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The Supreme Court Has Spoken: Now What
 

The Supreme Court Has Spoken: Now What

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Legal Landscape

Legal Landscape
Employer Obligations
Employer Next Steps
Tax Considerations
Employer Opportunities

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The Supreme Court Has Spoken: Now What The Supreme Court Has Spoken: Now What Presentation Transcript

  • THE SUPREME COURT HAS SPOKEN: NOW WHAT?   July, 2012 Karen R. McLeese, Esq.Vice President, Regulatory Affairs - CBIZ Benefits & Insurance Services, Inc. 1 William M. Smith, Esq.
  • Overview Legal Landscape Employer Obligations Employer Next Steps Tax Considerations Employer Opportunities 2
  • ACA: Legal Landscape Supreme Court Oral Arguments Heard March 26-28, 2012  National Federation of Independent Business v. Sebelius, Secretary of HHS, et al.  Florida, et al v. Department of HHS, et al  Department of HHS et al v. Florida, et al 3
  • ACA: Legal Landscape Supreme CourtFour Aspects of ACA Argued @ Hearings: 1. Anti-injunction issue i.e., whether harm need be shown prior to reviewing the impact of the law 2. Constitutionality of the individual mandate 3. Severability: Whether the entire law should be repealed, or sever only certain parts 4. State challenge to Medicaid expansion 4
  • ACA: Legal Landscape Supreme Court Ruled June 28, 2012Decision: Individual Mandate upheld under Congress’ Taxing Authority The ACA law, as a whole, Stands Narrowly Construed Medicaid Expansion 5
  • ACA: Legal Landscape 112 th Congress Multiple Bills Introduced to Modify or Repeal the ACA Law 6
  • ACA: Legal Landscape States By 2014: 1. Establish Exchange; or 2. Federal-State Partnership; or 3. Federal Implementation of Exchange  Expand Medicaid to population with income <133% of federal poverty level vs. Do Not Expand Medicaid 7
  • ACA: Employer Obligations Confirm ACA Compliance to Date – All Plans:  Extension of dependent coverage to adult child up to age 26  Ban on preexisting condition exclusions on enrollees under 19  Ban on plan rescissions, except for fraud or intentional misrepresentation  Ban on Annual and Lifetime Limits on Essential Benefits  Grandfathered Plans: Make certain Plan includes Notice of Grandfathered Health Plan Status 8
  • ACA: Employer Obligations Confirm ACA Compliance to Date (Applies to Non-GF or Plans losing GF status)  Coverage for Preventive Health Services  Independent Claims and Appeals, and External Review Process  Patient Protections: Choice of Primary Care Provider, Direct Access to OB/GYN Services and Emergency Room Service Access 9
  • ACA: Employer Next Steps 2012  Medical Loss Ratio - Rebates  Applies to Insured Plans Only  1st rebate Aug 2012  Share rebate with plan participants proportionately  Premium holiday or benefit enhancement permissible  Administratively feasible and tax-favored  Women’s Preventative Care  Applicable plan years beginning on or after 8/1/12 (January 1, 2013 for calendar year plans)  Religious employer-sponsored plans: 1-year compliance delay 10
  • ACA: Employer Next Steps 2012, con’t  Summary of Benefits and Coverage  Applicable for plan renewals and plan years beginning on or after 9/23/12  60-day Advanced Notice of Material Modification of Benefits  Effective 1st open enrollment period occurring on or after 9/23/12 11
  • ACA: Employer Next Steps 2012, con’t Form W-2 Reporting of Aggregate Cost of Employer-sponsored Health Coverage  Effective 2012 reporting year on W-2s issued Jan 2013 Patient-Centered Outcome Research Fee  Fee calculated based on average number of covered lives under the plan  Initial fee of $1 per covered life for policy/plan years ending on or after 10/1/12 12
  • ACA: Employer Next Steps 2013  $2,500 cap on Flexible Medical Spending Account Plans  Applicable plan years beginning on or after 1/1/13  Quality of Care Reporting Requirement (awaiting guidance)  Notice of Exchange Coverage (awaiting guidance) 13
  • ACA: Employer Next Steps 2014 Shared Responsibility (awaiting guidance)  Individual Minimum Coverage vs. Pay Tax  Employer 50+ FTEEs: Minimum Coverage at Affordable Rate vs. Excise Tax 14
  • ACA: Employer Next Steps Other Health Coverage-related Changes in 2014 (awaiting guidance) Employer Health Insurance Reporting Requirement Ban on Annual and Lifetime Limits on Essential Benefits Ban on Preexisting Condition Exclusions applicable to anyone Increased Reward for Participation in Wellness Program Ban on Discriminatory Premium Rates 15
