The Insurancenter

HEALTH CARE REFORM UPDATES FOR 2011

APRIL 15, 2011 – FREE CHOICE VOUCHER REQUIREMENT REPEALED

As part of the Department of Defense and Full-Year Continuing Appropriations Act of 2011, the provision that would have required employers who offer health insurance coverage to provide "free choice" vouchers to qualifying employees (one whose household income was at or below 400% of the federal poverty level and whose required premium contributions for the employer's coverage would be between 8% and 9.8% of their household income) for purchasing health care through state-based Exchanges has been repealed. The dollar amount of the voucher would have been equal to the premium contribution the employer would have paid on behalf of the employee under the employer's plan.

APRIL 14, 2011 – 1099 REPORTING REQUIREMENT REPEALED

President Obama also signed into law a bill that removes the expanded 1099 reporting requirement from the Affordable Care Act. The bill makes the following changes to the Affordable Care Act –

• Repeals the expansion of existing requirements that businesses report information to the Internal Revenue Service on payments for goods of $600 or more annually to other businesses
• Increases the amount of overpayment of premium assistance tax credits for purchasing health insurance coverage through state-based Exchanges that will be subject to repayment

APRIL 1, 2011 – EARLY RETIREE REINSURANCE PROGRAM (ERRP) TO STOP ACCEPTING NEW APPLICATIONS AS OF MAY 6, 2011

Effective May 6, 2011, the Centers for Medicare and Medicaid Services (CMS) announced the Early Retiree Reinsurance Program (ERRP) will no longer accept new applications due to the availability of funds.

MARCH 29, 2011 – IRS RELEASES INTERIM GUIDANCE ON REPORTING OF EMPLOYER-SPONSORED HEALTH COVERAGE ON FORM W-2

On March 29, 2011, the IRS issued interim guidance to employers on informational reporting on each employee's annual Form W-2 of the cost of the health insurance coverage they sponsor for employees. The new reporting to employees is for their information only to inform them of the cost of their health coverage, and does not cause excludable employer-provided health coverage to become taxable; employer-provided health coverage continues to be excludable from an employee's income, and is not taxable.

2011 W-2 REPORTING REQUIREMENTS FOR EMPLOYERS

The Affordable Care Act provides that employers are required to report annually the cost of employer-provided health care coverage on each employee W-2 form.

The new guidance provides interim relief to employers with respect to reporting the cost of coverage under an employer-sponsored group health plan on Form W-2, Wage and Tax Statement. Specifically, this notice provides that reporting the cost of such coverage will not be mandatory for all employers regarding W-2s issued for 2011 (generally furnished to employees in January 2012).

The Treasury Department and the IRS have determined that this relief is appropriate to provide employers with additional time to make any necessary changes to their payroll systems or procedures in preparation for compliance with the reporting requirement. Accordingly, an employer will not be treated as failing to meet the requirements for 2011, and will not be subject to any penalties for failure to meet such requirements, merely because it does not report the aggregate cost of employer-sponsored coverage on W-2s issued for 2011.

EMPLOYERS SUBJECT TO THE REPORTING REQUIREMENT

All employers that provide applicable employer sponsored coverage during a calendar year are subject to the reporting requirement. This includes federal, state and local government entities, churches and other religious organizations, and employers that are not subject to the COBRA continuation coverage requirements under, to the extent such employers provide applicable employer-sponsored coverage under a group health plan, but does not include Federally recognized Indian tribal governments. (Notice 2010-69 provides that reporting by these employers is not mandatory until the 2012 W-2 forms.

EXCEPTIONS

• In the case of 2012 W-2 forms (meaning W-2s for the 2012 calendar year that employers generally furnish to employees in January, 2013 and then file with the Social Security Administration), and until issuance of further guidance, smaller employers (those filing less than 250 W-2 forms the preceding calendar year) will not be subject to the reporting requirements regarding the cost of health coverage on any forms required to be furnished to employees.
• An employer is not required to include in the aggregate reportable cost the cost of coverage provided under a self-insured group health plan that is not subject to any federal continuation coverage requirements. If the only group health plan coverage provided to an employee by the employer is provided under a self-insured group health plan that is not subject to any federal continuation coverage requirements, the employer is not required to report any amount on the Form W-2 for that employee. However, employers who provide coverage under a self-insured group health plan that is subject to Federal continuation coverage requirements must report the cost of coverage on Form W-2. For this purpose, federal continuation coverage requirements include the COBRA requirements under the Code, the Employee Retirement Income Security Act of 1974 or the Public Health Service Act and the temporary continuation coverage requirement under the Federal Employees Health Benefits Program.
• Plans maintained primarily for members of the military or primarily for members of the military and their families are not required to include the aggregate reportable cost the cost of coverage provided.

This interim guidance is applicable until further guidance is issued. To the extent that future guidance applies the reporting requirement to additional employers or categories of employers or additional types of coverage that guidance will apply prospectively only and will not apply to any calendar year beginning within six months of the date the guidance is issued.

MARCH 18, 2011 – EXTENSION OF ENFORCEMENT GRACE PERIOD FOR SELECT INTERNAL CLAIMS AND APPEALS REQUIREMENTS

The DOL and the Treasury have further extended the enforcement grace period for certain requirements related to the new internal claims and appeals procedures under the Affordable Care Act until plan years beginning on or after January 1, 2012.

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For more information, contact your Insurancenter health care insurance professional at 417-623-7500 or toll-free at 800-444-8675. If you prefer to email us, our email address is benefits@theinsurancenter.com. We're happy to answer your questions.

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