- Does the law affect coverage for early retirees?
- How will the changes in simple cafeteria plans work for small business owners?
- Are there new reporting requirements, such as on the W-2?
- How will an employer know if it owes a shared responsibility payment?
- How will an employer make a shared responsibility payment?
- Does the law offer incentives to create or participate in wellness programs?
Does the law affect coverage for early retirees?
For a period of time, there has been temporary assistance available for employers who provide health coverage for early retirees who are 55 or over but are not yet eligible for Medicare. The Department of Health and Human Services (HHS) established a program that provides re-insurance coverage. The program has paid 80% of eligible claims between $15,000 and $90,000, and program participants have been able to submit claims for medical care going back to June 1, 2010. HHS began accepting applications on June 29, 2010; however, applications are no longer being accepted as of May 5, 2011. For information on deadline provisions, visit www.hhs.gov/ociio. or www.errp.gov. The program will expire January 1, 2014.
How will the changes in simple cafeteria plans work for small business owners?
The reform law makes it easier for small employers to offer cafeteria plans by carving out a safe harbor from nondiscrimination requirements. This change relaxes participation restrictions so that small employers can provide tax-free benefits, including healthcare coverage, to their employees. The self-employed are also considered qualified employees. The change exempts employers who make contributions for employees under a simple cafeteria plan from pension plan non-discrimination requirements applicable to key employees and those who are highly compensated.
Are there new reporting requirements, such as on the W-2?
Yes. As of 2011, every employer is required to report the value of the health insurance benefit for each employee on his or her annual W-2. This is to determine whether a) an individual has coverage as required and b) his or her health plan will be subject to the excise tax. Note that there is no new tax associated with this requirement.
How will an employer know if it owes a shared responsibility payment?
The IRS will contact employers to inform them of their potential liability and provide them an opportunity to respond before any liability is assessed or notice and demand for payment is made. The contact for a given calendar year will not occur until after employees’ individual tax returns are due for that year claiming premium tax credits and after the due date for employers that meet the 50 full-time employee (plus full-time equivalents) threshold to file the information returns identifying their full-time employees and describing the coverage that was offered (if any).
If it is determined that an employer is liable for a shared responsibility payment after the employer has responded to the initial IRS contact, the IRS will send a notice and request for payment. That notice will instruct the employer on how to make the payment. Employers will not be required to include the shared responsibility payment on any tax return that they file.
Does the law offer incentives to create or participate in wellness programs?
The new law established grants for up to 5 years for employers who establish wellness programs. In 2011, HHS announced $9 million to study how to reduce chronic disease risk among employees, through evidence-based/promising practices and workplace health interventions. Wellness grants incentivize employers to promote healthy workplace habits and engage in peer-to-peer health mentoring.