by Admin. | May 12, 2011 | Health Care Reform, healthcare, PPACA
Larger employers that don’t offer minimum essential health coverage to full-time workers may face penalties under health care reform if any full-time employees receive a government premium credit or subsidy to buy their own insurance through an exchange.
The so-called employer mandate and the health insurance exchanges both go into effect in 2014 under the Patient Protection and Affordable Care Act.
The penalties generally apply to all employers with 50 or more full-time equivalent employees. An employer with at least 50 FTEs that provides access to coverage but fails to meet certain requirements, outlined below, may also be subject to a penalty.
To determine the FTE (Full Time Equivalent) you must count FT and PT employees. Full Time Employees are those working 30 hours+/week. See blog post “What does FTE mean?”
Affordability of the employer plan remains a consideration, however, since just one employee qualifying for federal premium assistance for exchange coverage will trigger a penalty for employers with 50 or more employees
Minimum essential coverage generally includes any coverage offered in the small or large group markets. Excepted benefits, such as limited-scope dental or vision offered under a separate policy, certificate or contract of insurance and Medicare supplemental plans, do not qualify.
Penalties explained
Starting in 2014, large employers that don’t offer coverage face a penalty of $2,000 per full-time employee (excluding the first 30) if at least one FTE receives a government subsidy to buy coverage on an exchange. This is sometimes referred to as the “play or pay” penalty.
Employers that offer coverage to employees may still face a “free rider” penalty if the coverage offered is deemed unaffordable or low in value.
If an employer offers coverage, but a full-time employee receives a premium credit subsidy through an exchange, the employer must pay an assessment equal to the lesser of:
- $3,000 for each employee that receives a subsidy
- $2,000 for each full-time employee after the first 30
The monetary penalties listed above are annual figures and may be pro-rated to the number of months for which the penalty applies.
Who’s eligible for a subsidy?
Employees who are offered coverage from their employer could be eligible for subsidies on the exchange if they don’t qualify for Medicaid or other programs, are not enrolled in their employer’s coverage and meet either of the following conditions:
- The employee’s share of the premium exceeds 9.5 percent of their household income
- The plan pays for less than 60 percent on average of covered health care expenses (e.g. coverage offered does not have at least a 60-percent actuarial value).
After 2014, penalty amounts are indexed by a premium adjustment percentage for the calendar year.
The Congressional Budget Office expects the penalties to generate $52 billion toward the overall cost of health reform by 2019. The Department of Health and Human Services estimates that fewer than 2 percent of large American employers will have to pay the assessments.
Disclaimer: This blog is not intended to represent legal advise and one should consult with a tax and/or legal expert.
by Admin. | May 12, 2011 | healthcare
To determine the FTE (Full Time Equivalent) you must count FT and PT employees. Full Time Employees are those working 30 hours+/week.* The number of full-time employees excludes those full-time seasonal employees who work for less than 120 days during the year.4 The hours worked by part-time employees (i.e., those working less than 30 hours per week) are included in the calculation of a large employer, on a monthly basis, by taking their total number of monthly hours worked divided by 120.
For example, a firm has 35 full-time employees (30+ hours). In addition, the firm has 20 part time employees who all work 24 hours per week (96 hours per month). These part-time employees’ hours would be treated as equivalent to 16 full-time employees, based on the following calculation:
20 employees x 96 hours / 120 = 1920 / 120 = 16
Thus, in this example, the firm would be considered a “large employer,” based on a total full-time equivalent count of 51—that is, 35 full-time employees plus 16 full-time equivalents based on part-time hours.
This blog is not intended to represent legal advise and one should consult with a tax and/or legal expert.
* IRC 4980H(c)(4)
Disclaimer: This blog is not intended to represent legal advise and one should consult with a tax and/or legal expert.
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by Admin. | May 11, 2011 | Social 2.0, Twitter
At times a non related health care themes needs posting. This one is an important security measure that ought to be applied by all users whenevr possible. HTTPS connections are often used for payment transactions on the World Wide Web and for sensitive transactions in corporate information systems. Some of you are familiar with this when banking online you will see this prefix automatically This is easy to do and is being offered by many premier sites such as Facebook, Gmail, Twitter etc.
This is an excerpt form a great article in PC World:
HTTPS Is Your Friend
When you’re browsing the Web, protect yourself by using HTTPS (Hypertext Transfer Protocol Secure) whenever possible. HTTPS encrypts the connection between your PC and the Website you’re visiting. Though HTTPS doesn’t guarantee that a site is secure, it can help prevent other parties from hacking into the network and gaining access to your account.
