Obamacare Individual Mandate -A KEY PROVISION OF THE AFFORDABLE CARE ACT (ACA) IS THE INDIVIDUAL SHARED RESPONSIBILITY PROVISION. For more information on this topic, check out the Q&A basics that follow, or call the Millennium Medical Solutions Corp at 855-667-4621.
While the Employer mandate has indeed been delayed – Obamacare Midsize Employer Mandate Delayed Till 2016 the following 2014 rules must be followed. The PPACA excise tax of $100/day may be levied.
Importantly, the excise tax will not be assessed if an employer can demonstrate that it did not know, and exercising reasonable diligence would not have known, of a violation. Further, the excise tax will not be assessed if the failure is due to reasonable cause and not willful neglect and it is corrected within the 30-day period beginning on the first date an employer knows, or exercising reasonable diligence would have known, that the failure existed. This limited correction window makes identifying and promptly correcting any potential errors of utmost importance.
For more information on compliance please contact our team at Millennium Medical Solutions Corp (855)667-4621.
With only 6 month away from full implementation of 2014 Patient Protection Affordability Care Act (PPACA) employers are understandably uncertain. Below are Health Care reform – five things employers can do now to prepare and take action.
UPDATE JULY 2nd: Since blog posting the President Administration has delayed 1 year Employed Shared Responsibility Mandate i.e. Pay or Play to Jan 2015.
1. Employee Communications
Employers must notify employees of the online insurance marketplace known as a Healthcare Exchange. Recently released federal guidelines require employers to notify their workers of eligibility requirements for their state exchange starting Oct. 1, 2013 Open Enrollments for Jan 2014 effective date. To the relief of many, the U.S. Labor Department also provided model notices that employers can give to their workers, which eliminates the need to develop their own notifications.
Additionally, Employers sponsoring a health plan must give employees a Summary of Benefits and Coverage (SBC). The purpose of the Summary of Benefits and Coverage, or SBC, is to present benefits and coverage information in clear language and in a consistent format. Inspired by the Nutrition Facts Label on packaged food, the SBC (pdf) includes two medical scenarios: having a baby and managing Type II diabetes. It estimates how much a patient would pay for medical care in each scenario with specific insurance plans.
Important things to know about the SBC:
2. Determining which Employers must offer health care.
Because employers with 50 full-time equivalents face penalties for not providing affordable, minimum value insurance an employer should know whether it is subject to these requirements or not. Common law employees of the employer and any commonly controlled company must be counted. Employers with temporary or leased employees will want to discuss with their advisors whether these employees will be considered “common law employees” for purposes of determining how many FTEs an employer has. Employers with employees who are paid based on unique payment models (stipends, work product, etc) will want to discuss how to calculate these employee hours with their benefits advisors.
The good news is Employers can subtract 30 FT employees. This portion is known as the Employer “play or pay” option. Specific case example and details are found at Pay or Play Employer Guide.
3 Health Care Small Business Tax Credit Calculator
To encourage businesses to offer health benefits to their employees, the federal government is offering tax credits to small businesses. These credits are available to an estimated 4 million small businesses, including nonprofits.The IRS has set up a web page with information: Small Business Health Care Tax Credit for Small Employers. The maximum “credit” (which offsets taxes dollar for dollar and is better than a “deduction” which reduces taxable income) is 35 percent of the amount an employer pays towards employee health insurance.
Who’s eligible?
To qualify, small employers must:
Because of the high wages paid in most industries in NY/NJ/CT Tri State, few small employers that provide coverage pay such a low average wage. Note, however, that the calculation of average wages and number of employees excludes the wages of an owner and his or her family members.
medicalsolutionscorp.com help clients gather the appropriate information and do a preliminary estimate of the credit amount. This information will help you and your accountant determine whether applying for the credit makes financial sense. Find out what the new tax credit could mean for your coverage. Call us at 855-667-4621.
4. Determine affordability
Beginning Jan. 1, 2014, an employer with 50 or more employees must pay a tax penalty if they either: a) Do not provide health insurance with minimum benefits or 60 percent of healthcare expenses; b) Require employees to contribute more than 9.5 percent of an employee’s household income for the health insurance and those employees obtain a government subsidy for coverage.
