The ‘Hidden’ Costs of PPACA Are Lurking Just Around the Corner

By Don McAnelly CPA/ABV/CGMA Rehmann

February 2013 – It’s hard to believe we are nearing the three-year mark of President Obama’s signing of the Patient Protection and Affordable Care Act of 2010 (PPACA). Even more concerning is the fact that this piece of legislation appears to still have some surprises in store for us all. For those of you who may not have heard, the news outlets have been buzzing about a new Obamacare charge hidden in recent regulations. As this Act continues to evolve, it is important to keep up with the most recent changes as well as highlighting some other “stealth fees” that you may not yet be aware of.

A new health insurance fee; what it is and what it means to your business As business owners/managers of a company that offers health insurance to its employees, few of us enjoy surprises, right? Especially the ones that will cost money! Well, unfortunately, the following likely won’t make you too happy. Within PPACA, there is an annual fee of $63 per insured that goes into effect January 1, 2014. While this fee will be charged to health insurance plans, it is a virtual certainty that the fee will be passed down to businesses that subscribe to the insurance. I know what you’re thinking: what is this fee for? As you may know, PPACA contains the requirement that health plans cover individuals with pre-existing conditions. The additional fees (which are anticipated to be upwards of $12 billion in 2014) are intended to be put in a fund to help individual and small-group health plans and health insurance companies deal with the costs of pre-existing conditions. Luckily, absent additional legislation extending the fee, it will be phased out by 2017.

Upcoming nutritional disclosures in the food industry Have you recently treated yourself at your favorite fast food only to be disheartened by the caloric information staring you in the face? Well if so, you’d better get used to it. The Food and Drug Administration is in the very last stages of finalizing details, but it is expected that late this year nutritional information will be mandatory for restaurants with 20 or more locations. Although the impact will mostly be felt by franchises, owners of vending machines, mall kiosks, and many other types of food vendors will be affected. Existing legislation will require caloric information on all menus, display boards and drive-thru menus, and will require calories-per-serving signs in buffet-style or self-serve restaurants. The costs associated with reconfiguring this physical media are only the beginning. Additionally, information including items such as saturated fat, sodium, carbohydrates, etc. must be available in printed form upon request. Lastly, consider the expense to have menu items’ nutritional content analyzed. These additional costs will be something to think about for those of you in or directly impacted by the narrow-margin food industry.

Excise tax on “Cadillac Health Insurance Plans” There’s still plenty of time to avoid this one, but beginning in 2018, employers offering “Cadillac plans” will be hit with an additional excise tax. The term “Cadillac,” as you might imagine, refers to expensive, high coverage plans. Expensive, as defined by the government, means plans with annual costs in excess of $10,200 for individuals and $27,500 for families in 2018, with inflationary adjustments starting in 2020. Employers offering these kinds of plans will be assessed a 40% excise tax on the amount the plans’ costs in excess of these thresholds.

Conclusion With all of these changes, it is prudent to begin thinking about how they will affect your business, financially and otherwise. It is highly recommended that you discuss your particular situation with professionals such as your health benefits advisor, attorney and CPA.

With extensive experience providing financial solutions to clients – from business operation & efficiency assessments to consulting & corporate tax guidance – Don McAnelly is ideally positioned to provide the support today’s businesses need. Don serves as Rehmann’s primary CPA contact for health care clients in East Michigan and his experience extends to tax, valuation and financial matters. Don has been with Rehmann for 18 years, with prior Big Five national accounting firm experience. Additionally, he is a member of the Michigan Association of CPAs, has authored overviews on the Patient Protection and Affordable Care Act for the Firm’s BWD magazine and has spoken on the Act to various chambers of commerce.