It’s time for some benefits housekeeping. Although 2013 will not bring the blockbuster changes to health benefits that will come on January 1, 2014, there are still some things employers need to do to comply with new requirements. Here is a rundown:
FSA limits: Starting in 2013, employees will face a $2,500 limit to their annual flexible spending accounts contributions. As open enrollment for benefit plans approaches or is already underway for many companies, employers need to communicate this limit clearly so that employees can plan accordingly. Relevant plan documents must also reflect this change.
Summary of Benefits and Coverage: Both insured and self-insured employer-sponsored health benefit plans must begin providing employees with a Summary of Benefits and Coverage (SBC) for plan years beginning on or after September 23, 2012. Employers operating their benefit plans on a calendar year will have to comply for the plan year starting on January 1, 2013. If a company’s plan is insured, the insurer must provide this information. If the plan is self insured, the employer must create and distribute the SBC itself.
The SBC must include a plain language description of the health benefits plan and the coverage it provides, including covered benefits, cost-sharing provisions, and coverage limitations and exceptions. The SBC must also include “coverage examples” that indicate how various insurance or health plan options would cover common scenarios where employees use the plan for their health care. In addition to the SBC, employees and others covered by the plan can request a uniform glossary of terms commonly used in health insurance coverage, such as “deductible” and “co-payment.” The U.S. Departments of Health and Human Services and Labor will also post the glossary online at www.HealthCare.gov and www.dol.gov/ebsa/healthreform.
Medicare tax: High-earning employees making more than $200,000 if a single filer and $250,000 if filing a joint return face an increase in the Medicare tax. For these employees, the tax will increase from 1.45% to 2.35% but only for amounts earned above the $200,000/$250,000 threshold noted above. Employers are required to withhold this additional tax on any earnings over $200,000 regardless of whether the employee will end up being liable for the tax when they file their tax return. In addition to making sure payroll vendors are on top of this development, it is a good idea to communicate the change to any potentially affected employees.
The W-2 requirement: Starting with the Forms W-2 issued for the 2012 tax year, employers must report the value of the health care benefits employees receive. These amounts are not taxed; this figure is just for informational purposes and stands to remind employees of the value of the health benefits they receive from their employers. Companies that have not worked out the systems necessary to provide this figure on Forms W-2 to be issued by January 31, 2013 will need to work with their vendors and internal resources now to make sure that information is ready.