions regarding this provision… Will the portion an employee runs through an FSA count toward that total? Stay tuned for more.
Of particular concern to HR personnel are the administrative actions that need to be taken to comply with the new rules. Again, for example, TASC quickly updated our Plan Documents to accommodate the federally mandated extension of healthcare coverage to dependent children through age 26. Further, while delayed twice already, the new W-2 reporting requirement is now scheduled to take effect in 2014. The formula for determining the amount to report is complicated and employers are well advised to leave this calculation to administrators like TASC.
Of course there are opportunities for gains as well. One that comes to mind is the Small Business Tax Credit. To get the credit, a business must have fewer than 25 full-time workers or the equivalent (for example, two half-time employees equals one full-time employee), must pay an average annual wage of less than $50,000, and must cover at least half the cost of health insurance premiums for their workers. Through 2013, the tax credit covers up to 35% of the amount a qualifying business spends on its health insurance premiums. In 2014, the top tax credit bumps up to 50%. The credit is available for up to six years. Employers should consider how this credit plays against the traditional deduction (Section 162) and choose the most advantageous route for their circumstance.
In the future we will see grants to help small businesses provide wellness programs to their employees. Eligible employers will be those without a workplace wellness program who employ fewer than 100 individuals who work 25 hours or more per week. Other than that, the details of this program have not been worked out. TASC will step in to help facilitate the grant competition process for our participating employers.
Clearly, many of these new provisions are still very much in play. TASC continues to watch these developments to determine the best course of action for our customers. In my next blog, I will look at the new notice and documentation requirements.
