Healthcare Reform Evolves
July 19, 2015
Medi-Cal Expansion
July 19, 2015

Healthcare Reforms Require New Fees

Health Care Reforms require new fees and other changes by employers.

Effective in 2013, employee contributions to FSAs will be capped at $2,500 annually, with the cap adjusted annually to the Consumer Price Index.

Beginning in 2013, the act will require new fees and other financial changes for employers that have established and maintained self-funded health plans. 

Comparative effectiveness fee: A fee will be assessed on employers with self-funded health plans additional 0.9 percent Medicare tax imposed upon employees who have wages over $200,000 ($250,000 for joint tax filers). Also, there will be a new 3.8 percent Medicare tax imposed upon unearned income (interest, dividends, annuities, royalties and rents) for taxpayers in those same income brackets. 

 Additional Medicare taxes for high-income earners and on unearned income: There will be deduction for the amount of the Medicare Part D retiree drug subsidy. In other words, the employer’s allowable tax deduction for retiree prescription drug expenses must be reduced by the amount of the tax-free subsidy payment the employer receives. Although this provision does not go into effect in 2013, for companies subject to FASB recognition of the loss of this future tax benefit.Elimination of Medicare Part D subsidy deduction: The act also eliminates an employer’s tax4 rules, FASB 106 requires the immediate recognition of the loss of this future tax benefit.

 Effective March 1, 2013 (or subsequently for new hires), the act requires employers to issue a new notice to employees containing information about state exchanges, the availability of premium assistance if the actuarial value of the employer’s plan is below 60 percent, and the availability of free choice vouchers in the upcoming plan year (2014). 

New employee notice required  Plans to fund a comparative effectiveness research agency. (For employers with fully insured health plans, the health insurer will be assessed the fee.) For plan years ending after September 31, 2012, this fee will be $1 times the average number of lives covered under the plan; in subsequent plan years, the fee will be $2 times the average number of covered lives. The fee will end on September 30, 2019.

Health Care Reforms require new fees and other changes by employers.

Effective in 2013, employee contributions to FSAs will be capped at $2,500 annually, with the cap adjusted annually to the Consumer Price Index.

Beginning in 2013, the act will require new fees and other financial changes for employers that have established and maintained self-funded health plans. 

Comparative effectiveness fee: A fee will be assessed on employers with self-funded health plans additional 0.9 percent Medicare tax imposed upon employees who have wages over $200,000 ($250,000 for joint tax filers). Also, there will be a new 3.8 percent Medicare tax imposed upon unearned income (interest, dividends, annuities, royalties and rents) for taxpayers in those same income brackets. 

 Additional Medicare taxes for high-income earners and on unearned income: There will be deduction for the amount of the Medicare Part D retiree drug subsidy. In other words, the employer’s allowable tax deduction for retiree prescription drug expenses must be reduced by the amount of the tax-free subsidy payment the employer receives. Although this provision does not go into effect in 2013, for companies subject to FASB recognition of the loss of this future tax benefit.Elimination of Medicare Part D subsidy deduction: The act also eliminates an employer’s tax4 rules, FASB 106 requires the immediate recognition of the loss of this future tax benefit.

 Effective March 1, 2013 (or subsequently for new hires), the act requires employers to issue a new notice to employees containing information about state exchanges, the availability of premium assistance if the actuarial value of the employer’s plan is below 60 percent, and the availability of free choice vouchers in the upcoming plan year (2014). 

New employee notice required  Plans to fund a comparative effectiveness research agency. (For employers with fully insured health plans, the health insurer will be assessed the fee.) For plan years ending after September 31, 2012, this fee will be $1 times the average number of lives covered under the plan; in subsequent plan years, the fee will be $2 times the average number of covered lives. The fee will end on September 30, 2019.

Brian Schroeder
Brian Schroeder
Brian J Schroeder – Independent Broker - (925) 513-7778