Healthcare Reform and Its Impact on Payroll Presented by Lori Loridon, CPP

2 Introduction Discussion on the impact of the Patient Protection and Affordable Care Act of 2010 and the Healthcare and Education Reconciliation Act of 2010 to payroll. Discussion on Healthcare reform mandates for calendar year 2012 and beyond and how they affect payroll.

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4 On the Agenda Patient Protection and Affordable Care Act (H.R. 3590) Health Care and Education Reconciliation Act of 2010 (H.R. 4872) –The Reconciliation Act Changes Impacting Individuals and Employers

5 Patient Protection and Affordable Care Act (PPACA) Why? –To provide affordable health care for Americans. What? –PPACA contains 9 titles, each addressing an essential component of reform.

6 Title I of PPACA – Quality and Affordable Care Three elements are the essential links to achieve reform: –Accomplish a fundamental transformation of health insurance in the US through shared responsibility. –Achieving these reforms without increasing health insurance premiums will mean that all Americans must be part of the system and must have coverage. –Tax credits for individuals and families will ensure that insurance is affordable for everyone.

7 Title IX – Revenue Provisions The bill is fully paid for and reduces the deficit in the next ten years and beyond. Accomplished by tightening current health tax incentives, collecting industry fees and excise taxes, and slightly increasing the Medicare Hospital Insurance tax for individuals who earn more than $200k and couples who earn more than $250k. Includes a fee on insurance companies when they sell high cost health insurance plans, designed to generate smarter, more cost- effective health coverage choices. Includes changes to health care incentives including increasing penalties on nonqualified distributions from HSAs, capping FSA contributions, and standardizing the definition of qualified medical expenses.

8 Health Care and Education Reconciliation Act of 2010 PPACA as amended by the Reconciliation Act fundamentally alters the health care landscape in the United States. Core Principles are: –Individual Mandates –Affordable Coverage –Employer Mandates –Cover Preventive Health Services

9 Impact on Payroll 2010 –Expansion of Adoption Assistance Programs –Medical Benefits for Adult Children Expanded, Excluded from Income 2011 –Change in Definition of Medical Expenses –Simpler Cafeteria Plan Nondiscrimination Rules for Small Employers –W2 Reporting of Cost of Employer-Provided Health Coverage

10 Impact on Payroll 2012 –W2 reporting of the Cost of Employer Provided Health Coverage on Employees’ Forms W2 Method of Reporting on Form W2 Definitions –Aggregate cost –Applicable employer-sponsored coverage –Group health plan –Aggregate reportable cost Methods of Calculating the Cost of Coverage –Cobra –Premium charged –Modified Cobra premium –Composite rate –Cost changes during the year

11 Impact on Payroll 2013 –Medicare Tax Increase on High Earners –New Medicare Tax on the Net Investment Income –Reduced Health FSA Deferral Limits –Fair Labor Standards Act Amendments

12 Impact on Payroll 2014 –Enrolling Employees in Health Care Plans, Rules for Large Employers –New Reporting Requirements for Employers –Offering Qualified Health Plans through § –Excise Tax on High-Cost Health Coverage

13 Information Sources U.S. Department of Labor ( The Internal Revenue Service ( Independent Research

14 In Summary This is all subject to change if Republicans win the election in 2012! Questions Contact Information: – – –Office – Thank you for your time today!