Companies will be required to pay $3,000 per employee without affordable coverage. (Note: there are a number of caveats that might affect the actual penalty paid, so consult your tax advisor.)
This chart shows employer penalties under the ACA, referred to as “shared responsibility.” Employers wishing to more precisely calculate their potential penalty liability should read the document we prepared, Calculating the Potential ACA Employer Tax Penalty.
5. What does Full Time Equivalent Mean?
It is crucial to Understand the difference between FT and Full Time Equivalent. 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.
In the coming months, Millennium Medical Solutions Inc will host seminars and will share information you’ll need to know as the countdown continues to October 1st. [contact-form to=’info@medicalsolutionscorp.com’ subject=’Please contact us for immediate information on how to implement these initiatives for your group-specific needs Call (855) 667-4621.’][contact-field label=’Please contact us for immediate information on how to implememt these initiatives for your group-specific needs or Call (855) 667-4621.’ type=’text’/][contact-field label=’Name’ type=’name’ required=’1’/][contact-field label=’Email’ type=’email’ required=’1’/][contact-field label=’Website’ type=’url’/][contact-field label=’Comment’ type=’textarea’ required=’1’/][/contact-form]
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.
Health Insurance Mandates 2012. The Councel for Affordable Health Insurance in VA released their annual “Health Insurance Mandates in the States” for 2012 last week. While NYS did not crack the top 5 they did come close at number 7 this year.
NYS Mandates were discussed in our posting Empire Leaving Small Groups Nov 2011. ” Today, we have so many State mandates that many of the mandates(overage dependents coverage, preventive care, pre-existing for kids) in PPACA didnt even affect NY since they were already in place. Mandates account for approx 17% of the costs of which Small Businesses pay more than fair share. Large corporations and Unions can self insure and avoid some mandates as they are governed by ERISA and not State. To the relief of of our struggling clients on subsidized Healthy NY the State doesn’t play by their own rules and instead opts out of its very own mandates.”
According to the study CAHI Identifies 2,271 State Health Insurance Mandates “The sheer number of state mandates will make it difficult for states to deliver on one of the key promises repeatedly made by supporters of Obamacare: it would provide all Americans with affordable health coverage. The essential health benefit plan design was supposed to give states the flexibility to craft benefit packages which would be suitable and affordable for their unique populations. But HHS shackled the states to the full load of mandated benefits on their books, and the prices of next year’s offerings in the health insurance exchanges are going to bear witness to the free-wheeling mandate craze of the last twenty years. Recent studies have predicted double digit increases in health insurance premiums next year — the mandates are coming home to roost,” said Roy Ramthun, CAHI’s Director of Federal Affairs.”
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Most Mandated Benefits
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Least Mandated Benefits
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Most Popular Mandates
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Least Popular Mandates
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| Rhode Island | 69 | Idaho | 13 | Mammography Screening | 50 | Breast Implant Removal | 1 | |
| Maryland | 67 | Alabama | 19 | Maternity Minimum Stay | 50 | Cardiovascular Disease Screening | 1 | |
| Virginia | 66 | Michigan | 24 | Breast Reconstruction | 49 | Circumcision | 1 | |
| Minnesota | 65 | Iowa | 26 | Mental Health Parity | 48 | Gastric Electrical Stimulation | 1 | |
| Connecticut | 65 | Utah | 26 | Alcohol & Substance Abuse | 46 | Organ Transplant Donor Coverage | 1 | |
The rest of the study can be downloaded Executive Summary.
