Top 3 Action Items Employers Should Do Now for PPACA
Top 3 Action Items Employers Should Do Now for PPACA

Top 3 Action Items Employers Should Do Now for PPACA

From the HR Pros of the HR Support Center

Out of all the health care reform provisions and requirements of the Patient Protection and Affordable Care Act (PPACA), what are the top three action items your company should focus on?

The Supreme Court ruling in the summer of 2012 made many aspects of health care reform clearer for small business owners. For those of you who have been sitting on the sidelines hoping something major will change, now is the time to get in the game. There are many provisions that are already in effect, and several that are coming soon that are important to be paying attention to right now.

The three most important to take action on are medical loss ratio rebates, the Summary of Benefits and Coverage and W-2 reporting on the value of employer-provided health care coverage.

1. Medical loss ratio rebates

Health insurance companies are now required to spend at least 80% of their premiums on medical expenses. If they miscalculate or give doctors and other providers an incorrect amount, they must rebate the money: this is referred to as a medical loss ratio (MLR) rebate. If your company receives a MLR rebate, you are responsible for sharing the refund with employees who originally paid into the premium. It’s best to look to your benefits provider for guidance on how to manage MLR rebates.

2. Summary of Benefits and Coverage (SBC)

All employers with group health plans must provide new enrollment documentation to plan participants. These are required for the first open enrollment taking place on or after September 23, 2012. Penalties of up to $1,000 per participant per violation may apply if an employer fails to provide an SBC.

SBCs must be provided for each type of benefits package you offer—for example, if you offer an HMO and a PPO, each would need a separate SBC. They must also be within four pages double-sided. You can find SBC templates in the HR Support Center or on the Department of Labor website , or your benefits provider may supply SBCs for you.

Another requirement for SBCs is the non-English language translation assistance requirement. For employers who have employees who live in a county where 10% or more of the population are literate in the same non-English language, they must provide details with the SBC on how employees can get services for translation or support in that language. Such employers must also provide a version of the SBC in that language upon request. Please note that some differing state requirements may apply. Learn more about the SBC.

3. W-2 reporting on value of employer provided health care coverage

Large employers (more than 250 employees) are required to report the total cost of employer provided health care coverage, including the portion paid by the employer and the portion paid by the employee, in Box 12 of the W-2. Employers who filed 250 or fewer form W-2s in the previous calendar year are not required to follow this guidance, but may choose to do so. This reporting is for informational purposes only, so you will not be taxed on this coverage.

As more PPACA provisions become clear, there will be more information to come. Contact an HR or benefits professional if you have questions.

Want more helpful answers to your HR questions?

Subscribe to Paycor’s HR Support Center and find employee handbook templates to get you started. Or, upgrade to HR On Demand to get personalized answers and advice from an HR professional. Contact us to learn more.

This article is intended as a general overview, and should not be considered legal advice.

More to Discover

How to Avoid Payroll Tax Penalties in 2019

How to Avoid Payroll Tax Penalties in 2019

Employment laws are getting more complex and businesses are finding it harder to remain compliant. According to the IRS, 40% of small and medium-sized businesses are fined each year for failing to meet payroll tax regulations. These organizations are at risk because they tend to run payroll through manual processes and disconnected software, leading to miscalculations, incorrect filings and late withholdings deposits. If you’re a business leader and want to avoid fines and penalties, here’s what you need to know. What Payroll Taxes Are You Required to Pay? State and federal taxes include: Federal unemployment taxes: Employers must pay this tax based on the gross pay of all employees. These taxes can either be paid quarterly or annually...

Is Your Time and Attendance Solution Delivering Results?

Is Your Time and Attendance Solution Delivering Results?

Not all time and attendance solutions are created equal. Perhaps you’re manually keeping track of time cards or your automated time and attendance system isn’t living up to your expectations. Either way, it might be time to make a change. Modern time and attendance software should deliver results—mainly savings and accuracy—for any human resources department. Accurate Time Tracking Leads To Labor Cost Savings In any organization, employees usually are both the largest expense and the largest asset. Maintaining control of labor costs is critical to the overall bottom line and it all starts with accurate time tracking. According to the American Payroll Association (APA), organizations can experience anywhere between a 1% and 7% clerical...

2019 Compliance Changes

2019 Compliance Changes

It’s critical that you’re aware of all the tax changes that could affect your organization in 2019. This session will include frequently asked questions, an overview of federal and state withholding updates and trends we are seeing in areas of Tax and ACA compliance. Speakers: Arlene Baker and James Schwantes Arlene Baker is a Senior Compliance Analyst with over 40 years of payroll and tax experience. She’s a member of the National Payroll Reporting Consortium focusing on IRS compliance, and she’s been a member of the national and local APA for 25 years. In 2003, Arlene was awarded the Ohio Payroll Professional of the Year award. James Schwantes is a Compliance Analyst with a legal and tax background. Prior to working at Paycor in the...

Proposed Department of Labor Rule to Update Regular Rate Requirements

Proposed Department of Labor Rule to Update Regular Rate Requirements

In late March, the Department of Labor (DOL) announced a proposed rule to clarify and update the regulations governing the regular rate requirements under the Fair Labor Standards Act (FLSA). Unless exempt, an employee’s regular rate of pay is used to determine how much he or she should be paid for working overtime. The FLSA generally requires overtime pay of at least 1.5 times the regular rate for hours worked past 40 hours per week. The proposed rule details what forms of payment employers can exclude when determining an employee’s regular rate of pay. The cost of the following items would no longer apply: Tuition programs Discretionary bonuses Payment for unused paid leave Wellness programs, fitness classes, gym access, onsite...