Obamacare, beyond the headlines: Employers have much more to worry about in 2012 than issues like birth control coverage

The Patient Protection and Affordable Care Act (sometimes referred to as Obamacare), which has been a highly visible political football for much of the last year, was positively punted into the faces of the American public recently after religious institutions objected to a provision requiring health insurers to provide contraceptives to covered employees.

The controversy set off a media frenzy that is just now starting to abate, and gave the public more reason to wonder exactly what perceived devils – or angels, depending on your perspective – might be in the details of the complex law.

But while the contraception controversy seized headlines, it’s a small distraction for the majority of employers, who are simply trying to get their heads around the ACA and what’s required of them under the law.

“There’s so much information out there,” said Cindy Van Bogaert, a partner with Boardman & Clark who specializes in employee benefits. “There’s a lot of good information on the government websites. In some respects, it’s a matter of sort of focusing on what’s required. And I think it does help to chunk it down into what you have to do this year to keep your plan in compliance, and what you’re looking forward to doing with your plan in 2014.”

Van Bogaert, who gave a seminar on the “Affordable Care Act: New 2012 Employer Mandates” last Tuesday at Boardman & Clark’s downtown Madison office, says a good beginning resource for helping to crystallize some of the issues that come up with regard to health care reform is www.healthcare.gov, an Internet portal set up by the Department of Health and Human Services to help small businesses and individuals identify coverage.

“The portal is one of those tools that employers can use that I think may not be in the public eye that much,” said Van Bogaert. “But if employers haven’t looked at healthcare.gov and other websites, there’s a lot of information there for employers that’s really designed to help them provide health coverage in a way that helps keep their costs in check. So the idea of the portal is to see competitively what’s out there for options, which is a nice tool.”

Pressing issues

While a comprehensive summary of all the new 2012 employer mandates under the ACA could fill pages, Van Bogaert says employers should be particularly alert to W-2 reporting requirements and Form 8928 excise taxes.

For instance, one section of the Affordable Care Act requires employers to include the aggregate value of employer-sponsored coverage on W-2 forms. Optional reporting was in place for 2011, and the requirement will be fully in place for 2012.

“They made it clear that this is not taxable to the employee, so I think it will be a communication issue with employees,” said Van Bogaert. “The idea is to give them a sense of the value of their benefits.”

There are some exceptions to the W-2 reporting requirement. For instance, small employers (those filing fewer than 250 W-2s the preceding calendar year) are not required to follow the new reporting requirement for 2012 W-2s and won’t be until new guidance is issued. There are also exceptions for plans maintained by the government primarily for the military and their families, and for long-term care, accident or disability income, auto and general liability, worker’s comp, specified disease coverage, and other benefits.

Another sticking point involves multiple-employer plans.

“If you have a union involved, you may have a multi-employer plan, and that coverage is not reported,” said Van Bogaert. “If you have multiple employers like a related parent and subsidiary, where one employee works for both entities, they may fall under a special rule where one of those entities can choose to act as a common paymaster and do the reporting.”

Determining the cost for W-2s is also an issue employers will have to confront.

“In terms of determining cost, there’s several different methods; they’re generally COBRA-based,” said Van Bogaert. “Let’s take the simplest case: we have a single employee and maybe the employer picks up part of the cost and the employee picks up part of the cost, let’s say it’s 50-50. So you pick up both of those pieces. If it’s $500 and $500, then $1,000 would be the cost and that’s what the COBRA charge would be, and that would be the value that’s reported. So you talk about the value to the employee, but what we’re reporting is the total premium charge, so we’re reporting both the piece that you pay as an employee plus the piece that your employer pays.”

Van Bogaert says employers should also pay particular attention to the Form 8928 excise tax, which may not be on a lot of people’s radar screens. That part of the health care reform law requires plan sponsors to self-report violations of some of the law’s mandates as well as COBRA and other law violations. Those violations can result in excise taxes, and Van Bogaert recommends implementing a compliance review and early error detection program.

“Under the rules, you can avoid the excise tax if you catch it early enough and fix it,” said Van Bogaert. “The bottom line is, don’t wait for an annual review. Have something in place where if you’re the person responsible for the overall quarterbacking of your health plan, you should make sure that whoever’s doing the health care reform maintenance is taking care of the steps, and you want to check on it on a routine basis.”

In general, however, keeping up with the demands of the Affordable Care Act is an ongoing process, which requires both keeping one’s ear to the ground and having a comprehensive plan in place.

“Things will continue to evolve bit by bit, but it is important to have the bigger framework,” said Van Bogaert. “What plans do I have, which of the provisions apply to them – things like W-2 reporting – which of my benefits does that apply to? And I think after you put that together and look at, okay, if that does apply, if W-2 reporting applies, how do I put that into play? So it gets more complicated as you branch out to that level.

“And things like W-2 reporting for employers is something we have transition rules on now, but I think employers need to start thinking about how you get that information. Just like right now employers need to know if they hire somebody new, how they know when they’re eligible for the health plan. They’ve got that procedure set up, so they don’t have to think about it too much. So you have to build in all these other steps.”

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