A Health Summary on Mandates by New York State’s Employer Alliance for Affordable
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The United Hospital Fun estimates that approximately 2.2 million New Yorkers lacked insurance coverage in 2009, (Health Insurance Coverage in New York 2009.) |
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The collective cost of paying for New York’s health insurance mandates equates to 12.2% of overall premium cost. Based on 2008 premiums, this translates into $1,538 expense per year for an average family policy and $566 per year for a single person policy. (Employer Alliance, NYS Mandated Health Insurance Benefits, 2003) |
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Higher health care costs increase the number of uninsured. In New York, it is estimated that for every 1% increase in premiums, 30,000 New Yorkers lose health insurance. (Barents Group, 1999) |
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Mandates have a cumulative impact on premium costs. It is estimated that the cost of the 12 most common mandates can increase the cost of health insurance by as much as 30%. (Milliman and Robertson 1996) |
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Rising health care costs have the biggest impact on the small business sector. For every 1% increase in premium costs, small business sponsorship of health insurance drops by 2.6%. (Morrisey et al., 1994) |
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The percentage of US small business workers receiving insurance through their employer declined 5% between 1996 and 1998 – from 52% in 1996 to 47% in 1998. (KPMG Peat Marwick, 1999) |
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Nearly one of every four uninsured Americans has no health care coverage as the direct result of state mandates. (Jensen, Morrisey, 1999) |
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Health insurance premiums for New York’s working families skyrocketed between 2000 & 2007 increasing by 80.7 percent. (Families versus Paychecks, Families USA 2008) |
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Since 1999, family premiums for employer-sponsored health coverage have increased by 131 percent, placing increasing cost burdens on employers and workers. (Kaiser Family Foundation and Health Research and Educational Trust. Employer Health Benefits 2009 Annual Survey. September 2009). |
Small Business Helpful links:
the HIT is actually a hidden tax on small business. PPACA assesses a tax on all health insurance companies based on their “net premiums” written. The tax will raise $8 billion starting in 2014, $14.3 billion in 2018 and more in later years. This is [aid for by fully insured health plans which are comprised mostly by small businesses.
| Business Council of NYS http://www.bcnys.org |
| Coalition for Affordable Health Insurance http://www.cahi.org |
| National Center For Policy Analysis http://www.ncpa.org |
| New York Blue Cross and Blue Shield http://www.nysblues.org |
| North East Business Group on Health http://www.nebgh.org |
| National Federation of Independent Business http://www.nfib.com |
| New York State Assembly http://www.assembly.state.ny.us |
| New York State Senate http://www.senate.state.ny.us |
| NY Health Plan Association http://www.nyhpa.org |
| Pennsylvania Health Care Cost Containment Council http://www.phc4.org |
| Small Business Survival Committee
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| NYS Department of Financial Services http://www.dfs.ny.gov |
[contact-form][contact-field label=’Name’ type=’name’ required=’1’/][contact-field label=’Email’ type=’email’ required=’1’/][contact-field label=’Website’ type=’url’/][contact-field label=’Please contact us for immediate information on how to implememt these initiatives for your group-specific needs or Call (855) 667-4621′ type=’text’/][/contact-form]
Pay or Pay Employer Guide
Tick! tick! tick! As the 2014 Employer Mandate to either pay or play gets closer the nation’s employers move a step closer to having to make a decision: Do I play or pay? This Employer mandate under Patient Protection and Affordable Care Act (PPACA) does not apply to smaller groups under 50 FTE (full time equivalent) employees. Many small groups such as food service industry, retailers, construction etc. in fact have many FTE and while they may work minimal hours can trigger the “pay or play” mandate.
The IRS has released recently guidance published in the form of a Notice of Proposed Rulemaking (NPRM), addresses a number of issues tightly linked to an array of practical considerations related to the employer mandate. These include defining a “large employer,” determining “full-time” status for employees, clarifying the meaning of “dependents,” and determining what constitutes “affordable” coverage.
The guidance also tackles several stickier questions such as how and whether to count foreign or seasonal workers, as well as how to calculate the full-time status of employees who work unusual hours, such as teachers or airline pilots.
Three safe harbors relating to the provision of “affordable” coverage to employees in order to avoid exposure to the mandate penalties are also included in the guidance. Transition relief is offered in recognition of certain employers’ needing time to bring their plans into compliance.
Still, there are several regs that the IRS is awaiting commentary and resolution on due on March 18, 2013.
A Q&A summary of the rule has been released by the IRS and is available by clicking here.
Some employers assert that the play-or-pay mandate will raise their costs and force them to make workforce cutbacks. As a result, a number are considering eliminating their health care coverage altogether and instead paying the penalty on their full-time employees. While the “pay” option might be worth considering, there are strong reasons why employers should look carefully at all of their options and do their best to calculate the actual outcomes of each.
