While the topic of our nation's health care reform continues to be debated in this year's presidential election, employers are preparing to meet the law's provisions that are taking effect now and in the next few months. While CeridianVoice has been covering these provisions all along, it's a good time to recap the upcoming changes as annual open enrollment for benefits and year-end payroll activities are quickly approaching.  

Prepare now for 2013 health care reform changes

While the topic of our nation's health care reform continues to be debated in this year's presidential election, employers are preparing to meet the law's provisions that are taking effect now and in the next few months. While CeridianVoice has been covering these provisions all along, it's a good time to recap the upcoming changes as annual open enrollment for benefits and year-end payroll activities are quickly approaching. 

First open enrollment beginning after Sept. 23, 2012

Summary of Benefits and Coverage requirement
Beginning Sept. 23, 2012, Summaries of Benefits and Coverage (SBCs) are required for both fully insured and self-insured group health insurance policies. The purpose of the SBC is to provide individuals with standard information so they can compare medical plans and make more informed choices about their coverage. The health insurance carrier is responsible for creating the SBC on fully insured policies. The employer group is responsible for creating the SBC on self-funded policies.

  • Read the Department of Labor FAQs on this topic.
January 1, 2013

W-2 reporting for benefits provided during prior year
Health care reform requires employers issuing more than 250 Form W-2s to report the total cost of coverage under an employer-sponsored group health plan. This amount will be reported on Form W-2 in Box 12 using Code DD. The value of the employer's excludable contribution to health coverage is not taxable. This reporting is for informational purposes only and will help employees understand how much their employer contributes to the cost of their health care coverage.

Health care FSA contributions limited to $2,500
Beginning in 2013, health care reform is setting a limit of $2,500 on the maximum amount that an employee can elect to contribute each year to a health care Flexible Spending Account (FSA). The limit only applies to elective employee contributions and so does not apply to employer matching or other non-elective FSA contributions. Dependent care FSAs, Health Savings Accounts (HSAs), Health Reimbursement Arrangements (HRAs), adoption care assistance and elective "premium conversion" contributions for health coverage are not subject to the $2,500 contribution limit. 

  • Read guidance from the IRS on cafeteria plans.

Increased Medicare health insurance tax withholding for high-income individuals
Beginning in 2013, employers will be required to withhold additional amounts from the wages of high-earning employees. The Medicare tax rate will increase from 1.45 percent to 2.35 percent on wages over $200,000 for single filers, wages over $250,000 for joint filers, and wages over $125,000 for persons who are married filing separately. Employers are not required to consider a spouse's wages or whether an employee earns wages at a second job, and the employer would begin withholding the additional tax in the pay period in which it pays wages in excess of $200,000 to an employee. The IRS said it does not plan to add additional boxes to Form W-2 for the additional Medicare tax on wages in excess of $200,000. Employers will report aggregate Medicare wages in Box 5 and the aggregate Medicare tax in Box 6.

  • For more information, please read the IRS Q&A.

Repeal of employer business deduction for qualified retiree drug programs
Currently, employers are entitled by the Medicare Modernization Act of 2003 to a tax-free subsidy of 28 percent of their costs to provide a prescription drug benefit program to their retirees. This legislation was intended to provide relief by reducing the coverage gap, known as the doughnut hole, for individuals in the Medicare Part D program. As of 2013, employers that currently receive a federal subsidy for providing retiree prescription drug coverage may still receive the subsidy, but will no longer be able to take a deduction on their federal tax returns related to the subsidy. 

First dollar preventive care services for women
Starting with plan years beginning on or after August 1, 2012, non-grandfathered group health plans are required to provide first-dollar coverage for certain women's preventive care services, including certain contraceptive services. "First-dollar coverage" means that health plans must not impose any co-payments, co-insurance, deductibles, or other cost-sharing requirements. Certain religious employers are exempt from the requirement to provide coverage for contraceptive services. 

  • Learn more about first-dollar preventive coverage for women.
March 1, 2013

Employee health insurance exchange notices
As of March 1, 2013, employers must provide notices to all employees regarding new health insurance exchanges, which are supposed to be operational in 2014. The Department of Labor has not yet issued regulations for implementing this requirement. CeridianVoice will keep you posted as more information becomes available.

July 31, 2013

Patient-centered outcomes fee due 
The Internal Revenue Service (IRS) released a proposed regulation explaining a new fee, the "patient-centered outcomes research fee" or "comparative effectiveness fee" that must be paid by both fully insured and self-insured health plans under health care reform. For calendar-year, self-insured plans, the first payment will be due by July 31, 2013, for the 2012 plan year.

  • For more information read the IRS proposed rule.


Because there are many variables involved in health care reform legislation, this article is intended as general information only and should not be taken as legal advice. Please consult your organization's legal or compliance resources for health care reform guidance that is specific to your business.

For more information:

  • Read Jim O'Connell's health care reform FAQ.
  • Visit Jim O'Connell's HR Legislation blog.