Expecting either the United States Supreme Court to declare President Obama’s Patient Protection and Affordable Care Act (“Affordable Care Act”) unconstitutional or the Republicans to win the Presidency and repeal the legislation, many employers and plan sponsors have delayed taking steps to implement the Affordable Care Act. Now that the law has been upheld by the Supreme Court and President Obama has been re-elected, no material obstacles exist that would prevent the Affordable Care Act from becoming effective. Accordingly, taking steps to prepare for compliance with the Affordable Care Act is essential.
While the employer mandate provisions of the Affordable Care Act do not become effective until 2014, there are parts of the Affordable Care Act that will have significant implications starting next year. Beginning in 2013, the Medicare wage surtax increases from 1.45% to 2.35% for single taxpayers earning more than $200,000 and more than $250,000 for married taxpayers filing jointly. Starting in 2013, individuals with income over these thresholds will also be subject to an additional 3.8% Medicare contribution tax on their unearned income (e.g., interest and dividends). For plan years beginning on or after January 1, 2013, health flexible spending arrangements (“FSA”) salary reductions will be limited to $2,500 per employee. Employers filing 250 or more Form W-2s must report the cost of employer-sponsored health coverage provided in 2012 on the Form W-2s being prepared for employees in January 2013. By March 1, 2013, employers subject to the Fair Labor Standards Act must provide written notice to existing employees which, among other things, provides information about the availability of state health exchanges.