The "Patient Protection and Affordable Care Act" (PPACA) (P.L. 111-148) and the "Health Care and Education Reconciliation Act of 2010" (H.R. 4872) were signed into law March of 2010. The Oracle PeopleSoft team has been monitoring this legislation and the impacts it has on the PeopleSoft Benefits and Payroll for North America products. Through the use of Position Statements, updates and changes are communicated to our customers. Most recently we reported on product updates that were made as a result of changes that extend health care coverage to young adults.
One of the many changes initiated by PPACA requires any group health plan or plan in the individual market that provides dependent coverage for children to continue to make that coverage available until the child turns 26 years of age. This was effective for Plan or Policy Years beginning on or after September 23, 2010. The Act provides that medical coverage be extended to children up to the age of 26 without restrictions for student or marital status. In addition the tax favored status remains until the end of the tax year during which the child attains 26.
In order to allow for the varying age limits between plans it was necessary to develop a new Dependent Age limit structure which would allow our customers to accommodate the new age limit for dependents in the medical plans.
To compliment this change we will be delivering enhancements to the Oracle PeopleSoft Human Resources Base Benefits and Payroll for North America products to accommodate the difference in tax treatment of the Adult Child Benefit among states which do not conform to the Federal law. The IRS has issued guidance that the coverage for adult children is non-taxable through the calendar year they attain age 26, even though the law only requires plans to provide coverage up to the 26th birthday. State requirements may differ from these Federal requirements. In order to allow for compliance at the state level the following changes have been developed.
• Updated Benefit Rate Table Structure
• New relationship type “Adult Child”
• New Taxable Gross Component ID
The new configuration allows you to designate a value of the benefit attributable to the Adult Child in the Benefit Rate table. This value will then be used to calculate the appropriate state tax. Given the current functionality, the only deduction class that will not reduce the employee check, not impact Federal, and impute the income for the state is the Non-taxable Before tax deduction class. This deduction class is currently only available for use in Base Benefits for Savings Plan employer matching contribution. The new functionality will open up the use of this deduction class for use in the calculation of health premiums for the purpose of imputing taxable income for non conforming states.
The detailed information is posted to My Oracle Support Doc ID 1080659.1 - PeopleSoft Benefits and Payroll for North America Position Statement: HR 3590 and HR 4872.
In addition, we are currently following changes made in the Health Information Technology for Economic and Clinical Health (HITECH) Act, a section of the American Recoveries and Reinvestment Act of 2009 (ARRA). Congress passed the Health Information Technology for Economic and Clinical Health Act (HITECH) as part of the American Recoveries and Reinvestment Act of 2009. HITECH makes several significant modifications to the Health Insurance Portability and Accountability Act (HIPAA). These changes include creating new code and transaction sets for the HIPAA 834 EDI. Thorough analysis is currently being conducted and updates will be provided in an upcoming Position Statement.
Position statements can be found by accessing My Oracle Support.