Other Key Issues Addressed in the Proposed Rules
Additional issues addressed in the proposed regulations include:
When conducting a cost-benefit analysis, the key tax issues the employer should consider are:
Example:
Jungle Corp. has 100 full-time employees and is a leader in its market, using a talent differentiation strategy. Jungle’s family coverage costs $15,000, of which employees pay $3,000. Bob Smith, a highly skilled worker with a strong performance record, earns $50,000 and has family coverage through Jungle’s plan.
On Jan. 1, 2014, Jungle Corp. announces it is dropping its group health plan coverage and will instead pay the $2,000-per-full-time-employee penalty. On Jan. 2, Bob walks into HR and asks about receiving replacement compensation for the $12,000 that the business had been paying toward his family coverage.
Wanting to retain Bob in accordance with its strategy of maintaining market leadership with an experienced workforce, Jungle offers him another $12,000. But clever Bob points out that his share of Social Security and Medicare payroll (FICA) taxes will take a bite out of that $12,000, as will federal and state income taxes, so the HR manager agrees to make good on those amounts as well. Of course, the company will also have to pay its share of FICA taxes on Bob’s additional compensation. As a result, instead of paying $12,000 toward Bob’s family coverage using pre-tax dollars, Jungle Corp. now finds itself paying an additional:
- Bob’s salary adjustment: $14,500
- Employer’s share of FICA taxes: $1,109
- Excise tax (penalty): $2,000
———————————-- Total: $17,609
(versus $12,000 currently)
Similar per-employee costs will be reflected across the company’s workforce. A move that seemed like a no-brainer, the consequences could make you look silly.
For More Information
Due to the complexity of the law in this area, and the absence of finalized guidance, employers are strongly advised to review their benefit plans to prepare for the changes ahead. Additional information regarding the penalty is featured on our Employer Shared Responsibility page.
Ask us about our Health Care Reform Compliance Audit Assessments. See Health Care Reform Timeline and Preparing for Reform by UHC.
In the coming months, Millennium Medical Solutions Inc will host seminars and will share information you’ll need to know as the countdown continues to October 1st. Please contact us for immediate information on how to implement these initiatives for your group-specific needs at info@medicalsolutionscorp.com or Call (855) 667-4621.
At 10 AM today the Supreme Court in a 5-4 decision upheld the Patient Protection and Affordable Health Care Act’s individual mandate as constitutional. Imposition of a tax “leaves an individual with a lawful choice to do or not do a certain act, so long as he is willing to pay a tax levied on that choice,” Roberts says. “The Affordable Care Act’s requirement that certain individuals pay a financial penalty for not obtaining health insurance may reasonably be characterized as a tax. Because the Constitution permits such a tax, it is not our role to forbid it, or to pass upon its wisdom or fairness.” According to Footnote 11, which is on page 44 of the slip opinion: Those subject to the individual mandate may lawfully forgo health insurance and pay higher taxes, or buy health insurance and pay lower taxes. The only thing that they may not lawfully do is buy health insurance and not pay the resulting tax.With this decision finalized, New York State (and the rest of the country) can now move forward with implementing the law. We embrace the much-needed clarity and looking forward to working with our clients moving ahead.Millennium Medical Solutions Corp will be planning health care seminars to review the decision and overview to help understand the impact on employers, plan benefits, and providers. We welcome your suggestions on specific topics or questions you want us to focus on. Please join us!
Our office will continue to monitor events and inform our members of any other important news.
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Imndiv Mandatae requirement_flowchart_3
Individual Mandate Penalty Chart
2022 Open Enrollment Tools. A handy checklist Employers s for the upcoming 2022 renewals. PLAN DESIGN CHANGES, ACA EMPLOYER MANDATE 855-667-4621.
2021 Open Enrollment Tools. A handy checklist Employers s for upcoming 2021 renewals. PLAN DESIGN CHANGES, ACA EMPLOYER MANDATE 855-667-4621.
To prepare for 2023 open enrollment, health plan sponsors should be aware of the legal changes affecting the design and administration of their plans for plan years beginning on or after Jan.
Return to Work Plans and COVID-19.Things To Consider Before You OpenReturning to Work and Benefits Eligibility Considerations.info@mecialsolutionscorp.com or 855-667-4621.