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

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

March 31, 2010 by Jim Giuliano
Posted in: Legal & Compliance, Special Report


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:


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.


  • 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.


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).


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.


  • 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.

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  • Gary

    Well, let the savings begin!

  • Vizbiz

    Oh yeah, that’s going to help my business. Now I can fire everyone and just use contract non-union web based starving workers. My guess is that many businesses are gearing up for this. Good work Prez.

  • R Blum

    This is typical Washington garbage that never looks at the burden they are placing on businesses or people. I would love to make everyone in the Legislative and Executive branches go out and work in the environment they have created. We could call it Undercover Morons. The whole program would be filled with “this is not what I voted for”, because they really don’t have a clue what they have done to this country. It is time to throw them all out, bulldoze D.C. and go back to the Constitution as it was written and intended.

  • il

    Things change all the time, so pointing out that they do doesn’t really accomplish much. Can you quantify your “real and imposing” demands, in addition to calling them “real and imposing”? Can you provide some data on how the changes you’re describing impact administrative burden, in terms of time, effort, and cost? And if it’s to early to tell, your premise is not (yet) sustainable, and appears to be just another anti-reform propaganda piece, mascarading as helpful business advice.

  • Maria

    How about the hidden costs to businesses today for non-coverage of individuals? Or isn’t that any fun to look at?

  • J. Johnson

    Obama beat McCain 53% vs 46% and I hope we can all agree that there are 3 or 4 points of buyer’s remorse in that spread by now. Real Clear Politics average shows the final health care poll as 40% in favor 50% opposed. I guess he just knows better…..

  • Chris

    Another ignorant policy enacted by wannabee liberals with no business experience. The whole way this country is governed needs to be changed to an accountable working model. If not, it is only a matter of time before our country will experience its second revolution. Current government is too big, utterly innefficient and incapable of following the peoples needs. This November, make a firm commitment to fire all incumbents. They are the ones who got us here, now it’s time to remove the sickness and start the healing process.


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