Many sites use HTTPS by default: When you purchase an item online or log in to online banking, for instance, your browser will probably connect to the site via HTTPS automatically. But you can go one step further by enabling HTTPS on Facebook, Twitter, and Gmail.
To use Facebook’s HTTPS feature, log in to Facebook and click Account in the upper-right corner. Select Account Settings from the drop-down menu, and look for ‘Account Security’ on the resulting page. Under the Account Security heading, click Change, check the box next to Browse Facebook on a secure connection (https) whenever possible, and click Save.
You can easily enable HTTPS on sites such as Twitter and Facebook and on services such as Gmail to introduce an extra level of security.For Twitter, first log in to your account. If you’re using the new Twitter interface, click your account name in the upper-right part of the screen, and select settings. (If you’re still using the old Twitter interface, click theSettings link in the upper right of the window.) From there, scroll down to the bottom of the resulting page, check the box next to Always use HTTPS, and click Save.
To enable HTTPS on Gmail, log in to your account, click the gear icon in the upper-right corner, and select Mail Settings from the drop-down menu. Next, under the Browser Connection heading, select the button labeled Always use https. When you’re all set, scroll to the bottom of the page and click Save Changes. To learn more about Gmail security, visit Google’s Gmail Security Checklist page.
Please browse responsibly as your sensitive information can comprise your data as well as your contact’s stored on your PC. Kindly pass this on!
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by Admin. | Apr 28, 2011 | Health Care Reform
This month on April 12th, 2011 marked the five-year anniversary of Massachusetts 2006 State Health Care Reform. The reform was signed into law by then-governor Mitt Romney with the goal of providing affordable health insurance coverage to the estimated 6% of Massachusetts residents that were uninsured at the time.
Massachusetts State Health Care Reform and the Affordable Care Act are virtually identical.Both reforms rely heavily on state-based health insurance exchanges, subsidies for qualifying individuals, and mandates for employers and individuals. As a result, Massachusetts presents the most appropriate example of what to expect from federal health care reform.
So, what have we learned from Massachusetts state reform? The 2006 Massachusetts State Health Care Reform:
- Created the MAHealthConnector (a state health insurance exchange) to provide guaranteed issue health insurance to MA residents;
- Mandated that every resident of the state obtain a minimum level of health insurance or face penalties;
- Mandated that employers provide a “fair and reasonable contribution” to their employees’ health insurance premiums or face penalties; and
- Provided free health insurance and partially-subsidized insurance to qualifying residents based on income.
Proponents of the law argue that Massachusetts Health Reform:
- Has resulted in Mass. being the state with the highest percentage of insured residents, at 98% in April 2011, including 99.8% of children.
- Has increased the percentage of private companies that offer health insurance from 70% in 2005 to greater than 77% today.
- Has lowered the cost of individual health insurance premiums in Mass. due to the fact that primarily healthy people have moved to the individual market.
Opponents of the law argue that Massachusetts Health Reform:
- Has increased costs for its residents, $13,788 for a family of four in 2010, in the state that already had the highest medical costs in the nation prior to implementation.
- Was setup for failure from the start due to its reliance on employer-sponsored health plans, plans that employers cannot afford due to rising costs.
- Has resulted in more than half of the newly-insured residents receiving health insurance that is partially or completely subsidized by Massachusetts’ taxpayers.
Has Massachusetts health care reform been properly utilized as a test bed for Federal Reform? Will the costs associated with Massachusetts health care reform be sustainable over the long term?
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by Admin. | Apr 18, 2011 | healthcare
A taxing provision for small businesses was officially repealed last Thursday. The widely unpopular provision would have had
businesses report transactions to IRS of $600 in a year paid to ALL businesses for goods and services. Suddenly businesses would have to report payments to Staples, local restaurants and the like.
The $22 billion cost of the 1099 legislation was offset by requiring some people, if their income level increases during the year, to pay back a portion of the subsidies they receive to join health insurance exchanges created under the law.
Nevertheless, small businesses are in a position to take advantage of new Tax Credit of up to 35% and 25% for non profit see: http://alexmillers.wordpress.com/2011/02/08/tax-credit-boosts-small-business-health-plan-enrollment/. Even IRS Tax Advocate official, Nina Olsen, admits on CBS Sunday Morning News to the”mess” and daunting confusion of the 65,000 page tax codes. There were 579 changes alone in 2010 – “I dont know how businesses keep up”?!
We have been helping businesses and Accounting professionals calculate this credit. Call us to see of how to qualify for the small business tax credit.
