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Birmingham Bar Association Bulletin - Fall 2013

Health and Human Services have recognized that there are a significant number of issues surrounding this mandate and agreed not to impose the excise tax until additional guidance is issued. Exchange Notice (“Notice”) Employers must provide a written notice that provides information on the existence of the state exchange and information about the employer’s plan to its employees. The Notice was originally to be effective no later than March 1, 2013. However, due to delays, additional guidance has provided that the government will provide the Notice information in late summer or fall, in time for employers to provide the Notice by October 1, 2013. W-2 Reporting Employers who issue 250 or more W-2s in the previous tax year must include the aggregate value of their health plan coverage on employees’ W-2s. This was originally to be effective for the 2012 W-2s (for health plan coverage provided in 2011); however, it was delayed until the 2013 W-2s (for health plan coverage provided in 2012). The aggregate cost of an employee’s health care coverage is to be determined similar to the way COBRA premiums are determined. The government has repeatedly stated that this is an informational reporting requirement only, and the reporting of aggregate value on an employee’s W-2 does not make it taxable. The reporting requirement will remain limited to those employers who issue 250 or more W-2s in the previous tax year until further guidance is issued. Taxes & Fees The ACA requires an annual fee to fund the Patient-Centered Outcomes Research Institute, a non-profit entity created by ACA to focus on medical research. Employers who sponsor selffunded health plans and insurers of insured plans must pay the annual fee based on the number of covered lives. For plan years ending on or after October 1, 2012 but before October 1, 2013, the annual fee is $1 per covered life. For plan years ending after September 30, 2013, the annual fee increases to $2 per covered life and is subject to cost-of-living adjustments for future years. Fees will be paid annually using IRS Form 720. The ACA requires group health plans to pay a fee towards the reinsurance fund. The stated purpose of the reinsurance fund is to help stabilize the premiums in the market for years 2014-2016 by paying insurers and exchanges for covering high-risk individuals. The fee that fully insured plans and sponsors of selffunded group health plans will be $5.25 per enrollee per month ($63 annually) per covered life. Miscellaneous Changes The ACA amended the Fair Labor Standards Act (“FLSA”) to require certain large employers to automatically enroll new full-time employees in one of the employer’s health benefit plans. In addition, those large employers must continue the enrollment of current employees. The automatic enrollment requirement applies to employers that (1) are subject to the FLSA, (2) have more than 200 fulltime employees, and (3) have one or more health benefit plans. Employers must provide “adequate notice” to employees, and employees must be given an opportunity to opt out of coverage. While the ACA does not specify an effective date for the automatic enrollment requirement, the DOL has indicated that employers are not required to comply with this requirement until final regulations are issued. Such regulations are not expected to be promulgated in time to implement the automatic enrollment provisions by 2014. The ACA also amended the FLSA to include retaliation protections for employees regarding some of the health care reform requirements. Generally, employers are prohibited from discharging or discriminating against an employee with respect to the employee’s compensation, terms, conditions, or other privileges of employment because the employee (among other things): received a premium tax credit or a cost-sharing reduction or provided (or is about to provide) information to the employer, federal government, or any state attorney general relating to a violation or an act or omission of Title I of ACA. It is important for employers to know that these protections extend to all employees, as well as job applicants and former employees. Again, the delay of the employer mandate and certain reporting requirements does not mean that there is nothing to do. As you can see, there are still plenty of changes mandated by the ACA that are still on schedule. Employers should take advantage of the delay and continue preparing for the implementation of the ACA while keeping a watchful eye on the mounds of guidance being issued. G Contributor Robert Ellerbrock leads Balch & Bingham’s Employee Benefits and Executive Compensation Practice Group. He regularly advises employers, trustees, and service providers concerning qualified retirement plans, non-qualified plans, fringe benefits, welfare benefits and executive compensation issues. Birmingham Bar Bulletin/ Fall 2013 29


Birmingham Bar Association Bulletin - Fall 2013
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