After health reform decision: What’s next for employers?

June 28, 2012 by Christian Schappel

After one of the most important Supreme Court decisions in recent memory, companies can now start focusing on complying with the next wave of healthcare reform provisions.

The healthcare reform law was upheld by the Supreme Court by the slimmest of margins — a 5 to 4 vote.

The mandate that individuals obtain health insurance or pay a penalty — the centerpiece of the entire law — was deemed a violation of the Commerce Clause of the Constitution. But five of the justices ruled that the penalty for enforcing the mandate is actually a tax, and the implementation of it does not overstep Congress’ taxing power. So it will stand on those grounds.

Click Here to continue reading.

Report: IRS to simplify health reform affordability test

August 18, 2011 by Christian Schappel

It looks like employers will soon have some clarity in how to calculate if their health plans are “affordable” and make sure they won’t be penalized under the reform law’s “pay or play” mandate.

The Internal Revenue Service will develop new, clearer rules for employers on how they can determine if their plans pass the reform law’s “affordability test,” according to a report byBusinessInsurance.com.

Currently, for a plan to pass the test an employee’s cost for single coverage cannot exceed 9.5% of his/her income. For each employee whose health premiums exceed that threshold, the employer must pay a $3,000 penalty.

The problem: When workers have more than one source of income, it is difficult for employers to calculate total income for the purposes of the affordability test.

The new rules are expected to allow employers to determine affordability based on an employee’s W-2 wages — and not total income, simplifying the calculation.

So to pass the test, employers will just have to make sure the cost for single coverage doesn’t exceed 9.5% of an employee’s W-2 wages.

The affordability test will only be applied to single coverage. Employers will be able to charge more for family coverage.

Click Here for the full article and more information.