July 2012 Volume 8 Number 11

Practical Implications of Health Care Reform for Employers

By Bruce Howell, Schwabe Williamson & Wyatt, PC,Portland, OR

AuthorOn June 28, 2012, the United States Supreme Court upheld the constitutionality of certain health plan provisions of the reform legislation known as the Patient Protection and Affordable Care Act ( “PPACA”).1 Some provisions were already in place and other provisions are to be implemented over time.  What follows is a brief summary of the key dates and provisions of PPACA over the next few years. Employers need to understand the changes to come in order to prepare for these deadlines.


Employers will soon be required to provide employees under their group health benefit plans with what is known as a “summary of benefits and coverage.”  The summary describes relevant aspects of the plan, deductibles, out-of-pocket expenses and common coverage descriptions.  Failure to provide such summary can result in a fine of $100 per day per affected individual employees.

There are various new reporting provisions under the Internal Revenue Code, one of which is the requirement that the employer must report the amount of health care benefits provided to the Internal Revenue Service on the employees Form W-2 Wage Statement.  The healthcare benefits will not be taxable, and the report will be informational only.

For more information on this topic, please see the previously published eSource article,
"Supreme Court Upholds PPACA"

PPAACA prohibits in general a group health plan from imposing cost-sharing requirements on certain preventative services such as immunizations, prevention care and screenings for infants and children and adolescents, and breast cancer screenings and mammography for women.

There will be an additional Medicare tax of 0.9 percent on wages received in excess of the applicable income threshold.  This will go into effect after January 1, 2013.  The threshold amount is $250,000 in the case of a joint return or surviving spouse, $125,000 in case of a married individual filing a separate return, and $200,000 in any other case. 


The employer now bears a “shared responsibility” to provide a group health plan to its employees or, beginning in 2014, if the employer has more than 50 full-time “equivalents,” the employer will face penalties if one or more of their full-time employees does not receive coverage.  The test here will be whether or not “full-time equivalent employees” are included in the count of 50 employees.  The rules are very complicated and require close examination for this determination.

Effective in 2014, there will be no annual limits on essential health benefits.  In addition, plans will be prohibited from imposing cost-sharing provisions in excess of applicable limits to health savings account (“HSA”) eligible high-deductible health plan employees.  Wellness programs are encouraged and a minimum waiting period cannot be longer than 90 days.  At present, individuals under the age of 18 have no preexisting condition exclusions.  Beginning in 2014, this will apply to all persons regardless of age. And, a group health plan may not impose a waiting period longer than 90 days.


In 2015, if an employer has more than 200 full time employees, new eligible employees must automatically enroll in the plan, subject to applicable waiting periods. Such employees must, unless they decline, remain enrolled in the plan.


In 2018, there is a threshold amount that will be established for what is called “Cadillac” plans.  These are plans that provide excellent benefits and the tax will be 40 percent of the amount over the threshold amount.


This list of issues for employers is not exhaustive.  There are many aspects of PPACA that are subject to regulation.  Employers are encouraged to seek qualified counsel to study the effects of ACA on their particular business. 


124 stat 119-124 stat 1025.

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