Michigan employers working to comply with several administrative health care reform requirements

UPDATED: May 26, 2011

Originally posted on July 20, 2010

The Patient Protection and Affordable Care Act (PPACA) requires all employers, regardless of whether or not they offer health care coverage, to make certain administrative changes over the next few years. 

Below is a summary of those requirements:

Tax on non-qualifying health spending accounts (HSAs):

The tax on non-qualifying HSA withdrawals increases from 10 to 20 percent beginning in 2011.

W2 forms:

Our W-2 Reform Alert has the latest information on W-2 reporting.

Communication and standardization:

Prior to early 2012, federal regulations will develop standardized processes and formats for compiling and communicating benefits, plan changes and rights.

Exchange notification:

Employees must be notified of the existence of their state health care exchange and eligibility for potential premium credit by March 1, 2013 

Flexible spending accounts (FSAs):

In 2013, flexible spending contributions are limited to $2,500. In 2011, over-the-counter drugs must be prescribed to use FSA. 

Long term care program enrollment:

In 2013, employees may be auto-enrolled in a new federal long-term care plan called the Community Living Assistance Services and Supports (CLASS) program. The department of Health and Human Services has yet to provide details about eligibility, benefits and administration of the CLASS program. 

Payroll taxes:

Employee share of the Medicare hospital tax will increase by 0.9 percent for individuals with incomes greater than $250,000 (joint filers) or $200,000 (single filers), effective 2013. Employers will have to withhold additional payroll taxes from individual’s income once it exceeds $200,000. 

Comparative effectiveness fee:

Beginning with policy years ending during the 2013 fiscal year, there is a $1 fee per covered life to pay for comparative effectiveness research. For fully insured groups, this fee is remitted by the insurer. For self-insured groups, this fee is remitted by the plan sponsor, which in most cases is the employer. The fee goes up to $2 per covered life for policy years ending during the 2014 fiscal year.

Exchange eligibility:

Exchanges open to small employers in 2014. States may open to large employers beginning 2017. 

Reporting to IRS:

Reporting is required in 2014 to identify employees with coverage through their employers.

Auto-enrollment:

Large employers must auto-enroll new-hires in one of the plans and continue enrollment of current employees. Automatic enrollment programs must include adequate notice and opportunity to opt out. (There is no specific effective date for this provision in the statute. Some commentators believe the provision will take effect in 2014, while others believe the provision will take effect upon issuance of the statutorily mandated regulations by the Department of Labor, which could be much sooner.)

The information on this website is based on BCBSM's review of the national health care reform legislation and is not intended to impart legal advice. Interpretations of the reform legislation vary, and efforts will be made to present and update accurate information. This overview is intended as an educational tool only and does not replace a more rigorous review of the law's applicability to individual circumstances and attendant legal counsel and should not be relied upon as legal or compliance advice. Analysis is ongoing and additional guidance is also anticipated from the Department of Health and Human Services. Additionally, some reform regulations may differ for particular members enrolled in certain programs such as the Federal Employee Program, and those members are encouraged to consult with their benefit administrators for specific details.