FEDERAL HEALTH CARE REFORM
HHS, DOL & IRS RULES DEFINE “GRANDFATHERED”
NEW HEALTH CARE TAX CREDIT AVAILABLE FOR SMALL EMPLOYERS
COBRA/UI EXTENSION
FACT SHEET: THE AFFORDABLE CARE ACT'S NEW PATIENT'S BILL OF RIGHTS
Federal Health Care Reform: On March 23, HR 3590, the Patient Protection and Affordable Care Act, was signed into law and designated Public Law 111-148. To complete the package, Congress also approved changes or “sidebars” to the new law. These changes, which were included in the Budget Reconciliation Act of 2010, were part of the agreement negotiated between the House and Senate to approve the overall health care reform package.
The new law is complex and many of the provisions will require additional clarification before the full extent of the legislation can be realized. However, following are resources to assist you in fully understanding this legislation.
In addition, this site will continue to provide updates and notify employers when specific actions are required as we move forward.
www.healthreform.mn.gov
The Minnesota Department of Commerce has set up a website to assist consumers in implementing the federal law.
Health Care Implementation Timeline developed by the U.S. Chamber of Commerce.
Aftermath: New Realities for Businesses in the Wake of the Health Care Law developed by the U.S. Chamber of Commerce.
Webinar: What does reform mean to employers – held April 14 and sponsored by the Minnesota Chamber and presented by Mercer, The Devine Agency and HealthPartners.
Health Care Reform Includes New Form W-2 Reporting Requirement
(Article provided by Maureen Maly, partner, Faegre & Benson, MMaly@faegre.com, www.faegre.com)
Employers who sponsor health care plans will need to focus quickly on new Form W-2 reporting requirements under health care reform.
Health care reform requires employers to calculate and report the aggregate cost of applicable employer-sponsored health insurance coverage on employees' Form W-2s. Although the new rule applies for employees' tax years beginning after December 31, 2010, payroll systems need to be updated for this change by January of 2011. This deadline is imposed because employees are entitled to request their Form W-2s early if they terminate employment during the year.
HHS, DOL & IRS Rules Define “Grandfathered” Group Health Plans & Health Insurance Coverage
On June 14, the U.S. Departments of Health and Human Services, Labor and Treasury published regulations on when group health plans and insurance qualify as “grandfathered plans” or purposes of determining certain deadlines for complying with certain health care reform requirements imposed under the Patient Protection & Affordable Care Act. Following is a fact sheet on provisions in the rules: www.healthreform.gov/newsroom/keeping_the_health_plan_you_have.html.
These interim final regulations from the Departments of Health and Human Services, Labor and Treasury are generally effective June 14; public comments are due by Aug. 16, 2010.
New Health Care Tax Credit Available for Small Employers
In April, the Internal Revenue Service mailed postcards to more than 4 million small businesses and tax-exempt organizations to make them aware of the benefits of the recently enacted small business health care tax credit. The credit, which takes effect this year, is designed to encourage small employers to offer health insurance coverage for the first time or maintain existing coverage.
In general, the credit is available to small employers that pay at least half the cost of single coverage for their employees in 2010. The credit is specifically targeted to help small businesses and tax-exempt organizations that primarily employ low- and moderate-income workers.
For tax years 2010 to 2013, the maximum credit is 35 percent of premiums paid by eligible small business employers and 25 percent of premiums paid by eligible employers that are tax-exempt organizations. The maximum credit goes to smaller employers — those with 10 or fewer full-time equivalent (FTE) employees — paying annual average wages of $25,000 or less. Because the eligibility rules are based in part on the number of FTEs, not the number of employees, businesses that use part-time help may qualify even if they employ more than 25 individuals. The credit is completely phased out for employers that have 25 FTEs or more or that pay average wages of $50,000 per year or more.
Eligible small businesses can claim the credit as part of the general business credit starting with the 2010 income tax return they file in 2011.
Following is a link to IRS website for more information on how to claim the credit. www.irs.gov/newsroom/article/0,,id=223666,00.html?portlet=7
Also, SevenHills Benefit Partners has developed a Small Business Tax Credit Estimator for its clients and have generously agreed to share with other employers. See attached link.
Cobra & Unemployment Extension: On April 15, President Obama signed HR 4851, the Continuing Extension Act of 2010. Passage in the House and Senate guaranteed several extensions to government programs, including Consolidated Omnibus Budget Reconciliation Act (COBRA) health care insurance benefits and emergency unemployment benefits. The bill provides:
- An extension on the period that individuals may file applications for Federal Emergency Unemployment Compensation (EUC) from April 5, 2010, to June 2, 2010, and the period which individuals may claim and be paid EUC from September 4, 2010, to November 6, 2010.
- An extension on the period that individuals may qualify for the Federal Additional Compensation (FAC) – the extra $25 per weekly benefit amount on state and federal unemployment compensation - will be extended for the same weeks as the EUC extension.
- An extension of the period that the federal government will provide 100-percent reimbursement for weeks of regular federal extended benefit payments from April 5, 2010, to June 2, 2010, with the state option to continue the benefit extension period from September 4, 2010, to November 6, 2010.
- An extension on the eligibility for the COBRA health insurance 65-percent subsidy for people who have lost their jobs through May 31, 2010. The bill also provides transition relief for individuals who lost their jobs between March 31, 2010, and the date of enactment.
EUC and FAC payments will be paid for from general revenue, and regular employment benefits will be drawn from the Federal Emergency Unemployment Compensation Account that is funded with FUTA taxes paid by employers.
At this time, it is unclear if Congress will consider a longer extension of unemployment and COBRA benefits. The current legislative proposal, HR 4213, would extend benefits through the end of 2010.
Employers with questions on the federal COBRA extension should visit the U.S. Department of Labor Web site. For questions on Minnesota’s subsidy, visit the Minnesota Department of Human Services Web site.
Click here for Fact Sheet: The Affordable Care Act’s New Patient’s Bill of Rights
