Market Overview

2013 Could Prove a Taxing Year for Health Care Coverage as Employees Face Some New Deduction Limits


As the 2012 tax year is in its final lap, HighRoads, the industry leader in employer health care regulation compliance and benefits management, notes it's a good time for employees to be aware of Affordable Care Act (ACA) regulations taking effect in 2013, that can affect their future tax picture. Also, employees will be receiving more information on the cost of employer-sponsored group health coverage costs – an ACA regulation that kicks in with the 2012 tax year.

Cynthia Weidner, VP of H&W consulting at HighRoads (Photo: Business Wire)

Cynthia Weidner, VP of H&W consulting at HighRoads (Photo: Business Wire)

Regardless of the election outcome, these regulations will remain in effect until such time as Congress amends the law, should that occur. At the earliest, action would not be taken until August of 2013. So it is prudent for employees to be aware of new ACA regulations that govern tax deductions in the coming year,” said Cynthia Weidner, vice president, consulting, HighRoads.

Under ACA, beginning in 2013, an employee's salary reduction contributions to a health FSA (Flexible Spending Account) offered under a cafeteria plan are limited to $2,500 (and will be indexed for inflation in future years).

Those employees in high earning brackets will be subject to additional Medicare tax withholding, effective January 1, 2013, under ACA. An additional 0.9 percent will be withheld on an employee's wages in excess of $200,000 ($250,000 for married couples filing jointly). According to the Tax Policy Center, an estimated 6.07 million Americans earned above $200,000 in 2011.

Employees should be aware of employers' W-2 reporting requirements on the aggregate costs of group health plans and understand it is not a tax liability for the employees and their families, but a new ACA reporting regulation for employers. The cost must be reported with the 2012 Tax Year forms, which are due in January 2013.

Employees also need to read their new Summary of Benefits Coverage (SBC) documents, the health plan summaries mandated under ACA, and available for the first time, during this open enrollment period, said Weidner. A new HighRoads ‘pulse' survey of health benefit professionals revealed that 80% of respondents have complied with the new SBC regulations and are distributing in time for this season's open enrollment.

“We at HighRoads are delighted that so many companies are taking advantage of new automated technology solutions to produce and distribute SBCs via online portals and even via smartphones,” said Weidner. “It helps employees a great deal to be able to use SBCs as another learning tool during open enrollment.”

About HighRoads

The world's leading employers choose HighRoads to gain complete control over their health care costs and compliance. HighRoads' SaaS-based solutions provide employers with complete benefits management capability, including benefits plan information and pricing, competitive benefits benchmarks, and compliance management. The privately-held company is headquartered in Woburn, MA. For more information, visit

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HighRoads Company Contact:
Petra Marino, 781-503-4031
HighRoads Media Contact:
Erin Jones, 704-664-2170

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