Thursday, November 11, 2010

Health Insurance Reform Update

There are two new employer responsibilites with healthcare reform. One upcoming responsibility requires that employers must report to their employees the actual dollar value of their health insurance coverage under the group plan. However, the IRS and the Treasury Department have decided to make this requirement optional for 2011 to give employers additional time to adjust their payroll systems and prepare for this W-2 mandate.

Another new responsibility requires eligible employers to submit written confirmation regarding their contribution levels to their carriers in order to maintain grandfathered status. During the healthcare reform debate the Obama Administration promised that people who liked their current coverage would be able to keep it. That's called grandfathering and groups loose their grandfathered status if: (1) a group chooses a new carrier after March 23, 2010; (2) a group chooses any benefit changes after March 23, 2010; (3) an employer changes contribution levels after March 23, 2010; (4) a group does not maintain at least 1 employee at all times in all grandfathered plans. Employer groups with grandfathered plans must provide their carriers written confirmation at each renewal stating that their contribution levels have not been reduced by more than 5% since March 23, 2010. Carriers will send employers attestation letters that they will need to complete and fax back and contracts will be modified stating that employers must notify the carrier if they reduce contribution levels.

Employers should contact their tax or payroll professionals regarding implementation of the W-2 mandate.