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    Obamacare and Human Resource Benefits

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    Please explain how Obamacare affects Human Resource benefits such as health care benefits and taxes.

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    The Patient Protection and Affordable Care Act (PPACA) or Federal Health Care Law is a United States Federal Statute coming into existence on 23rd March, 2010, the date it was singed by President Barack Obama into a law, hence popularly known as 'OBAMACARE'.
    Along with Health Care and Education Reconciliation Act it is the most significant regulatory act changes since the passage of US Health Care system of Medicare and Medicaid Act passed in 1965.
    The object of the act basically is decreasing the number of uninsured Americans and reducing the overall costs of health care. The act provides a number of mechanisms such as mandates, subsidies, and tax credits to employers and individuals so that coverage rate may increase. Further, that it may improve health care and streamline the delivery of health care.
    Accordingly, insurance companies are required to cover all applicants at the same rates irrespective of pre-existing conditions or gender.
    The Congressional Budget Office (CBO) projected that the act will reduce the future deficits as well as Medicare expenditure. In March 2011, CBO calculated approximately a net deficit decline of more than 200 billion dollars during the period 2012 to 2021 and net receipt of $813 billion. It would make up for $604 billions in outlays that may be a reduction of $210 billion in deficit.
    A poll conducted in 2012 - July, reflected that about 56% Americans want to see critics of President's health care act avoid blocking it and pay attention to other urgent matters related to the nation.
    The above two acts together will have a number of different incentives affecting individuals and businesses leading to important changes in health care sector.
    HR aspects:
    For HR people it is just a beginning as how the law will influence the businesses and their employees. The law is clear about the employers' health plans which will be key source for employees and must be communicated to them.
    1) The plans must cover children up to the age of 26 irrespective of their matrimonial status instead of 19 as now;
    2) Insurers will not deny children cover due to pre-existing conditions and after 2014 even the adults. They can not set annuals limits on coverage.
    3) One of the reasons for offering health care is attracting and retaining right people. The employers may offer more choices to employees where talent management is important.

    Tax limitations and implications:
    The employers in near past encouraged employees to behave like consumers due to tax implications affecting to both of them. For example since January - 1, 2011, tax free reimbursements for FSA's, HAS's, HRA's and OTC drugs are restricted, from Jan -1, 2013, the Medicare tax will enhance to 2.35% from 1.45% for income over $200,000., and restricts FSA's to $2500.
    The effect on employers may be as Uniform Standard definitions, descriptions of coverage, cost sharing provisions, exceptions, renewal and continuation of coverage provision, examples of common benefits like pregnancy , serious and chronic medical conditions giving related cost sharing as recognized clinical practice guidelines, a statement stating that the plan extends minimum essential coverage as per code sec 5000 A (f) , and share of total costs and benefits provided meets applicable requirements, contact number to call with questions and internet web address to view and copy coverage policy or group certificate of coverage, find whether the prescription drugs are covered or not.
    Employers have to devise ways how to report value of health benefit on employees' W-2 wages and tax statements as commencing from 2012 W-2s will be distributed in 2013. Now the employers are ...

    Solution Summary

    The expert explains how Obamacare affects human resource benefits such as health care benefits and taxes.