Wednesday, March 24, 2010
Federal Health Care Update
The federal health care legislation signed into law by President Obama yesterday, and the Reconciliation Bill expected to pass Congress this week, will have a significant impact on employers. The Maryland Chamber and most other business groups had opposed the legislation. Please thank Congressmen Bartlett and Kratovil for opposing the bills. As enacted, the Health Care bill (H.R. 3590) and the Reconciliation Bill (H.R 4872) will have the following effect on employers:
- Dependent Coverage: Effective this year, group health plans that offer dependent coverage must allow dependent coverage to continue up to age 26.
- Small employer credits: Starting in 2010, certain employers with fewer than 10 employees and average annual wages of less than $25,000 could qualify for federal tax credits of up to 35% of the cost of providing health insurance. Lesser amounts of subsidy would be provided to employers with fewer than 25 employees and average wages up to $50,000. Starting in 2013, the credits would be limited to 2 years.
- W-2 Reporting: Starting in 2011, employers must report the value of health benefits on employee W-2 statements.
- More 1099s: Starting in 2012 there are expanded requirements for reporting payments to businesses and persons in consideration for property or services.
- Employer mandate: Starting in 2014, employers with more than 50 full time employees must offer full time employees health insurance coverage that pays at least 60% of the cost of plan benefits and for which an employee’s contribution is less than 9.8% of family income.
- Employer penalties: Starting in 2014, employers with more than 50 full time employees that do not offer a qualifying health insurance plan and have at least one full time employee that receives income-based assistance to buy insurance through the health insurance exchange are subject to a penalty of $2,000 per employee. If you do offer insurance, but the employee share of premiums is “unaffordable”, and that employee goes into the exchange and receives a tax credit, your fine is $3,000 per employee.
- Part-time employees: Would be counted as full-time equivalents in calculating the 50 employee threshold.
- Tax on Cadillac plans: Starting in 2018, a nondeductible 40% excise tax is imposed on the value of health insurance plans that exceed $10,200 for individuals or $27,500 for families. Dental and vision benefits are excluded from the tax.
See recaps of the legislation from: Mercer and Deloitte.
Contact Ron Wineholt for further information at .(JavaScript must be enabled to view this email address) .
