TRIO Blog

WHAT OBAMACARE MEANS FOR EMPLOYERS IN 2013 AND BEYOND

Written: January 2, 2013

The Worklaw® Network firm of Pilchak Cohen has put together this quick reminder about upcoming changes.

WHAT OBAMACARE MEANS FOR EMPLOYERS IN 2013 AND BEYOND
By: Daniel G. Cohen

Obamacare - 2013 and beyondWith over 1,000 pages of text, 10,000 pages of regulations and thousands more on the way, I can’t help but think that the Patient Protection and Affordable Care Act is going to be significantly more costly for employers than we already thought it would be. Whether you are a small business, a large business or something in between, Obama Care will have a financial impact on your business and your bottom line. The biggest changes will take hold in 2014, but some will occur this year. During a recent webinar conducted by the NFIB, 2013 was identified as the year of planning. I could not agree more.

There are several changes that kick in during 2013:

  • Starting January 1, 2013, employers must withhold an additional .9 percent of the wages of individuals who earn more than $200,000 per year ($250,000 if filing jointly);
  • Starting January 1, 2013, these same high earners will have an increase in their taxes of 3.8% on unearned or passive income;
  • Starting January 1, 2013, employees will only be able to contribute a maximum of $2500 to a health care Flexible Savings Account.
  • Employers will have to provide Notice of Exchange Availability to employees (the form has not yet been published by the federal government);
  • Employers will have to provide employees with a “Summary of Benefits coverage” form during open enrollment on and after October, 2013
  • Health Insurance costs will have to be disclosed on the W-2s of employees working for employers with 250 or more employees.
  • There will be increased thresholds for medical expense deductibility and taxes on medical devices.

 

2014 will bring the most significant and costly changes:

  • Employers with 50 or more full-time employees or full-time equivalents (FTEs) will be required to offer minimal and affordable health care to all employees and their families or pay a $2000 fine per employee after the first 30. The way this works is that an employer with 50 FTEs, which does not offer affordable insurance and where at least one employee receives federal insurance subsidies in an exchange, would pay $40,000 (50-30 x $2000). If that same employer offered affordable health care insurance, and at least one employee receives federal insurance subsidies, the employer would pay $3000 per subsidized employee or $2000 per employee (minus the first 30) whichever is less. So, a providing employer with two subsidized employees would be fined $6000. With 14 or more subsidized employees (above the tipping point for the formula), the penalty would be $40,000. To qualify for the subsidy, an employee’s household income must be 400% of the federal poverty level and the employee’s portion of the health care premium must exceed 9.5% of household income;
  • Employers will be required to report/verify employee healthcare coverage;
  • Employer health plans will be subject to non-discrimination rules which will prohibit employers from offering different health insurance plans, premium subsidies, or benefits to high earners. Non-compliance will result in significant financial penalties;
  • Small employers will incur increased premium costs when the health insurance tax (“HIT”) kicks in. This tax exempts self-insured plans and applies to fully insured plans, which will admittedly be passed on to the consumer (e.g. small employers and their employees);
  • The individual mandate will also take effect, resulting in individual taxes for remaining uninsured absent an exemption; and
  • State health care exchanges will be available to individuals without employer coverage.

 

As you can imagine there will be a lot of sorting out to do. We will keep you informed as we learn even more.

 

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TRIO - "Turning Risk Into Opportunity" We are all surrounded by risk. It's no wonder we can easily find ourselves consumed by our efforts to control risk and we can't see how the risks that surround us can be turned into opportunities. Here we will share what we have learned to help your organization look beyond the transaction of insurance and find the hidden costs within organization.

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