The Healthcare Reform Impact - Can your HRIS handle the changes?
Posted by Heather Lewko on Fri, Oct 01, 2010 @ 10:03 AM
At our recent User Conference, we held a healthcare reform Panel - "The impact on your Business" with representatives from The Segal Company, Wells Fargo Insurance Services, Wise Consulting and NuView, presenting perspectives from the benefits/brokers, legal/compliance, healthcare and HRIS vendor sides.
This panel focused on recent and upcoming healthcare changes and the impact these changes will have for businesses from a benefits, cost, legal, systems and organizational perspective. The panelists also discussed actions and planning that organizations need to consider as they prepare for healthcare reform, and the tradeoffs involved should organizations choose not to offer a health plan -- federal penalties and huge implications for recruiting and workforce demographics.
The panel session was well attended by our users. Learn some quick facts below about the reform and how the NuViewHR product Suite is equipped to handle these changes.
Where it all began President Obama signed two bills into law:
1. Patient Protection and Affordable Care Act on March 23, 2010 (PPACA)
2. Health Care and Education Affordability Reconciliation Act on March 30, 2010 (HCEAA)
Healthcare Reform = PPACA + HCEAA
Timeline:
- September 23, 2010 - First Plan Year start date- Provisions begin to impact employers with our 2011 plan year renewal dates
- Oct 1, 2010 for plan years that begin October 1
- Jan 1, 2011 for calendar year plan years
- April 1, 2011 for plan years that begin April 1
- July 1, 2011 for plan years that begin July 1
Timeline Exceptions:
- “Grandfathered” plans/policies in effect on 3/23/10 excluded from some of the new reforms
- Collectively bargained plans are “deemed” to be grandfathered until the last collective bargaining agreement (that was in effect on 3/23/10) expires
Accounting Changes:
- FAS 109 requires employers to take charge against current earnings to reflect the higher anticipated tax costs and higher FAS 106 liability
- ASC 740 states that expense or benefit related to adjusting deferred tax liabilities and assets must be recognized in income from continuing operations for the period that includes the enactment day.
- Expense from this change will be recognized in the first quarter of 2011, even though change in law may not be effective until later years
- Extends the adoption tax credit until 2011 and increases the tax credit by $1,000 to $13,170
- Amends FLSA and provides whistleblower protection for those who report possible violations of the new law (effective now)
Summary of the new health care bill in 2010
In the year 2010, there would be three major changes to health care. First, insurance companies would no longer be allowed to deny coverage to children with pre-existing illnesses. Second, children would be able to stay on their parent’s insurance policies until they turn 26 years old. Third, Medicare recipients who fall into a specific coverage gap will get a $250 rebate.
Other changes include an excise tax on indoor tanning, which will increase the cost of that service. Also, individuals that have not had health insurance for 6 months will receive a subsidy to enroll in high-risk insurance pools run by the states. All new insurance plans sold must exempt preventative care and screenings from deductibles. Finally, small businesses with fewer than 25 employees would receive up to a 35 percent tax credit for providing health insurance to their employees.
Summary of the new health care bill in 2011
In 2011, the new health care bill will make changes focused mostly on preparing for later updates. The new health care bill will set up a long-term care insurance program. Individuals who pay premiums into this system for at least five years will become eligible to receive support with daily living assistance.
The senior citizens will get a 50 percent discount on some drugs. In 2011, a new fee on drug makers will also be implemented to help pay for the upcoming changes. The fine on withdrawing funds from a Health Savings Account for non-medical expenses will increase by 5 to 10 percent. Employers will also need to start including the cost of health care on employee’s W-2 forms.
Summary of the new health care bill in 2010
Within this year, there are three major changes to health care. First, insurance companies would no longer be allowed to deny coverage to children with pre-existing illnesses. Second, children would be able to stay on their parent’s insurance policies until they turn 26 years old. Third, Medicare recipients who fall into a specific coverage gap will get a $250 rebate.
Other changes include an excise tax on indoor tanning, which will increase the cost of that service. Also, individuals that have not had health insurance for 6 months will receive a subsidy to enroll in high-risk insurance pools run by the states. All new insurance plans sold must exempt preventative care and screenings from deductibles. Finally, small businesses with fewer than 25 employees would receive up to a 35 percent tax credit for providing health insurance to their employees.
Summary of the new health care bill 2012-13
No major changes will occur in health care in the year 2012 under the new health care bill. In 2013, many of the new taxes and fees that will pay for the new health care bill will go into effect. This will provide funding for the 2014 fiscal year updates to the health care system.
These taxes will include new Medicare taxes on individuals who earn more than $200,000 a year. The wage tax, dividends and interest tax, and a small tax on medical devices will also be implemented. In 2013, the new health care bill will also implement a test system in Medicare in which payments are made based on the quality, rather than quantity of health care services. Health insurers will also be barred from charging different premiums to customers based on gender.
Summary of the new health care bill in 2014
In 2014, the majority of Americans will gain benefits from the new health care bill. Exchanges will be created so individuals without employer-provided health care or small business can shop for health care coverage – and insurance companies will be barred from denying coverage on the basis of pre-existing conditions. Medicare will also expand to cover all Americans with income up to 133 percent of the federal poverty level ( about $27,000 per year for a family of 4). Small businesses will also receive a tax credit to help them provide coverage to their employees. The insurance industry will also be required to pay an annual fee to help pay for the exchanges that will cover all citizens that cannot otherwise receive insurance.
In addition to providing subsidies and guaranteed coverage for most citizens, the new health care bill will also require that most people have health insurance. There will be a fine for not carrying insurance of some sort. An independent Medicare board will also be created to help curb Medicare costs if the costs rise more quickly than inflation.
Summary of the new health care bill in 2015, 2016, 2017, 2018
In 2015, the new health care bill will simply continue the new coverage, taxes and fees that are created in previous years. In 2016, the penalty for individuals who do not purchase health insurance will rise to a $695 minimum. In 2017, businesses that have more than 100 employees will be allowed to participate in the state insurance exchanges, if the state government allows it. In 2018, an excise tax will be imposed on so-called “Cadillac plans” that generally provide more than $27,500 worth of coverage for a family.
More Paperwork for Business Owners:
While taxes may hit many small business owners, the largest impact may be the increase in administrative costs when it comes to managing employees' health coverage. Even the W-2 will become more complex, because you'll need to report the value of each employee's health plan on their W-2 statement. The IRS is also planning to look harder at all tax paperwork in an effort to improve tax collection and pay for health care reform. You'll be expected to complete 1099 forms for all payments of $600 or more to corporations (currently, 1099s are only required for payments to unincorporated businesses).
Don't be surprised if you find yourself needing to keep more in-depth records, which in turn requires more time and expense on your part. It's a simple fact of the new legislation and there's not a way around it.
Additional Information:
Extends the adoption tax credit until 2011 and increases the tax credit by $1,000 to $13,170
Amends FLSA and provides whistleblower protection for those who report possible violations of the new law (effective now)
What does all this mean to your HR dept?
If you are currently using an HRIS System, you may be asking yourself: can my system handle these changes? If you are using or thinking of using NuViewHR, your answer would be yes!
NuViewHR is structured to be a long term solution that easily changes as legislation, market conditions and the organization changes. The flexible architecture allows changes to be easily made using NuView Tools, allowing clients to customize virtually any part of the HR system – from menus, tabs, forms and help text, to adding unlimited fields and tables – to creating new workflow, alerts, reports, queries, imports and exports.
NuView is the only vendor that offers this level of flexibility and customizability.
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