Recent Aspects of Health Care Reform:  Preventive Services and W-2 Reporting of Health Care Costs

By:  Héctor L. Moreno, CPA, President, iBenefits Insurance Services, LLC.

The Health Care Reform Law continues to evolve as interim final rulings (IFRs) are issued.  The various government agencies, tasks force and organizations involved continue to generate clarifications allowing PPACA to take form.

Since inception, the Law has put into place changes that directly impact cost, and the administration of group and individual health plans. To mention a few of the more relevant, there are dependents to age 26, the elimination of preexisting conditions for children, elimination of lifetime maximums, elimination of annual maximums, recision of coverage, and the offering of preventive services to non-grandfathered plans, among others.

The year 2014 will be instrumental with regard to PPACA because the Law implements a variety of changes in the administration, communication, requirements, offerings, and potential cost of health care.  However, we want to discuss two important changes that have recently been revised and released and which will impact employers more immediately.  The first is effective for compliance on August 1st, 2012 (i.e. extended preventive services) and, the second (i.e. W-2 reporting of health care cost) will take effect on a mandatory basis during 2013 for qualifying employers. Nevertheless, it is important for employers to take necessary measures to prepare the infrastructure prior to the compliance deadline.

INCLUSION OF EXTENDED PREVENTIVE HEALTH CARE SERVICES

On July 14, 2010, Health and Human Services (HHS), Department of Labor (DOL) and Internal Revenue Services (IRS) joined to publish interim final rulings (IFRs) for group  and individual health related to preventive services.  The Law requires Health Plans to cover preventive services with no cost-sharing (deductible, copayment and/or coinsurance).  This only applies to non-grandfathered plans.

The ruling prohibits cost-sharing with regard to the following categories:

Services ranked “A” or “B” according to the recommendation by the United States Preventive Services Task Force (USPSTF);

Routine vaccinations according to the recommendations by the Advisory Committee on Immunization Practices of the Centers for Disease Control and Prevention;

 Preventive care and screenings for infants, children and teenagers according to the guidelines provided by Health Resources and Services Administration (HRSA) and;

Preventive care and screenings for women as provided by the guidelines of HRSA.

On August 1, 2011 HHS revealed an amendment to the IFR for Preventive Services.  This amendment applies to individual and group (fully insured and self insured) health plans that are non-grandfathered.  In summary, the amendment provides additional guidelines for preventive services related to women.

For plans beginning on or after August 1, 2012, if non-grandfathered, will be required to cover the following additional services for women with no cost-sharing:

1. Annual well-women visits
2. Screening for gestational diabetes
3. HPV DNA testing for women 30 years and older
4. Sexually-transmitted infection counseling
5. HIV screening and counseling
6. FDA-approved contraception methods and contraceptive counseling
7. Breastfeeding support, supplies, and counseling

Inclusion of these services are mandatory for all group and individual health plans.  However, HRSA can issue an exemption for group health plans pertaining to religious employers, specifically in regard to contraceptive services.

For a complete list of guidelines and recommendations related to preventive services you can visit www.healthcare.gov/center/regulations/prevention.html.

 

W-2 REPORTING OF HEALTH CARE COST

The IRS recently released guidelines for the reporting of health care cost on Form W-2.  As part of the Health Care Reform Law, employers that sponsor health plans are required to report said cost.  The purpose is to provide employees information of the cost of their health coverage.  At this time, it is meant to be informative in regard to the cost of health benefits.  It does not represent a taxable benefit to employees.

The inclusion of this information in Form W-2 will be mandatory for taxable year 2012. In other words, it is to be included in Form W-2 provided in 2013.  Employers who have filed fewer than 250 W-2s for the preceding calendar year are exempt from this reporting requirement. 

For insured plans, the amount to be reported are the premiums charged for coverage.  For self-insured plans the amount reported is the equivalent 100% COBRA premium (less the allowable 2% COBRA administration fee). 

Those coverages that are stand alone and otherwise not integrated into the comprehensive medical plan, such as dental or vision, are not reportable in Form W-2.

Employers will have to work with their payroll providers to begin setting up the infrastructure to calculate the reportable cost.

In Puerto Rico, the equivalent IRS agency is the “Departamento de Hacienda”.  At this time, no specific guidelines have been issued by the Department.  It is reasonable to expect that similar to other components of the tax code that maintain a parallel with the US tax code, Puerto Rico will issue similar requirements. 

 

The information provided is not intended for distribution and/or any unauthorized use.

Note:  This article is intended only to provide an informative review and summary of the rules, regulations and guidelines surrounding the Health Care Reform legislation as part of the Affordable Care Act (PPACA & HCERA).  The information is only an interpretation and presentation of current information at the time of publication.  We do not provide warranty regarding its accuracy or completeness. The information provided should not be construed as legal or tax advice or as a recommendation of any kind.  For specific individual needs please contact your own attorney, legal counsel or advisors (benefit, financial, compliance).

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Héctor L. Moreno, CPA, is President of iBenefits Insurance Services, LLC., a licensed life, disability, health insurance and financial services broker which advises their clients in the process of benefits procurement and financial planning.  Services include evaluating, assessing, and designing health benefits packages that are comprehensive and affordable.  Products include individual and group life, disability, medical, dental, drug and vision coverage.  In addition, iBenefits Insurance Services, LLC. supports their clients in the areas of Human Resources, Compliance, Communications, Voluntary Benefits, Health Fair coordination, and initiatives that are key to an enhanced employee benefits strategy.  Héctor L. Moreno can be reach at 787.649.3245 or hmoreno@ibenefitsservices.com, you can follow on Twitter (@ibenefitservice) or can visit them online at www.ibenefitsservices.com.

Patient Protection and Affordable Care Act, law signed by President Barack Obama on March 23, 2010