The IRS stated that reporting would be voluntary for W2 forms issued for 2011 “to provide employers with additional time to make any necessary changes to their payroll systems or procedures in preparation for compliance with the reporting requirement.”
Summary: The law is complex, and key aspects are being defined through the rule-making process at federal agencies. Nevertheless, businesses’ ongoing efforts to respond to the health care law must proceed without complete information about forthcoming requirements.
The health care law is more than 2,500 pages long and amends a number of existing federal laws. Many details of how the health care reform law will take shape will be determined by federal officials through the regulatory process.
These regulations are providing key details about the legislative provisions and are integral to companies’ efforts to respond to the health care law.
The challenge for management is to map out the company’s response to the health care law without complete information. Employers must stay abreast of regulatory action in Washington, DC, to ensure that they are in compliance with the law.
Responsive companies will take advantage of opportunities to comment on pending regulations and engage in discussions with government officials and members of Congress.
Important in the next 24 months
Notably, a number of provisions of the law that respondents said were of importance to them in the next 24 months will be finalized through the regulatory process. These provisions include:
Outlining the process for employers with more than 200 employees to automatically enroll all new full-time employees in a company-sponsored health plan
- W2 reporting
Determining the process for companies to report the value of employees’ health care coverage on their W2 forms
- Waiting periods
Dictating that employers cannot impose waiting periods of more than 90 days for employees to enroll in company-sponsored coverage
- Form 1099 reporting
Explaining how businesses file information returns for all payments aggregating $600 or more in a calendar year to a single payee, including corporations (Note: At press time, Congress is considering proposals that would repeal all or part of this requirement)
Prohibiting employers from discriminating in favor of highly compensated employees relative to other employees with regard to eligibility to participate in (and benefits provided under) group health plans
Qualifying for exemptions with “grandfathered status”
Establishing the standards that plans must meet to retain their so-called “grandfathered status” is an example of the scope of authority that the law leaves to the Administration to define in regulation.
Under the grandfather regulation, plans that were in existence on March 23, 2010 (the date of the law’s enactment) can qualify for exemptions from some requirements of the health care law provided they do not make substantial changes to their plan design or cost-sharing arrangements. The terms of these limitations were not addressed in the law, but instead were defined in an interim final rule that Health and Human Services and the Departments of Labor and Treasury released jointly in June 2010.
The law’s requirement for employers to report the value of employees’ health care coverage on their W2 forms offers another example of the way that the regulatory process is affecting the final shape of the law.
Reporting requirements and
insurance reforms are key concerns aspire to
IRS guidance around January 2011 compliance deadline
The law set a January 2011 compliance deadline for the requirement, but in guidance issued on October 12, 2010, the Internal Revenue Service (IRS) stated that reporting would be voluntary for W2 forms issued for 2011 “to provide employers with additional time to make any necessary changes to their payroll systems or procedures in preparation for compliance with the reporting requirement.”
The guidance is particularly noteworthy because of employers’ concerns about the provision. When completing our survey in August/September 2010, more than 91% of respondents considered the W2 reporting requirement to be at least somewhat important over the next 24 months, topping the list of issues respondents said would be important to their companies.