Understanding
Health Care Reform

Blue Cross of Northeastern Pennsylvania
Can Help You Prepare

For Members For Employers
A Timeline for You and Your Family
We know you are busy with important things like working and taking care of your family. BCNEPA can provide the information and resources you need to better understand changes due to Health Care Reform.

Blue Cross of Northeastern Pennsylvania is committed to helping you understand changes to your health insurance.

We’ve put together a timeline of key provisions of the Health Care Reform bill. We have also compiled a list of frequently asked questions and answers. We also provide links to information from a variety of sources that can help guide you on what to do next. To see the entire Act, go to the U.S. Department of Health & Human Services (HHS) website at www.healthcare.gov.

As the provisions evolve and additional guidance is released from the government, we encourage you to visit our website often for updates.

2013 Provisions

Employer Notice to Employees of Marketplace Coverage Option

Your employer must provide you with a written notice with information about the public health insurance marketplace, or federally facilitated marketplace, including a description of services provided and how to contact the federally facilitated marketplace to request assistance.   This will be provided when the requirement first becomes effective, and after that, notice will be provided to only new hires.

  • The notice should also inform you of your potential eligibility for premium assistance and cost-sharing reduction if your employer does not offer coverage or the coverage is unaffordable.
  • Originally set to begin March 1, 2013, the U.S. Department of Labor (DOL) expects that the timing for the distribution of notices will now be later in 2013, which should coincide with the federally facilitated marketplace open enrollment period.
What you need to know:
  • You will receive a notice from your employer, if your employer is subject to the Fair Labor Standards Act (FLSA).

Flexible Spending Account (FSA) Contribution Cap

For plan years beginning on or after January 1, 2013, employee contributions to an FSA are capped at $2,500 annually.

  • They will be indexed for inflation starting in 2014.
What you need to know:
  • Your employer may inform you of the change during your open enrollment period.
  • We recommend that you review your FSA contribution amount and update it, if needed, to comply with the new maximum.
  • As a reminder, if you have a BlueCare® FSA, you can get more information from the HealthEquity® website

Itemized Deductions for Medical Expenses Cap

Currently, taxpayers may deduct unreimbursed medical expenses exceeding 7.5% of their adjusted gross income. The 7.5% threshold is increased to 10%, effective for 2013 and later tax years. However, if a taxpayer or his or her spouse is age 65 or older, the threshold continues at 7.5% through 2016.

What you can do:
  • You can visit the Internal Revenue Service (IRS) website at www.irs.gov and click on “Credits & Deductions” to learn more.
  • The IRS also has a webpage providing information on tax provisions of the Affordable Care Act.

Medicare Part D Drug Savings

There are prescription drug discounts available to individuals enrolled in Medicare or Medicare Advantage with Part D prescription drug coverage.  The discounts apply to certain drugs in the coverage gap (known as the “donut hole”) as follows:

  • 52.5% discount on brand-name and biologic prescription drugs
  • 21% discount on generic prescription drugs
  • Additional discounts will be applied through the year 2020
What you can expect:
  • If you qualify, you will save on the amount you are charged for prescription drugs when you present your Medicare Advantage membership information.

Medicare Payroll Tax on High Income Earners

Effective January 1, 2013, 2 tax increases were imposed on individuals who earn a high income (over $200,000 a year for individuals, over $250,000 a year for families). This money will support the Medicare Hospital Insurance fund, which supports Medicare for those who are eligible.

  • The Medicare Hospital Insurance payroll tax rate will be increased by .9% (9/10ths of 1%). The Medicare tax on unearned income will result in a 3.8% Medicare tax for individuals, trusts and estates. Unearned income includes interest, dividends, capital gains, rents and passive activity income, minus any allowable deductions.
What you need to know:
  • If you are in this category, you should notice the extra amount being withheld from your pay.
  • The Medicare tax on unearned income will need to be reported on your tax returns; it is not a payroll deduction. For more details on this tax, visit the White House website or the IRS website.

W-2 Reporting of Health Benefit Costs

Effective for 2012 and later tax years, employee W-2 statements will include the aggregate cost (their costs plus the employer's costs) of employer-sponsored health benefits. These costs will not be considered taxable income by the IRS. It is meant to show the value of the coverage.

  • This new reporting requirement applied to W-2s issued in January 2013.
  • The W-2 requirement is optional for smaller employers (those filing fewer than 250 W-2s) until further guidance is released.
What you need to know:
  • We recommend you read the IRS overview at this link.