And the requirements have nothing to do with healthcare!

The provision in question: The expansion of IRS Form 1099 reporting requirements for all vendor purchases over $600 that are slated to kick in on Jan. 1, 2012.

A new amendment to repeal that portion of the law passed the Senate two weeks ago, and now the House Ways and Means Committee has green-lighted H.R. 4, The Small Business Paperwork Mandate Elimination Act of 2011.

Even President Obama has admitted that he would support a repeal of this intended revenue-generator to ease the burden on small business. So if it gets to his desk, chances are good it will be signed.

You’re probably thinking: It’s about time. This is the first good news on this front.

Small business advocates balked the minute the health reform law was passed, highlighting how tough this particular provision would be on businesses, especially smaller ones, to track all their purchases for each and every vendor that once they crossed the $600 threshold. (Not to mention the massive task of year end information reporting your Accounts Payable department would be saddled with!)

But until now, two previous attempts at legislation to repeal the 1099 expansion have been batted down.

This one looks like it may finally take hold. Your best bet: Some cautious optimism at this point.

Stay tuned — we’ll update you as soon as there are any new developments.

A federal judge ruled that ObamaCare is unconstitutional. So the Justice Dept. is asking the judge: What do we do now?

In a 19-page filing, the U.S. Justice Department essentially asked U.S. District Court Judge Robert Vinson: If health reform is illegal, what’s the practical effect of the ruling? Can employers legally ignore the provisions that are in effect now or that are scheduled to go into effect soon?

Vinson had ruled on Jan. 31 that the entire law must be declared void but that only one part of the law is unconstitutional—the provision requiring individuals to carry health coverage or pay a penalty. Vinson didn’t issue an injunction halting the law. Some states said that the ruling is in effect an injunction against implementing health reform. The Obama administration has continued to carry it out.

Confused? So is the Justice Dept. To make matters worse, two other federal judges ruled the law is constitutional.

The law won’t fully go into effect until 2014, but some measures have been funded and are in practice. For example:

• Seniors with high prescription-drug costs have received rebates
• Statewide insurance pools have been set up, and
• Policies have been amended to allow members to add their children up to the age of 26.

Further filings by states objecting to the law will take place, and Virginia Attorney General Ken Cuccinelli has asked the U.S. Supreme Court to take the case now or no later than the court’s 2011-12 term.

We’ll keep you posted.

Here are the top 10 Business Brief stories for 2010, as chosen by our readers:

1. A profile of an employee who’s most likely to steal.

2. Obama tries back-door approach to unionization.

3. 8 big changes in Obama’s new small-biz bill.

4. Feds take away key health savings on Jan. 1.

5. 3 out 5 employees say they’ll work harder if …

6. Feds issue final Form I-9 rules.

7. Court ruling: You can kick unions off your property.

8. Obama extends med-leave rights to domestic partners.

9. 5 audit areas the feds are targeting this year.

10. The hidden biz effect of health reform: Back-office burden.

Fourteen states have filed legal action contesting the constitutionality of the health reform bill. Is it all a lot of bluster? Or can they actually put up a legal roadblock to ObamaCare? It all rests on one provision in the Constitution.

The facts:

Twelve state attorneys general, all of whom are Republican, have joined Florida in filing suits to block the healthcare bill on the grounds that its requirement that everyone have health insurance is unconstitutional. Four state legislatures have already passed laws blocking the bill. And Virginia’s Republican Gov. Bob McDonnell signed a bill making it illegal for the federal government to require Americans to purchase health insurance.

(The 12 states that joined Florida in the suits are Alabama, Colorado, Idaho, Louisiana, Michigan, Nebraska, Pennsylvania, Texas, Utah, South Carolina, South Dakota and Washington.)

All of the suits pound on the same two points:

• The health reform package exceeds Congressional authority to regulate interstate commerce and violates states’ sovereignty. If individuals choose not to purchase health insurance, they are therefore not engaging in any economic activity subject to federal regulation.
• The government cannot compel the purchase of any goods or services.

Additionally, Florida is challenging the provisions that:

• states must expand their Medicaid programs
• states must take on additional administrative burdens involved in implementing the health reform law, such as monitoring compliance by consumers and operating health insurance exchanges, and
• tax the uninsured and force some to enroll in Medicaid.

