Looking ahead… Healthcare Reform Implementation

Five constellations of policy issues are likely to dominate Washington’s 2011-2012 calendar: health care reform implementation, targeted jobs creation measures, tax policy, retirement security and immigration. Over the next several weeks, we will explore into each of the five constellations – starting with the first.

1. Healthcare Reform Implementation
While the direction of the regulatory pendulum may depend on this November’s congressional elections, many employers believe the compliance crunch is only beginning on healthcare reform. They are convinced that the Patient Protection & Affordable Care Act threatens a flood of regulations for years to come, especially in new reporting requirements and added tax burdens.

Indeed, close inspection of the legislation reveals new employer compliance burdens for 2011, 2012, 2013, 2014 and even 2018, including a prohibition on FSAs for over-the-counter drugs, W-2 reporting of the value of worker health benefits, extensive reporting to IRS and employees of health coverage information, limits of annual FSA elections, special new Medicare taxes on higher-income employees and a new excise tax on so-called Cadillac health plans.

IRS Notice 2010-69 on October 12 offered some much-needed “interim relief” to employers by providing that the new law’s requirement to report the value of health coverage on employees’ Forms W-2 would not be mandatory at least for 2011.

Included in the health care reform picture is the outlook for the COBRA premium assistance program that Congress decided not to extend past May 31, 2010.

Some lawmakers and President Obama strongly supported extension of the subsidy for those involuntarily terminated through December 31, 2010. Other lawmakers favored indefinite COBRA through Medicare eligibility for those over 55. Concerns about government spending appear to have killed the subsidy. It seems fairly certain the program will not be revived in 2011 — thus ending an unprecedented expansion of federal aid to the jobless, i.e., to pay a portion of their health insurance.