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What's on Tap for the Affordable Care Act This Year?

By Colleen Bruce and Brian Schilling

Concern about complying with the various provisions of the Affordable Care Act once again topped the Towers Watson/National Business Group on Health list of health care concerns among benefits managers at large to midsize employers this year. Compliance concerns slipped to the number 2 spot in last year’s annual survey of employer purchasing behaviors. There are many resources available for keeping abreast of pending changes. The Commonwealth Fund offers a free, comprehensive resource center on health care reform at The U.S. Department of Health and Human Services (HHS) website,, offers useful tips and insights about navigating the new law. And don’t forget your local business health care coalition, which may offer hands-on support, meetings, and other assistance, in addition to information and updates.

The following employer-related provisions of the health reform law have already gone into effect, or will do so this year:

  • Exchange open enrollment. State health insurance exchanges (now called marketplaces) may not open for business until January 1, 2014, but open enrollment begins October 1, 2013. Even large employers that are not participating in the exchanges will be expected to notify all new hires and current employees about the marketplaces and inform them if the health benefits the employer offers do not meet the minimum essential coverage standard. Further, employers are expected to let employees know that they may be eligible for a premium tax credit if they purchase a health plan through their state’s exchange. In early May, the U.S. Department of Labor (DOL) issued an important clarification about employers’ obligations to inform employees about their options under the new health insurance marketplaces. Significantly, the DOL guidance included a model notice for employers that currently offer health coverage.
  • New contribution limits on health flexible spending accounts (FSAs). The days of unlimited contributions to FSAs are over. The maximum annual FSA contribution now stands at $2,500.
  • Loss of Medicare Part D subsidy deduction. Employers may no longer deduct the portion of their overall health care expenses that were reimbursed through the now-defunct Medicare Part D subsidy program. This change to the tax code applies to both insured and self-insured health plans regardless of whether or not they are grandfathered.
  • Federal Insurance Contributions Act (FICA) tax increase. Employees’ FICA tax rate for wages over $200,000 ($250,000 for married couples) now stands at 2.35 percent, up from 1.45 percent last year. Employers are required to collect the employee’s portion of this tax.
  • Patient-Centered Outcomes Research Trust Fund fees. To help fund the new Patient-Centered Outcomes Research Institute, self-insured health plans and health insurance carriers are now being assessed a $1 per-member-per-year fee. Fees double to $2 per-covered life in 2014.
  • Penalties and more penalties. Although technically not assessed until next year, employers with more than 50 employees should be advised that failure to offer benefits that meet the minimum essential coverage standard will be subject to a $2,000 per-employee-per-year penalty. Employers that offer coverage deemed “unaffordable”—that is, coverage that drives employees to the exchanges—will face a $3,000 per-employee-per-year penalty.
  • Reinsurance fees. Health plans and third-party administrators for self-insured plans will be required to pay into their state’s individual market reinsurance program at a rate of $5.25 per member per month, or a total of $63 per member per year. Though steep, the fee is only expected to last for three years.

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