Health Care Coverage Requirements and Reporting

The Supreme Court recently upheld the provisions of the 2010 Patient Protection & Affordable Care Act. As a result it will become mandatory for many employers to provide medical coverage to their employees in 2014. Outlined below are some of the rules:

• Companies with 50 or more full-time employees must provide health insurance for all workers by 2014 or penalties could be imposed
• The individual mandate states that everyone must purchase some sort of health insurance by 2014. That means at companies with fewer than 50 employees the responsibility will be on the employee to obtain medical coverage if the employer does not provide it.
• Sole proprietors will also be required to buy health insurance for themselves in 2014 or pay a fine
• The plan must cover 60% of health care expenses
• The employee's share of the insurance costs must be less than 9.5% of the family's salary
• Stiff penalties will apply for those who don't comply with the mandate, including: o Individuals without health coverage will be fined a minimum of $95 or 1% of their income starting in 2014 and the penalties increase each year after. o Employers who don’t meet health insurance coverage requirements could face a minimum penalty of $40,000

In addition, employers are now subject to additional reporting requirements for employer-sponsored health coverage. The Act requires employers to report to their employees on Form W-2 the cost of employer-provided health insurance. Listed below are some guidelines:

• This reporting requirement is optional for small-employers filing less than 250 Forms W-2 in 2012
• In 2013 it will be mandatory for all employers to report the cost of health care premiums to employees.
• The aggregate cost of employer-sponsored health coverage is reported on Box 12 using code DD on Form W-2.
• Please be aware that if you have a payroll agent preparing Forms W-2 for your business you will need to provide the amount of employer-sponsored health coverage for each employee to the payroll agent in order for the correct costs to be included on the employee's Form W-2.

If you have any questions or would like more information, please contact Rachael Leberstien at 302.691.2237 or by email. Visit our website for more information about our firm and the services we provide.

Cover & Rossiter will be holding seminars at both our Wilmington and Middletown offices to discuss these changes and offer strategies for being proactive in 2012. The dates of these seminars are as follows:

Wilmington office: September 25th 8:00 AMOctober 23rd 5:30 PM Middletown office: October 2nd 5:30 PM

To register for a seminar click here or call 302.691.2224.