  • ACA: Employer Next Steps Other Health Coverage-related Changes in 2014 (awaiting guidance), con’t  Ban on Excessive Waiting Periods  Ban on Discrimination Based on Health Status  Coverage for Individuals Participating in Approved Clinical Trials  Ban on Discrimination against Health Care Providers 16
  • ACA: Employer Next Steps 2018  Excise Tax on High Cost Employer- Sponsored Health Coverage (“Cadillac Tax”) (awaiting guidance) 17
  • ACA: Employer Next Steps Provisions Delayed - Effective Date TBD  Salary-based Discrimination Rules applicable to insured plans (were to become effective on or after 9/23/10)  Automatic Enrollment Provisions (were to become effective in 2013) 18
  • ACA: Tax Considerations Confirm ACA Compliance to Date  No reimbursement of OTC Medications except for insulin or when prescribed  Increased Penalty for Nonqualified HSA or Archer MSA Distributions (20%) 19
  • ACA: Tax Considerations 2013  Additional Medicare tax withholding for certain High Income Earners (1/1/13)  Unearned Income Medicare Contribution (1/1/13)  Modification of Itemized Deduction for Medical Expenses (awaiting guidance)  Retiree Prescription Drug Coverage – Modified Deduction (1/1/13)  2.3% Medical Device Tax (1/1/13) 20
  • ACA: Tax Considerations Additional 0.9% Medicare Tax on Earned Income Change in 2013:  Additional 0.9% HI tax on wages and net self-employed’s income exceeding thresholds below  Additional tax applies to employee’s contribution only (or ½ of self-employed individual’s contribution) Filing Status Threshold Married Filing Jointly $250,000 Single/Head of Household $200,000 Married Filing Separately $125,000 21
  • ACA: Tax Considerations Withholding Additional 0.9% Medicare Tax on Earned Income  Employers required to withhold the additional 0.9% tax on wages in excess of $200,000  Employers disregard wages received by employee’s spouse 22
  • ACA: Tax Considerations Withholding Additional 0.9% Medicare Tax on Earned Income, con’t Implications:  If employee’s wages are <$200,000 but when combined with the spouse’s wages they >$250,000, the couple may be under-withheld  If employee’s wages between $200,000 and $250,000 and spouse has no wages, the couple may be over- withheld  The 0.9% tax is a tax for purposes of the underpayment of estimated tax penalty. 23
  • ACA: Tax Considerations 3.8% Medicare Tax on Unearned Income  First time that FICA/Medicare taxes have been assessed on unearned income  Applies to Individuals, Trusts and Estates, and Certain Trades or Businesses  Considered a tax for purposes of the underpayment of estimated tax penalty 24
  • ACA: Tax Considerations 3.8% Medicare Tax – Individuals  3.8% of the lesser of:  Net investment income or  Excess of Modified AGI over threshold amount  Modified AGI – AGI + foreign earned income exclusion Filing Status Threshold Married Filing Jointly $250,000 Single/Head of Household $200,000 Married Filing Separately $125,000 25
  • ACA: Tax Considerations 3.8% Medicare Tax – Net Investment Income  Net Investment Income includes investment income, less otherwise allowable deductions properly allocable to such income  Includes:  Gross income from interest, dividends, annuities, royalties and rents  Other gross income from any passive trade or business  Net gains attributable to the disposition of property  Excludes:  Distributions from qualified retirement plans  Investment income excludable from taxable income (e.g. 26 municipal bond interest)
  • ACA: Tax Considerations 3.8% Medicare Tax – Trade or Business  The 3.8% Medicare tax only applies to the following types of trades and businesses:  Passive activities, and  Traders in financial instruments or commodities  The tax does not apply to active trade or business activities conducted by a sole proprietor, partnership or S corporation  The tax does not apply to any income subject to self- employment tax 27
  • ACA: Employer Opportunities  Determine Shared Responsibility Liability  Consider FTEs 30+ hours  Plan eligibility  Employee cost as % of W-2 earnings  Cost Containment Strategies  Wellness Incentives  Defined Contribution Approach  Medical Home Model 28
  • Questions? Karen R. McLeese, Esq. Vice President, Regulatory Affairs -CBIZ Benefits & Insurance Services, Inc. (913) 234-1760 kmcleese@cbiz.com William M. Smith, Esq. Managing Director – CBIZ National Tax Office (301) 951-3636 billsmith@cbiz.com 29