Small business owners with employees are already busy enough running day to day operations; and now there new regulations and requirements to consider which ensure the health and safety of your staff. The Affordable Care Act of 2010 (Obamacare) delineates a new federal law to increase health care coverage for all Americans and offers employers some affordable mechanisms – including mandates, subsidies and taxes – to increase access. The provisions went into effect in January, but many employers still need time to review and respond to each of the mandates.

The 2012 tax season is over and California is close to rolling out their state health insurance exchange, so now may be a good time to initiate changes to meet deadlines and get your employees off to a healthy start. Within the next year here are some changes all small business owners can make to meet deadlines and requirements that should guide your planning.

2013: New W-2 Reporting for Employer-Sponsored Coverage

If you are not doing so already, starting in 2013 you will have to include information about the amount of employer-sponsored healthcare coverage in on your IRS W-2 Form. Most employers that issued 250 or more W-2’s in 2012 must report the value of health benefits in Box 12 (Code DD) on the 2013 Form W-2. Employers are not required to report the costs on Form W-3 (the employer’s transmittal of Wage and Tax Statements to the Social Security Administration). Furthermore, these regulations do not impose a reporting obligation if the employer is not otherwise required to file a Form W-2 on behalf of any individual (such as for a retiree or former employee).

The amount reported should include both the amount paid by the employer and the amount paid by the employee, as well as a special code (“DD”) to identify the amount. Keep in mind that the IRS has indicated that the reporting requirements are subject to change, that changes will be announced through IRS Notices, and that you generally have up to six months after the Notice date to comply with a new reporting rule.

For more details on what is optional and what is not, refer to the helpful table of required and optional reporting areas contained in the IRS online guidance.

July 31, 2013: Initial Deadline for Filing Payment of Research Fees

If you are a health insurance issuer or employer that sponsors self-insured plans, you are required to pay fees for financing the Patient Centered-Outcomes Research Institute (PCORI) established under the Affordable Care Act (ACA). The final rule applies to policy and plan years ending on or after October 1, 2012, and before October 1, 2019. The fee imposed on issuers of specified health insurance policies and sponsors of self-insured plans is $2 multiplied by the average number of lives covered under the policy or plan.

According to the proposed IRS Regulation, employers should use IRS Form 720 to file their fee payments, and the first potential deadline for filing a Form 720 that includes the research fee is July 31, 2013.

Other Important Dates and Information

Beyond the dates and requirements addressed above, there are other important dates and issues worth considering, including:

  • Employers will be required to notify employees of the availability of health insurance available through state-run exchanges as an alternative to any insurance provided by employers. The notice must be provided to each current employee by no later than March 1, 2013, regardless of the plan year for the employer’s group health plan. For new employees hired on or following March 1, 2013, notice must be provided on their respective date of hire.
  • The “Play or Pay” mandate kicks in on January 1, 2014. At that point, employers with 50 or more full-time employees or full-time equivalents must either offer healthcare coverage to all full-time employees (play) or pay penalties.—larger employers must offer full-time employees and their spouses and dependents health insurance or pay a penalty.

Employers need to begin planning as soon as possible, since the law and the processes it requires are complex. Small businesses are even more susceptible to penalties since owners are often responsible for their own bookkeeping. You will probably need to speak with your insurance agents and financial advisers to understand your new positions as a benefits provider.