From the April 2010 issue of Ceridian Connection.


Health Care Reform | HIRE Act

Health Care Reform

The recently passed health care reform legislation is the largest piece of domestic legislation since the 1935 Social Security Act. The new law extends an entitlement to health care coverage to 32 million Americans, many of whom will now qualify for Medicaid. Analysts agree the legislation will have a profound impact on all Americans. Health care reforms consist of two public laws, a number of provisions that take effect very soon, other provisions that take effect later and a cascade of new regulations that will be drafted, proposed, finalized, implemented and continue to have an impact on health care for years to come. To help employers prepare for the myriad of issues and changes under recently passed health care reform legislation, Ceridian is providing a series of special events and communications focused on topics of vital interest to employers. Topics include compliance issues, health plan redesign and benefits strategies for greater health care cost savings. Jim O'Connell, Ceridian's expert in legislative affairs, said he believes the constraints employers now feel when providing health care to their employees will result in innovative new strategies. "Even though health care reform has passed and is ushering in a new era of compliance responsibility, employers will still need to manage their health care costs," O'Connell said. "They will attempt to do this by redesigning their health plans." Bart Valdez, executive vice president and general manager of Ceridian Benefits Services stated, "Ultimately, employers don't feel they will bring health care costs under control until they help employees achieve a much greater level of personal responsibility for their own health. They don't feel the health care reform law adequately supports employers in doing this." As a result, there's "a thirst for knowledge" in the marketplace for innovative ways to help control health costs, such as consumer-directed health care and employee wellness in the workplace, Valdez said. Ceridian is publishing a biweekly newsletter, Health Care Compass, to help employers navigate through the myriad of new regulations associated with health care reform. Visit this page for the most recent health care reform information and resources.

Two new health care laws: Patient Protection & Affordable Care Act (PPACA) signed into law on March 23, 2010 Health Care & Education Reconciliation Act (H.R. 4872) signed into law on March 30, 2010 Some of the new provisions take effect soon: "Beginning the plan year that begins six months after the date of enactment" Enactment date was March 23, 2010 Many provisions become effective in 2010, but will not impact employers until their 2011 plan year renewal dates. October 1, 2010, for plan years that begin October 1 January 1, 2011, for calendar year plan years April 1, 2011, for plan years that begin April 1 The clock is already ticking on some provisions Employer health plan mandates Lifetime and annual limits Coverage of adult children Pre-existing condition exclusions Rescissions Internal and external appeals process Automatic enrollment Waiting periods The question of "grandfathering" existing plans Employer play or pay provisions

HIRE Act

In addition to health care reform, HR and payroll professionals are struggling to cope with the new requirements imposed by the passage of Hiring Incentives to Restore Employment (HIRE) Act (H.R. 2847), which was also commonly referred to as the jobs bill. The bill passed by both the House and the Senate and was signed into law by President Barack Obama on March 18, 2010.

"Ceridian spends a great deal of time and effort making certain our clients receive the full tax value of new regulatory and legislative changes," commented Web Hill, senior vice president and general manager of Ceridian Tax Services "Whether these tax benefits come from new health care reform legislation or recently enacted HIRE Act provisions, Ceridian continues to monitor and incorporate into all of our solutions tax-filing changes that insure our clients recognize the full benefits to which they're entitled."

Payroll-related highlights of the provisions in the final version of the HIRE Act include:

• Social Security tax suspension for qualified employers at the rate of 6.2 percent (.062) up to the annual Social Security wage cap for 2010 of $106,800. This amounts to a maximum annual hiring incentive of $6,621.60 per employee ($106,800 x 6.2 percent).
• Qualifying employees must be hired after February 3, 2010, and before January 1, 2011.
• Qualifying employees must have had not more than 40 hours of work over the most recent 60 days (ending on the employee's start date). Employers must get a signed affidavit from each employee as proof of compliance with this provision.
• The employer may not take the Social Security tax offset on employees hired to replace involuntarily terminated employees. Employees hired to replace employees terminated "for cause" will qualify.
• An additional tax credit of 6.2 percent of federal income taxable wages, not to exceed $1,000, for each qualifying employee retained for at least 52 weeks may be taken on the employer's business tax return.

More resources for HR/payroll professionals related to the HIRE Act Legislation
HIRE Act - final
The complete text of the Hiring Incentives to Restore Employment (HIRE) Act (H.R. 2847)

Internal Revenue Service
New Incentives for Hiring
"Two New Tax Benefits Aid Employers Who Hire and Retain Unemployed Workers"

HIRE Act: Questions and Answers for Employers
The IRS provides answers to HIRE Act questions and guidance for employers.

Find answers to your questions about the HIRE Act. Check back frequently to find the most up-to-date information.