Two health care reform provisions repealed

Congress acted recently to repeal two provisions of PPACA that had concerned many employers: the expanded 1099 reporting requirement and "free choice" vouchers.

The first provision would have mandated businesses to report annual payments exceeding $600 for gross proceeds and amounts in consideration for property on Form-1099 Misc. beginning in 2012. This expansion of 1099 reporting rules was unrelated to health care but was included in the legislation as an attempt to raise $17 billion over ten years toward the $1 trillion projected cost of health care reform.

Both the House and Senate made it a priority to remove the controversial 1099 provision from PPACA. President Obama agreed and signed the repeal into law on April 14, 2011.

As a result of the last-minute compromise to avoid a government shutdown, Congress eliminated another key PPACA provision.

The "free choice" voucher provision would have taken effect in 2014 and required employers in very limited circumstances to give employees a voucher equal to the value of the employer's contribution to health coverage premiums. Recipients would then have been able to use these vouchers to help pay premiums for coverage purchased from state Health Insurance Exchanges.

Labor unions and some employer groups were concerned that younger and healthier employees might prefer to buy lower-cost, voucher-subsidized insurance from the Exchanges, reducing the size of risk pools and driving up premiums for employer health plans.

The repeal of these two provisions demonstrates that Congress views health care reform as an ongoing process. No one knows what might go next - Stay tuned.

New Health Savings Account (HSA) Limits Announced for 2012

The IRS has just released Revenue Procedure 2011-32 which provides information on the limits for HSA plans for 2012. The annual contribution limitation on deductions for individuals with self-only coverage under a high deductible health plan will be $3,100. The deduction limitation for an individual with family coverage will be $6,250. These both represent small increases over the limits for 2011.

In order for a plan to be considered a “High Deductible Health Plan” for 2012, the deductible for self-only coverage must be at least $1,200 and $2,400 for family coverage. These minimums have not changed from 2011. The maximum out of pocket expenses may not exceed $6,050 for self-only coverage and $12,100 for family coverage in 2012. dw