Tag Archive for: Affordable Care Act

CPA's & Business Advisors

H&S April Newsletter Now Available

H&S April Newsletter



HS-Companies-Tax-Newsletter

Click to Download

In This Issue:

  • Managed IT Services Deliver Reliability: Uncertainty is a business killer. To be successful, companies must plan expenses and know that vital business systems will work.
  • Give Your Employees More Than A Benefits Program: Providing benefits to workers is a significant issue, particularly at a time when many in Congress are eyeing modifications to Social Security as a means of reducing the national budget deficit.
  • Affordable Care Act Q&A
  • Google Business Photos: First Google showcased your street; now they’re showing off the inside of your business.
  • Book Review: The Power of Habit

H&S April Newsletter Now Available

H&S April Newsletter




HS-Companies-Tax-Newsletter

Click to Download

In This Issue:

  • Managed IT Services Deliver Reliability: Uncertainty is a business killer. To be successful, companies must plan expenses and know that vital business systems will work.
  • Give Your Employees More Than A Benefits Program: Providing benefits to workers is a significant issue, particularly at a time when many in Congress are eyeing modifications to Social Security as a means of reducing the national budget deficit.
  • Affordable Care Act Q&A
  • Google Business Photos: First Google showcased your street; now they’re showing off the inside of your business.
  • Book Review: The Power of Habit

How Are the Exchanges Funded?



hscompanies-ppaca_exchange-who-paysOne big question many people have is, “who is going to be paying for the exchanges being setup by the states and federal government”. In reality, the burden will fall upon both employees, who receive coverage through a group health insurance plan, and also those who are eligible to purchase through the exchange.

Starting in 2014, all group health insurance plans will be charged a fee of $63 per participant per year. This fee is charged to the insurance company, but the cost will be passed on to the employer, and subsequently to the employee through an increase in their health insurance deduction.

In addition, insurers who wish to participate in the new exchanges will be charged a 3.5% fee on the premium amount for policies sold through the exchange. Once again, this is a fee that will ultimately be passed on to the individuals purchasing through the exchange.

Employers, employees, and those who may be eligible to purchase through the exchange need to be aware of how these fees will increase their share of the cost of obtaining insurance coverage.

To learn more about the PPACA visit the H&S Companies PPACA webpage or download our February newsletter.

Have questions about how the exchanges will affect your business? Contact HR Manager Travis Sinquefield.

Travis Sinquefield
HR Manager
616.735.3088
traviss@hscompanies.com

PPACA Pop Quiz



hscompanies-Test

  • Question 1, C — Minimum value is defined as having an actuarial value of 60%. Each medical health insurance plan will require an actuarial valuation to determine whether the plan is paying out at least 60% of the benefits, including co-pays. Essentially, this means that the plan pays for more than 60% of covered health care expenses.
  • Question 2, False — The original deadline to publish exchange notices for employees was March 1, 2013. However, on January 24, 2013, the IRS released a notice stating that exchange notices have been pushed back until at least the fall of 2013. Individuals and employers will be able to purchase insurance on the exchange starting October 1, 2013.
  • Question 3, False — While all large employers are subject to the employer mandate rules and penalties, the key determinant is whether an employee receives a tax subsidy and purchases insurance on the exchange, and that the insurance offered meets the minimum value and affordable cost requirements. An employer can refuse to offer coverage and avoid penalties if no eligible employees receive the subsidy and purchases insurance through the exchange. Likewise, employers who offer insurance that does not meet the minimum value and affordable cost provisions can also avoid a penalty if no employee receives a subsidy. It is important to note that if you do offer insurance, in order to avoid fines, the coverage offered must meet the minimum value requirement and affordable cost requirements. If those are met, eligible employees will not be able to qualify for the subsidy for purchase of insurance on the exchanges.
  • Question 4, 50 — Per the PPACA, a large employer is defined as having 50 or more full-time and full-time equivalent employees. Employers will need to count not only the full-time employees, which under the new rules are employees that work 30 or more hours per week, but also add up the hours of all part-time individuals and calculate the number of full-time equivalents. This calculation would be done on a monthly basis, so employers will need to look at each month individually, add up the part-time hours, and divide by 120 to determine the number of full-time equivalents. Employers, however, are only required to offer insurance to full-time employees, and not to the equivalents.

Return to PPACA Page

What is the 3.8% Tax?

3.8% Tax

You will NOT pay the tax if you sell your home and the gain qualifies for the $250,000/$500,000 principal residence exclusion.

The 3.8% tax has been a topic of heated discussion since it was slipped into the healthcare bill in 2010. The law is set to take effect in 2013, yet many people are still confused as to what exactly will be taxed.

Here’s what you need to know about the 3.8%:

  • The 3.8% tax applies to net investment income — capital gains, net rents (so rent after expenses are deducted), passive income from partnerships, interest, and dividends.
  • For those who are single the tax will apply to the lesser of net investment income or income over $200,000; for those filing jointly, over $250,000. This means if a single person has $20,000 of net investment income and adjusted gross income of $210,000, the tax applies to $10,000 (the portion exceeding $200,000).
  • This tax goes into effect in 2013 and will be reported on the tax return you file in 2014.

