PPACA FAQs; Senate Votes to Repeal 1099 Reporting

From TrueNorth and our partners at UBA, we are happy to provide you with the latest Health Care Reform Update:

PPACA FAQs released on the Grandfathered Plan Rules:
The Employee Benefits Security Administration (EBSA) has released a sixth set of frequently asked questions (FAQs) about the Patient Protection and Affordable Care Act (PPACA). Specifically, they address:


• the anti-abuse rule;

• changing cost sharing for newly-generic drugs

• no cost sharing for preventive services under a value-based health care initiative,

retiree health care, and

• the timing of the relinquishment of grandfather status.

The full FAQ can be found here: http://www.dol.gov/ebsa/faqs/faq-aca6.html  

U.S. Senate Votes to Repeal 1099 Reporting Requirement
Bowing to pressure from business groups worried about an avalanche of paperwork, the U.S. Senate voted 87-12 Tuesday to pass legislation that repeals a requirement for businesses and landlords to file a Form 1099 document with the IRS for purchases of goods and services exceeding $600 a year. The legislation earlier was passed by the House of Representatives and now goes to President Barack Obama, who is expected to sign it into law.

The bill adjusts the health insurance tax subsidies to be given to middle-income people under the health care law. It would require anyone who receives excessive tax subsidies for health insurance to pay back a greater share than currently required under the law. Some Democrats argued that the payback provision for excessive subsidies would discourage individuals and small businesses from complying with the law's requirement that they obtain health insurance.

HCR-Update: IRS Delays W-2 Reporting; Self Funding Report

Highlights of recent regulations released by the IRS:

1. The regulations emphasize that the reported amounts are for employee information only and does not cause excludable employer-provided health care to become taxable. Separate legislation would need to be enacted for this to occur.
2.  Reporting is optional for the 2011 calendar year, but mandatory for many employers beginning with the 2012 calendar year (i.e., for W-2s produced in January 2013).
3. Employers who issue fewer than 250 W-2s for the 2011 calendar year (i.e., produced in January 2012), are exempt from the reporting requirement for at least the 2012 calendar year. Such employers will be required to report for future years if/when additional regulations are issued.
4. The cost of an employer-sponsored health plan is the amount to be reported. This includes any amounts contributed by the employer and the employee.
5. Amounts attributable to an HSA are not reported. The amount for the underlying QHDHP are reported.
6. The amount of any salary reduction election to a medical reimbursement FSA is not included. Any employer contribution to the medical FSA is included.
7. Plans that provide benefits generally limited to dental, vision, specified illness/disease or fixed indemnity reimbursements (typically hospital indemnity plans) are not included. This is the case even if the dental and vision are packaged with the medical if they are provided under a separate plan (i.e., not an integral part of the medical plan).
8. Fully insured plans can rely on the premium charged by the carrier in determining the amount to be reported.
9. Self-funded plans can rely on the COBRA costs they calculate at the beginning of each plan year, including any amounts the employer may contribute to the COBRA coverage.
10. For employees that are not enrolled in a health plan for the entire tax year an employer may use any reasonable, consistent method for calculating the pro-rata amount to be reported.

This is obviously not an exhaustive list of the regulations, nor does it constitute tax advice. Employers and employees should consult their own tax consultants for details regarding their specific situation.