A Look at the Affordable Care Act: 2013 Reforms

*Each month AssuredPartners NL will discuss a different aspect of the Affordable Care Act. Stay tuned for more updates on the second Thursday of each month.   shutterstock_81364459


When the health care reform bill, or Affordable Care Act, was signed into law by President Barack Obama in 2010, extensive changes to the U.S. health care system were not far behind. These reforms are intended to reduce the uninsured population and decrease health care costs. Significant changes to health plan administration, and fees and taxes are coming in 2013, and will impact both employers and individuals. Here’s what you can expect from Affordable Care Act reforms in 2013:

Changes to Health Plan Administration:

  • Administrative Simplification
    In 2013, health plans must adopt and use uniform standards and operating rules for the electronic exchange of health information. This step will reduce both paperwork and administrative burdens and costs. 
  • Limiting Health Flexible Savings Account Contributions
    The Affordable Care Act limits the amount of salary reduction contributions to health FSAs to $2,500 per year for plans beginning after Dec. 31, 2012.
  • Employee Notice of Exchanges
    Employers must provide a notice to employees regarding the availability of the health care reform insurance exchanges. The Department of Labor expects that the timing for distribution of notices will be the late summer or fall of 2013, which will coordinate with the open enrollment period for Exchanges. 
  • HIPAA Certification
    Employers with group health plans must certify that their plans comply with certain HIPAA rules on electronic transactions by Dec. 31, 2013.

Changes to Fees and Taxes:

  • Eliminating Deduction for Medicare Part D Subsidy
    Employers that receive the Medicare Part D retiree drug subsidy may currently take a tax deduction for their prescription drug costs and costs attributable to the subsidy. The deduction for the retiree drug subsidy will be eliminated in 2013.
  • Increased Threshold for Medical Expense Deductions
    The Affordable Care Act increases the income threshold for claiming the itemized deduction for medical expenses from 7.5 percent of income to 10 percent. Individuals over 65 would be able to claim the itemized deduction for medical expenses at 7.5 percent of adjusted grown income through 2016.
  • Additional Medicare Tax for High Wage Workers
    The Affordable Care act increases the Medicare hospital insurance tax rate by 0.9 percent on wages greater than $200,000 for an individual or $250,000 for a married couple filing jointly. The tax is also expanded to include a 3.8 percent tax on net investment income in the case of taxpayers earning more than $200,000, or $250,000 for a joint return.
  • Medical Device Excise Tax
    The Affordable Care Act establishes a 2.3 percent excise tax on the first sale for use of a medical devise. Eye glasses, contact lenses, hearing aids and any type of a devise that is generally purchased by the public at retail for individual use are exempted from the tax.
  • CER Fees
    For plan years ending on and after Oct. 1, 2012 and before Oct. 1, 2019, self-insured plans and issuers must pay fees per covered life. The initial fee is $1 per covered life, increasing to $4 per covered life for plan years ending on or after Oct. 1, 2013. This will be adjusted annually for later plan years. The first possible payments are due on July 31, 2013.

What do you think about the changes to health care in 2013? Check back on the second Thursday of each month as we discuss the Affordable Care Act and what it means to you. For questions about the Affordable Care Act, contact a AssuredPartners NL representative.

This post is not intended to be exhaustive, nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice.

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