 

Below are 4 situations where the 3.8% tax will NOT apply:

  • You will NOT pay the tax if you sell your home and the gain qualifies for the $250,000/$500,000 principal residence exclusion.
  • You will NOT pay this tax if you buy a home, as it will NOT be collected as a transfer tax.
  • Have a million dollars but didn’t earn a cent of it from investment income? You will NOT pay the 3.8% tax.
  • Are you single and made $199,000, or married and made $249,000, and some of that income came from investment income? You will NOT pay the 3.8% tax.

 

Still have questions about how the 3.8% tax will affect you? Contact H&S today.

 
photo credit: Images_of_Money via photopin cc

Summary of Benefits and Coverage Due to Employees Soon



sbc_temp

You will need to provide a Summary of Benefits and Coverage (SBC) to employees with open enrollment periods beginning 9/23/12.

By Travis Sinquefield

Do you have a company sponsored health plan for your employees? If so, then under the Patient Protection and Affordable Care Act (PPACA) you will need to provide a Summary of Benefits and Coverage (SBC) to employees with open enrollment periods beginning 9/23/12. The SBC must outline, in clear language, the costs and benefits of their health plans and must also include a glossary of terms used in the health insurance coverage. As part of the PPACA, the government has provided a template to use for relaying this necessary information.

If you are fully insured, meaning that the insurance is provided by an outside provider (Blue Cross, Priority, etc.), then this document will be provided to you by the insurance company after you sign the renewal forms. If you are self-insured, then you are required to create this document yourself with the help of your third party administrator.

Useful Links

Full text of the PPACA
Summary of Benefits and Coverage Template – PDF

If you have any questions concerning the PPACA and how it affects your business, please contact Travis Sinquefield.

Travis Sinquefield
HR Manager
616.735.3088
traviss@hscompanies.com

You Could Be Getting a Health Care Rebate



Rebate Check

12.8 million Americas will be benefitting from the 80/20 rule

Under the Affordable Care Act, if health insurance companies don’t spend at least 80% of premiums paid on medical care, then they must provide those covered with a rebate. According to healthcare.gov 12.8 million Americas will be benefitting from this in one of the following ways:

  • They will receive a rebate in the mail
  • They will receive a lump-sum reimbursement to the same account that was used to pay the premium
  • They will receive a reduction in future premiums
  • Their employer will apply the rebate in a way that benefits the employee

To learn more read, The 80/20 Rule: Providing Value and Rebates to Millions of Consumers

If you are a small business owner with any questions regarding the best way to apply the rebate in a way that benefits your employees, please contact Mike Farmer.

Mike Farmer
Certified Public Accountant
231.798.6503
mikef@hscompanies.com

 

 

Survey Shows 10% of Employers Anticipate Dropping Health Care Benefits



Employer

With medical costs on the rise, employers are exploring health care coverage alternatives.

According to an article on the Los Angeles Times website, a new survey shows 10% of employers anticipate dropping health care benefits for their employees. The survey, by consulting firm Deloitte, found 81% of employers plan to continue offering health benefits and another 10% weren’t sure what they would do.

According to the article, more employers are exploring new ways to provide health care benefits to their employees. Some are looking into defined contribution plans or trying to negotiate with local health care systems directly.

Source:  Nearly 10% of employers to drop health benefits, survey finds, LA Times

Congressional Budget Office Releases New Estimates for Cost of Affordable Care Act

Calculations

The CBO released their estimation for how much Medicaid will cost under the Affordable Care Act

On Tuesday, the Congressional Budget Office (CBO) released new estimates regarding the cost of the Affordable Care Act’s insurance coverage provisions, which takes into account the Supreme Court decision issued on June 28, 2012.

The CBO estimates that Medicaid will cost $1,168 billion from 2012-2022, rather than the previously estimated $1,252 billion. They believe fewer people will enroll in Medicaid because more people will seek insurance through newly established exchanges and more people will be uninsured.

To view their full decision read, Estimates for the Insurance Coverage Provisions of the Affordable Care Act Updated for the Recent Supreme Court Decision.

Small Business Health Insurance Tax Credit



StethscopeOn Thursday, June 28, 2012, the Supreme Court upheld the individual mandate in the Affordable Care Act. This means that small businesses will continue be offered a tax credit of up to 35% (or up to 25% for non-profits) to help offset the cost of providing insurance to their employees that began in 2010. Beginning in 2014, that rate will increase to 50% and 35%, respectively. This is both a credit and a deduction meaning that because the health insurance premium payments are worth more than the credit, some eligible businesses will be able to deduct the amount by which the premium payments exceed the credit.

To qualify you must:

  • Have fewer than 25 full-time equivalent employees (2 part-time employees = 1 full-time employee).
  • Pay an average of $50,000 in wages annually. For example, if you have 10 employees, and you pay them $600,000 total, then you would qualify because you pay an average annual wage of $60,000 ($600,000/10 employees = an average wage of $60,000). Even if Steve makes $33,000, Diane makes $45,000, Carol makes $41,000, and so on for a total of $600,000.
  • Provide health insurance to your employees, and cover at least 50% of the cost.

To determine how much you are eligible to receive from this credit, use Form 8941, Credit for Small Employer Health Insurance Premiums. Small businesses will claim this credit on their tax returns as part of their general business credits; non-profits will include the amount on line 44f of Form 990-T, Exempt Organization Business Income Tax Return.

H&S Companies will publish tips and updates regarding the Affordable Care Act each week, so check back often. If you have any questions, please contact an H&S professional today.

Links + Sources
What You Need to Know About the Small Business Health Care Tax Credit
Small Employer Tax Credits