Author: Jayne Zanglein, Western Carolina University

Now that the ACA has been upheld, plan sponsors need to focus their efforts on implementing ACA requirements. Several tasks require immediate attention by plan sponsors.

Form W-2 Reporting Requirements

The ACA requires employers to report the total cost of employer-sponsored group health coverage on Form W-2 for the 2012 tax year (distributed to employees in 2013). There is an exception for employers that issue less than 250 W-2 forms.

The cost is based on the coverage in which the employee is enrolled and must account for changes in coverage throughout the plan year.

Employers should have systems in place (or be developing systems) that will track this information, and should also be working with their health care providers in order to determine how to collect and report this information.

Summary of Benefits and Coverage

The summary of benefits and coverage (SBC) describes the benefits and coverage under an employer's plan so that participants can compare the information to other plans for which they may be eligible.

The SBC must be provided to employees who enroll or re-enroll during an open enrollment period that begins on or after September 23, 2012. Plans that do not have a regular open enrollment period, or plans that allow individuals, such as new employees, to enroll outside of the open enrollment period, must comply on the first day of the plan year that begins on or after September 23, 2012.

Advance Notice of Benefit Changes

The ACA made a significant change to ERISA's Summary of Material Modification (SMM) reporting requirement when it adopted a 60-day advance written notice of material benefit changes. Material changes in the terms of the plan or coverage that are not reflected in the most recent SBC must be reported to plan enrollees within 60 days before the change goes into effect. This applies to changes made after the initial SBC is issued.

Health Flexible Spending Account Limits

The ACA imposes a $2,500 limit on employee pre-tax contributions to health flexible spending accounts (FSAs). The dollar limitation is effective for cafeteria plan years beginning on or after January 1, 2013.

Plan sponsors have until December 31, 2014 to amend plan documents as long as the amendment is retroactive for plan years beginning after December 31, 2012, and as long as the FSA implements the $2,500 limit for plan years beginning on or after January 1, 2013.

Medicare Tax

Beginning January 1, 2013, an additional 0.9 percent Medicare tax will apply to wages for individuals who earn more than $200,000 ($250,000 for individuals filing a joint tax return). Employers are required to withhold the additional 0.9 percent on the portion of wages in excess of $200,000 ($250,000 for individuals filing a joint tax return).

Notice to Employees of Health Care Exchanges

Employers are required to notify employees of their right to purchase insurance from a state insurance exchange. The notice must be provided no later than March 1, 2013.

Continue to check XpertHR for the latest news on this and other key HR compliance issues.

Additional Resources

Employee Benefits > Health Care Benefits

Employee Benefits > Compliance, Reporting and Disclosure Requirements

Employee Benefits > Benefit Planning and Design

Employee Benefits > Managing Health Care Costs

Payroll > Taxation of Employee Benefits

Payroll > Withholding Taxes