IRS Health Care Reform Law Affordability Test

IRS to Issue New Health Care Reform Law Affordability Test

In a proposal that was welcomed by employers, the Internal Revenue Service said it will develop a safe harbor in which coverage would be considered affordable so long as the premium contribution for single coverage did not exceed 9.5 percent of employees’ W-2 wages.

IRS to Issue New Health Care Reform Law Affordability Test

The Internal Revenue Service said it will develop new rules that will make it easier for employers to determine if their health care plans are “affordable” and exempt from a stiff financial penalty mandated by the health care reform law.

Under the new Health Care Reform law, starting in 2014, employers are liable for an annual $3,000 penalty for those employees whose required health insurance premium contribution for single coverage exceeds 9.5 percent of family income and the employees are eligible for federal premium subsidies to buy coverage through state insurance exchanges.

In rules proposed Aug. 12 that were welcomed by employers, the IRS said it will develop a safe harbor in which coverage would be considered affordable so long as the premium contribution for single coverage did not exceed 9.5 percent of employees’ W-2 wages.

The IRS said it is developing the new safe harbor to give employers more certainty on whether their plans will pass the new health care reform act’s affordability test.

“Giving employers the ability to base their affordability calculations on their employees’ wages [which employers know] instead of employees’ household income [which employers generally do not know] is intended to provide a more workable and predictable method of facilitating affordable employer-sponsored coverage for the benefit of both employers and employees,” the IRS said in its notice of proposed rule-making. That notice is expected to be published in the Aug. 17 Federal Register.

Employers had complained that it would be difficult—if not impossible—for them to know employees’ household income, creating a big obstacle to determine whether their plans would be considered affordable, said Anne Waidmann, a director with PricewaterhouseCoopers in Washington, D.C.

The IRS safe harbor “would provide more certainty and effective planning,” said Frank McArdle, a principal with Aon Hewitt Inc. in Washington, D.C.

“This will make it easier for employers to do the necessary calculations,” said Chantel Sheaks, a principal with Buck Consultants, also in the District.

The IRS also affirmed that the 9.5 percent affordability test is to be applied only on single coverage, allowing employers to charge higher amounts for family coverage.

“While we think that was clear in the law, employers will welcome the additional clarity,” said James Klein, president of the American Benefits Council in Washington, D.C.

Affordable Care Act Labor Department News Release Update

New Affordable Care Act proposal to help consumers better understand and compare benefits and coverage [08/17/2011]

Today, the U.S. Department of Labor, The US Department of Health and Human Services, and the Treasury proposed new rules under the Affordable Care Act that will enable consumers to easily understand their health coverage and determine the best health insurance options for themselves and their families. Likewise, these proposed rules will assist employers in finding the best coverage for their business and their employees. Under the proposed rules announced today, health insurers and group health plans will provide consumers with clear, consistent and comparable information about their health plan benefits and coverage. The new forms, scheduled to be available in 2012, will be a critical resource for more than 180 million health insurance consumers with private health insurance coverage.

Blue Star Benefits is a general insurance agency in Overland Park, Kansas. If you have any questions regarding your current plan or a new product you would like to know more about, please give us a call at 913-647-1000. We can offer Health Insurance, Dental Insurance, Vision, Disability and more. Keep reading our blog to learn more about the Affordable Care Act.

 

Blue KC August 2011

Blue KC Adds New Option for Small Employers

Blue KC (Blue Cross and Blue Shield of Kansas City) is pleased to announce a new $3,500 deductible Preferred-Care Blue PPO plan to the BlueChoice® package lineup. Created for employers looking for higher deductible options with benefits to meet their employees’ needs, the new plan from Blue KC features the following in-network benefits:

• Deductible: $3,500/$10,500 (individual/family)
• Coinsurance: 100%
• Office Visit: $40
• Prescription Drug: $12/50/70

BlueChoice updates have been loaded to the BlueQ quoting system and are now available for new 2-99 group business effective August 1, 2011, and renewing business effective October 1, 2011.

For more information on BlueChoice from Blue KC, contact your Blue Star Benefits representative at 913-647-1000. Blue Star Benefits is a general agency offering insurance products for brokers, businesses and individuals. We proudly offer Blue KC products for you, your family and your employees.