The re-election of President Obama and insignificant changes made to the political make-up of the House and the Senate have dashed the hopes of many employers that the Patient Protection and Affordable Care Act (the “ACA”) would be significantly modified or repealed. Employers, especially those that pushed compliance efforts to the back burner during the election, will now need to turn their attention to ACA compliance. With numerous compliance deadlines having taken effect in the latter half of 2012, new requirements taking effect in 2013, as well as an already noticeable up-tick in regulatory guidance, employers that do not start to take action could be left scrambling when the majority of the remaining ACA provisions become effective in 2014.


2012 Requirements

  • Summary of Benefits and Coverage and Modification Notice – Group health plan sponsors must begin providing participants with the appropriate Summaries of Benefits and Coverage (“SBC”) as of the first day of the first open enrollment period occurring on or after September 23, 2012. Insurance carriers are also subject to this provision of the ACA, so insured plans may be able to rely on SBCs prepared by their carriers, while greater compliance efforts may be required for self-insured plans.  Group health plan sponsors will also have to provide employees with a notice of any changes that are not reflected in the most recent SBC at least 60 days before the effective date of the change.
  • Preventive Care For Women­ – Effective for plans years beginning on or after August 1, 2012, non-grandfathered group health plans must provide coverage with no cost sharing for certain preventive care services provided to women. Guidelines developed by the Institute of Medicine establish the covered preventive care services.
  • Form W-2 Reporting – Effective for the 2012 calendar year Forms W-2, which generally must be issued in January of 2013, employers are required to report the cost of health care coverage in box 12.   Internal Revenue Service (“IRS”) Notice 2012-9 provides guidance regarding how to determine the cost of reportable health care coverage.

2013 Requirements

  • $2,500 Limit on Health Care Flexible Spending Account Contributions – Employers may not permit employees to contribute more than $2,500 to their health care flexible spending account during the plan year. The limit applies on an individual basis and is effective for plan years beginning in 2013. Employers have until the end of 2013 to adopt the necessary plan amendments.
  • Health Insurance Exchange Availability Notice – Employers must notify employees of the availability of coverage form the health insurance exchanges by March of 2013. A model notice has not been released, but is expected.
  • Medicare Payroll Tax Increase – Beginning January 1, 2013, high income individuals (those earning more than $200,000 for single filer, or $250,000 for married filing jointly) will be required to pay an additional 0.9% Medicare payroll tax on compensation earned in excess of $200,000. 
  • HIPAA Compliance Certification – By December 31, 2013, employers must certify to the Department to Health and Human Services (“HHS”) that the data and information systems used for their group health plans comply with certain Health Insurance Portability and Accountability Act (“HIPAA”) electronic standard transaction and operating rules.
  • Patient Centered Outcome Research Fee – Certain health insurance issuers and self-funded health plans will be required to pay an annual fee based on the number of covered lives. The fee due for 2012 will be $1.00 per covered life. The 2013 fee increases to $2.00 per covered life, and thereafter will be indexed for inflation. Employers must file a Form 720 on an annual basis to report and pay the fee. The fee is due by July 31 of following plan year, meaning the 2012 plan year fee will be due on July 31, 2013.
  • Loss of Medicare Part D Subsidy Deduction – Effective January 1, 2013, the deduction for the reimbursed portion of certain prescription drug expenses that an employer receives through the Medicare Part D subsidy program will no longer be available. Employers accustomed to receiving this deduction should have taken action to account for this change.

Employers should also ensure compliance with the ACA requirements already in effect.  Our recent Client Alerts on this topic are located here, here, and here. The Department of Labor (“DOL”) has started auditing employers for compliance with the effective provisions of the ACA. Specifically, the DOL is seeking documentation of plan amendments necessary to comply with the ACA’s insurance market reforms as well as evidence that certain required notices were provided to participants. Employers that have not taken the required steps to implement the insurance market reform provisions, as well as the steps necessary to timely implement the requirements discussed above, should take immediate action to do so.


Reed Smith’s Labor & Employment Group will be conducting a series of CLE Programs entitled “Employment Law 2013 – Reed Smith Boot Camp” in locations across the country. Kicking off “Boot Camp” will be an event in our Philadelphia Office on January 31, 2013. If you would like to attend, click here and indicate your location.