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Health Care Reform Bill Offers Many Hidden Changes
Published: April 21, 2010
Author: David Westcott
On March 23, 2001, President Barack Obama signed into law the U.S. Senate’s Patient Protection and Affordable Care Act (H.R. 3590) and the Health Care and Education Affordability Reconciliation Act of 2010 (H.R. 4872). Although the law principally relates to health insurance plans, there are other various non-health care provisions that will affect employers.
Employer-sponsored Health Plans
The law changes employer-sponsored health plans in the following respects:
- Group health plans may no longer place lifetime dollar limits or annual dollar limits on claims, and must provide dependent coverage to the children of covered employees up to age 26.
- Group health plans may not impose any preexisting condition exclusions for children under age 19 beginning this year; for adults, the prohibition begins Jan. 1, 2014.
- Mandates non-discrimination for group health plans, which means that the employer can’t charge some employees more than others for health insurance.
- Health Spending Accounts:
- Increases the tax on withdrawals for non-health care related reasons.
- Caps contributions at $2,500 for flex spending accounts.
- Expenses for over-the-counter medications (excluding insulin) are no longer eligible for tax-free reimbursement from FSAs and HSAs.
- Employers must pay $2,000 per employee to the government if they do not provide coverage – but the first 30 employees are free.
Surtax Added
The law includes a Medicare surtax:
- Imposes a new 3.8% Medicare tax on the lesser of net investment income or excess of modified adjustment gross income over the threshold amount. ($250,000 for married taxpayers filing jointly, $125,000 for married taxpayers filing separately and $200,000 for other individuals).
- Taxpayers should seriously consider reducing their exposure to the new surtax by converting to a Roth IRA.
Other Tax Changes
The law includes numerous other significant tax changes:
- Employers with no more than 25 employees and less than $50,000 in average wages are eligible for a tax credit under the Act for employer-provided health coverage.
- Beginning January 1, 2011, employers will be required to disclose the value of the benefit they provide to each employee’s health insurance coverage on the employee’s W-2 form.
- Increase in Medicare portion of the FICA tax.
- An Excise tax on “Cadillac” health plans as well as uninsured individuals.
- Expansion of the term “dependent” for purposes of the Internal Revenue code’s medical reimbursement exclusion.
- Credit for taxpayers who purchase health insurance from the state.
New Whistleblower Protections
Sections 1558 and 2706(b) of the Act include expanded whistleblower protections that cover hospital employees:
- Administrative investigation and hearing at the Department of Labor for any claimed discrimination of a hospital employee.
- Right to a jury trial if the DOL doesn’t respond to the whistleblower within 180 days.
- Whistleblowers may argue that their refusal to violate the law or decision to report wrongdoing was a “contributing factor” in getting fired.
FLSA Amendments
The law amends the Fair Labor Standards Act (FLSA):
- Requires employers to provide nursing mothers with “reasonable break time” to express breast milk for up to one year after the birth of a child.
- Employers with fewer than 50 employees may be exempt from the amendment if they can show the requirements would pose an “undue hardship.”
David Westcott is working as a Summer Intern for Axley Brynelson, LLP. If you have any questions concerning this article contact Attorney Saul C. Glazer at (608) 260-2473 or sglazer@axley.com.
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