Health Reform Provisions Affecting Employers in 2013

While 2014 will be a busy year for major portions of the reform law to take effect, some provisions went into effect January 1, 2013 that may affect small business owners and the self-employed:

Exchange enrollment. Open enrollment for individual and small business health insurance exchanges begins October 1, 2013. The exchanges will allow individuals and small businesses with up to 100 employees to shop for qualified health insurance coverage online, using a one-stop option.

On November 15, 2012, Governor Beverly Perdue declared North Carolina’s intent to establish a state-federal partnership health insurance exchange.  States opting for a partnership exchange can choose to operate plan management functions, consumer assistance functions, or both. States can also elect to perform Medicaid and CHIP eligibility determinations or use federal government services.
North Carolina must submit an exchange “blueprint” consisting of a declaration letter signed by the Governor and an application to the U.S. Department of Health and Human Services (HHS) by February 15, 2013, indicating the state plans to operate a state-federal partnership exchange.

Ultimately, the decision rests with new Governor Pat McCrory. At the annual economic forecast meeting of the North Carolina Chamber at the North Carolina Bankers Association held January 2 in Durham just days before he was sworn in as Governor, McCrory’s first talking point was the state exchange decision, calling it one of the most immediate priorities of his new administration. Watch upcoming issues of the Bulletin for updates on the state exchange plan as it progresses.

Tax implications. As in recent years, eligible employers that provide health coverage will get a tax credit for up to 35 percent of their contribution toward employee insurance. The credit is calculated based on average wages and number of employees; it goes up to 50 percent for tax year 2014.

High-income individuals. For singles with modified adjusted gross income over $200,000 and married taxpayers with $250,000 modified adjusted gross income (MAGI), a 3.8 percent Medicare contribution tax will apply for tax year 2013 to investment income, including interest, dividends, annuities, royalties and rents.

W-2 reporting. Tax form W-2s issued in January 2013 for wages paid in 2012 must for the first time include a line showing the benefit employees receive from their employer-sponsored health care. The provision is an attempt to make health-care benefits and spending more transparent.  For certain employers, such as those issuing fewer than 250 W-2s, there is “transition relief” from this requirement, along with some other exceptions. IRS guidance and a chart illustrating the types of coverage that employers must report on the W-2 can be viewed at http://www.irs.gov/uac/Form-W-2-Reporting-of-Employer-Sponsored-Health-Coverage; with FAQs at  http://www.irs.gov/uac/Employer-Provided-Health-Coverage-Informational-Reporting-Requirements:-Questions-and-Answers.

For more information or assistance, contact the NCMS for resources and referrals for you or your practice.

 
 

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