The key Constitutional provision
So what’s the likelihood that any of the suits can stand up in federal court or even make it to the to the U.S. Supreme Court? That depends on which legal scholar you ask, but generally success or failure of the suits rests on the interpretation of what’s known as “the Commerce Clause” of the Constitution.

The Commerce Clause grants Congress the power “to regulate commerce . . . among the several states.” Historically, commerce referred to merchandise, not insurance contracts. That’s why insurance has traditionally been regulated by states. But the Supreme Court has allowed Congress to regulate and prohibit all sorts of interstate economic activities that don’t involve merchandise.

Here’s the difference, however, between health reform and other types of commerce: Health reform seeks to regulate not only economic activity, but also economic inactivity. No one’s sure that Congress can use its power over commerce to mandate that an individual person engage in an economic transaction with a private company. As one legal scholar has pointed out, it’s the difference between offering “cash for clunkers” and mandating that everyone buy a GM-made vehicle.

Whether the courts will see it that way is anyone’s guess.

Sure, everyone’s talking about health reform and its down-the-road costs. There will be real and imposing administrative demands on your staff, too.

Here’s a five-year time line for major admin adjustments:

2010:

Your plan will have to:

• add employee dependents up to age 26
• drop preexisting condition exclusions on children
• lift lifetime limits on the value of coverage

Your payroll people will have to:

• Allow for a bigger income exclusion for qualified adoption assistance. The maximum adoption tax credit and income exclusion for employer-provided adoption assistance increases to $13,170 (indexed for inflation).
• Gather and provide data needed to qualify for employer subsidies and to receive a tax credit for employer-provided coverage for firms with no more than 25 employees and an average wage of less $50,000 per employee. From 2010 to 2013, the credit equals 35% of an employer’s contribution if the company pays at least 50% of the premium.

2011:

• The company will have to report the value of each employee’s employer-provided health coverage, along with other info, on Forms W-2.
• Get ready to change records if employees decide to set less money aside in a healthcare spending plans. Beginning next year, employees won’t be able to buy over-the-counter drugs tax-free through a flexible spending account health reimbursement account, or health savings account.

2012:

That’s the year Payroll will start increasing the paycheck deduction for the Medicare portion of the FICA tax increases — to 2.35% (up from 1.45%) — for individuals earning more than $200,000 annually ($250,00 for couples).

2013:

Payroll will have to adjust deductions to reflect new limits on pre-tax contributions to health accounts. Employees will be able to set aside up to $2,500 for health flexible spending accounts.

2014:

• This is the kick-in date for employers to begin offering a minimum level of health coverage — paying penalties for noncoverage. If you offer coverage that’s considered “unaffordable,” the company pays the lesser of $250 a month for each full-time worker receiving a government subsidy or $166.67 a month for each full-time worker
• If you don’t offer coverage, the penalty is $2,000 per full-time worker – even if just one employee receives a tax credit to buy insurance.

Health reform is more up in the air than ever. Still, two groups are offering data to support the idea that any reform will be just what the economy — and the job market — needs.

The study is called “New Jobs Through Better Health Care.” It was produced by the University of Southern California and the Center for American Progress, and predicts that health reform will add up to 400,000 jobs this decade and ultimately a total of about four million jobs.

Where will the jobs come from? In summary, according to the study: Health reform will result in lower health costs and premiums for employers, meaning companies will have more cash to sink into their operations and for payrolls. The formula in the study says that 120,000 jobs are added for every 10% decrease in health costs.

Where will the savings come from? The study says: Reform will change the incentives in current payment systems, and thus encourage higher quality, lower cost care. Estimates show that large savings are possible in a number of areas. For instance:

• Reducing the number and cost of high-cost illnesses through better coordination of care — for instance, fewer people needing to be rehospitalized after an initial hospitalization.
• Lowering unit prices of healthcare services that are more expensive in the United States than in other developed countries — for example, operating rooms and scanners that are run at less than full capacity.
• Streamlining excessive administrative costs that neither improve quality nor patient satisfaction.

Go here to see the full study.