February 2011
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Implementation Tips
The New Healthcare
Legislation and Your Business
by Kerry Duvall, Manager
he number of
T pages in the
new health care
legislation is stag-
gering. But that’s
only the beginning:
the volume of
changes and the
different tax years each provision
comes into effect complicates com-
pliance implementation strategies
even more so!
To simplify the material and help
you prioritize your actions around
the new healthcare legislation, we
have put together a series of articles
based on the year the changes come
into effect. (Please note: there are
various individual income tax
changes that will come into effect as
a result of the new legislation; how-
ever, we have not included them
here, but we can provide them to
you, free of charge, upon request.)
This first article focuses on changes
that will affect your employee
medical plans beginning in 2010 and
continuing through 2013. Articles to
follow will summarize changes from
2014 through 2018, and beyond.
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Changes effective in 2010
Dependent care coverage
For plan years that begin on or after
October 1, 2010, dependent care
coverage must be extended to cover
unmarried, adult children until their
26th birthday. This expansion will
cover these adult children, regard-
less of whether they are a tax
dependent, a student and/or receiv-
ing financial support from the par-
ent. However, until 2014, the cover-
age does not have to be extended to
adult children that are eligible for
coverage from another employer.
Implementation: Plan documents
need to be re-written to include this
change. In addition, find out if the
adult children of your employees
are eligible for health insurance cov-
erage by their own employer.
Small business tax credits
Under the legislation, states have until
2014 to set up Small Business Health
Option Plans (“SHOP exchanges”)
which provide an opportunity for
small businesses to pool together in
order to purchase health insurance.
Until these SHOP exchanges become
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available, eligible small businesses
will receive a tax credit in the amount
of 35 percent of employer contribu-
tions toward employee health insur-
ance premiums. The employer must
cover at least half the cost of the
employee’s premiums (based on the
single’s premium rate). After the
SHOP exchanges are available, the
credit will increase to 50 percent for
the first two years and then will be
eliminated (unless legislation is
passed to extend it).
Implementation: Reviewing the
requirements and conducting calcu-
lations to determine the company’s
eligibility as a “small business” will
need to be done. These calculations
are, unfortunately, obtuse. Contact
us for help in determining if your
business is eligible for this tax cred-
it, beginning in tax year 2010.
Emergency room coverage
For plans that cover emergency
room visits, claims for in-network
must be covered at the same rate as
those that are out-of-network.
Additionally, claims must be cov-
ered regardless of prior authoriza-
tion for emergency services.
Implementation: Plan documents
need to be re-written to include this
change.
Top-heavy plans
Businesses may no longer offer
plans that discriminate in favor of
highly compensated employees.

The New Healthcare
Legislation and
Your Business
continued from page 1
Implementation: Plans need to be
analyzed and re-written in order to
meet this criteria.
High-risk insured pools
Beginning on June 23, 2010, high-
risk pools will be established to
cover applicants as well as early
retirees between 55 and 64 years of
age. The risk pools will be available
to applicants that have had claims
rejected for six months from insur-
ers. Employers will be reimbursed
for 80 percent of each claim between
$15,000 and $90,000.
Implementation: Begin to assemble
claim information in order to apply
for the reimbursement.
Subsidies for retiree drug coverage
Beginning in 2013, companies are no
longer allowed to expense the subsidy
received from the federal government
to cover the cost of retiree prescription
drugs. The prior subsidy was 28 per-
cent of the cost, and companies were
allowed to deduct the full cost, includ-
ing the amount reimbursed by the
subsidy. Although this change does
not go into effect until 2013, and, if the
company records tax assets related to
the subsidies on their balance sheets,
the impact must be recorded in the
first quarter profits of 2010.
Implementation: Calculate the effect on
book income and tax assets for 2010.
Changes in 2011
Healthcare costs reported on W-2
Beginning for tax year 2011, the
value of employer-provided health-
The statements contained herein are provided for informational purposes only, are not intended to constitute tax advice which may be relied upon to avoid penalties under any federal,
state, local or other tax statutes or regulations, and do not resolve any tax issues in your favor. Furthermore, such statements are not presented or intended as, and should not be taken
or assumed to constitute legal advice of any nature, for which advice it is recommended that you consult your own legal counselors or professionals.
UHY Advisors, Inc., provides tax and business consulting services through wholly owned subsidiary entities that operate under the name of “UHY Advisors.” UHY Advisors, Inc.,
and its subsidiary entities offer services from offices across the United States. UHY Advisors, Inc., and its subsidiary entities are not licensed CPA firms. UHY LLP is a licensed independent
CPA firm that performs attest services. UHY Advisors, Inc., and UHY LLP are independent U.S. members of Urbach Hacker Young International Limited.
February 2011
care coverage is required to be Implementation: Be sure your
reported on the employee’s W-2. accounting software is updated to
(This would be on W-2s that are track total payments made to all of
issued in January, 2012.) The value is your vendors.
not taxable to the employees; rather,
this is an informational reporting
requirement. Most plans are includ-
Changes in 2013
ed in this requirement, including Mandated coverage
COBRA. Employers with more than 50
Implementation: Companies need to employees that fail to provide cov-
coordinate with their payroll depart- erage to all of their full-time
ment/administrators to assess the employees may be subject to a mon-
values beginning in January, 2011. (If etary penalty. This penalty will be
employees leave the company, they assessed for every employee that is
are allowed to request their W-2 certified as having enrolled in a
early.) state exchange to purchase health
insurance and has received a tax
Wellness program grants credit to purchase this coverage.
Grants will be awarded to compa-
nies that implement wellness pro- Implementation: The penalties can be
grams for their employees. The substantial and are assessed on a
employer must have less than 100 monthly basis. If you believe you
employees that work more than 25 may be subject to these penalties,
hours per week. In addition, the contact us, and we can determine
employer must not have had a well- your potential exposure.
ness program in place as of March
23, 2010. Employers with more than 200
employees are required to automat-
Implementation: Contact us if you’d ically enroll their employees in
like some help in applying for one of
healthcare plans, with the employee
these grants. having the option to opt-out.
Implementation: Discuss this require-
Changes in 2012 ment with your plan administrator
Reporting vendor payments to determine procedures that will
on 1099s assist you with the enrollment
Prior to this new legislation, pay- process.
ments to vendors aggregating over • • •
$600 were required to be reported Stay tuned for the follow-up article,
on the form 1099. Payments made to in which we’ll look at healthcare
corporations were exempt from this legislation changes effective begin-
reporting requirement. Beginning in ning with tax year 2014 and what
tax year 2012, all payments are your company will need to do to be
required to be reported for property compliant. As always, we’re here to
and services. This new requirement help you if you need additional
is also applicable to payments made information or have questions about
to corporations. implementation practices.