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by Admin. | Feb 10, 2011 | Health Care Reform
Aside from the many health care related questions that are popping up with the new Health Care Reform Act otherwise known as Patient Protection and Affordable Care Act there are also new Labor Law changes that affects businesses of all sizes. For the latest info please visit Healthcare.gov.
A downloadable form and respective gov hyperlinks are available here with a summary of the key labor laws (updated for 2011).
Stay tuned, with changing political make up of the House these laws may undergo changes and tweaks.
by Admin. | Feb 8, 2011 | Health Care Reform, healthcare, Small Business Group Health
More small businesses are providing health insurance to their employees in 2011 as a result of the tax credit of up to 35% and 25% for non-profits offered through PPACA starting in 2010. Several insurers have reported significant increases in small group enrollments. Coventry Health Care added 115,000 small group enrollments, representing an 8% increase; and Blue Cross Blue Shield of Kansas City saw a 58% jump, 38% of which had never offered health benefits to employees before. Click video [vimeo http://vimeo.com/19716548].
Further information can be found at http://www.irs.gov/newsroom/article/0,,id=223666,00.html. In addition, we have a simple work sheet that can determine exactly how much the credit is worth to you. Importantly, the Tax Credit will increase to 50% for small businesses by 2014!
Please contact our office for further guidance on your group’s plan.
by Admin. | Feb 1, 2011 | Health Care Reform, healthcare
Yesterdays ruling on Individual Mandate by Florida Federal Judge on buying a health plan is unconstitutional changes everything. More importantly, Judge Vinison also struck down the entire bill as unconstitutional.
According to Politico, the health reform law lacks a severability clause, a common legal phrase that prevents an entire law from being invalidated in court if one portion of the law is deemed illegal. He added that the law, “like a defectively designed watch, needs to be redesigned and reconstructed by the watchmaker” (New York Times, 1/31). Put in another way, he has compared the individual mandate to requiring an individual to buy broccoli because its good for you.
The Plaintiff, Florida DA, argued:
“The Individual Mandate is unprecedented. It compels citizens to engage in commerce even though they have not themselves chosen to enter the marketplace. Never before has Congress purported to use its power over interstate commerce to compel activity, rather than to regulate existing economic activity.”
If this ruling is upheld on appeal, many of the major provisions of PPACA will need to be redesigned or removed altogether. Further details regarding this ruling can be viewed at CNN.
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by Admin. | Jan 25, 2011 | Health Care Reform, healthcare
The IRS issued On December 22, 2010 a Notice http://www.irs.gov/pub/irs-drop/n-11-01.pdf which states compliance with the non-discrimination provisions of the Protection and Affordable Care Act (PPACA) are suspended for insured group health benefit plans….for now.
Under the original health care reform law, non-grandfathered, fully insured health plans would have required companies to meet the non-discrimination rules of IRC 105(h). This provision of the law is effective for plan years beginning on or after September 23, 2010. Therefore, if your company’s health plan renews on January 1, 2011 and it is non-grandfathered, your plan is subject to these rules on January 1, 2011.
The anti-discriminatory provisions were enacted primarily to prohibit highly-compensated employees (such as company owners and senior management) from receiving health benefits that are materially better than the “rank and file” employees. As contemplated in the health care reform measure, failure to comply with the anti-discriminatory rules could result in the payment of penalties to the IRS.
Affected plans must satisfy two tests; eligibility test, and benefits test. The tests determine whether or not the plan disproportionately benefits highly compensated individuals (HCI). Please contact us for further information on these tests.
According to the notice, the decision to delay the effective date was because:
Regulatory guidance is essential to the operation of the statutory provisions, the Treasury Department and the IRS, as well as the Departments of Labor and Health and Human Services (collectively, the Departments), have determined that compliance with § 2716 should not be required (and thus, any sanctions for failure to comply do not apply) until after regulations or other administrative guidance of general applicability has been issued under § 2716.
There has been no indication of the length of the delayed implementation, other than the provision would become effective after further rules were promulgated.
The employer is responsible for monitoring non-discrimination compliance. If the plan is deemed discriminatory, fines could be assessed at $100 per day per individual discriminated against. If reasonable cause exists (the employer can show good faith belief that the plan was not discriminatory), the penalty can be capped at the lesser of 10% of group health plan costs or $500,000.
Importantly, this doesn’t apply to “grandfathered plans“. Employers of non-grandfathered, fully insured plans should review their contribution structures and benefit designs to ensure that plans are not favoring highly compensated employees.
Further information can be found at http://www.irs.gov/irb/2010-41_IRB/ar07.html . Please contact our office for further guidance on your group’s plan.
by Admin. | Dec 19, 2010 | healthcare
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