Boris Benic and Associates LLP - Certified Public Accountants and Consultants - Garden City, Long Island, New York

Boris Benic and Associates LLP - Certified Public Accountants and Consultants - Garden City, Long Island, New York

   
Resources - Tax Center - Boris Benic and Associates LLP - Certified Public Accountants and Consultants - Garden City, Long Island, New York
     
 

Key Elements of Obamacare for Business Owners

 
 

The amount of information that has been written about the Patient Protection and Affordable Care Act (PPACA), also referred to as ‘Obamacare’, is tremendous. The number of new compliance deadlines, reporting requirements and increasing employer responsibilities has left many unclear about their responsibilities. As the deadline for new regulation compliance approaches, Boris Benic and Associates wants you to understand your responsibilities and options. Outlined below are key changes being imposed on employer sponsored health plans.

 

Minimum Value of Health Plans

Effective January 1, 2014, the PPACA will allow certain eligible individuals who purchase health coverage through exchanges to receive a premium tax credit unless they are eligible for minimum coverage, including an employer sponsored plan that is affordable and provides minimum value. If the plan’s share of the total allowable cost of benefits exceeds 60% it is considered to provide minimum value. An ‘affordable’ plan qualifies as such if the employees’ contribution does not exceed 9.5% of household income. For employers with 50 or more full time employees there will be a penalty of $250 per month for each full time employee that receives a tax credit because the employer plan does not provide minimum value healthcare benefits.

 

To help business owners avoid penalties, the IRS has developed three approaches that can be used to demonstrate if the health plan will provide a minimum value. These include the following:

  • Minimum Value Calculator – The IRS is in the process of developing a calculator that will allow employer sponsored self-insured plans and large group plans to enter cost sharing information to determine if the plan meets or exceeds the 60% threshold. In assessing standard cost sharing features, the calculator would evaluate deductibles, coinsurance, and maximum out of pocket costs for physician care, hospital and emergency room service as well as pharmacy benefits.

  • Safe Harbor Checklists – Using a number of safe harbor checklists an employer can determine whether their health plan meets the minimum value standard. If the plan’s terms meet or exceed expectations, the plan would be treated as providing minimum value.

  • Actuarial Certification – Plans with nonstandard features (such as limits on any of the four categories of benefits, including limit on the number of covered physician visits per year) would be able to use the calculator, engaging an actuary to make appropriate adjustments for non-standard features.  If the plan terms meet or exceed expectations, the plan would be treated as providing minimum value.

Determining Full Time Employees

Employers need to determine the number of individuals employed full time to determine whether the penalty provisions apply. The PPACA classifies a business entity as a large employer for the calendar year if, during the previous calendar year, the company employed, on average, at least 50 full time employees. Any employee is classified as full time for any month they were employed at least 30 hours per week.

 

The PPACA provides optional safe harbor for determining whether employees are full time. Slightly different rules existing for ongoing and newly hired employees which are based on a measurement period (period for determining whether the employee is full time), a stability period (period going forward during which the determination applies), and an administrative period (a short period between the end of the measurement period and the beginning of the stability period, during which the employee’s full-time status is determined and the employee is offered coverage).

 

Maximum Waiting Period

Effective January 1, 2014, group health plans may not have a waiting period longer than 90 days. The PPACA defines the waiting period as the period of time that must pass before coverage of an employee or dependent who is otherwise eligible to enroll under the terms of the plan. An employer may use eligibility conditions as long as they are not designed to avoid the 90-day limit. An eligibility condition based on total number of hours worked is acceptable as long as no more than 1,200 hours of service are required. Any plans that allow for additional time to elect coverage will meet the requirement as long as the individual could have elected coverage to begin within the 90-day period.

 

Contact Us

If you’re unsure how your company will be impacted by these new regulations or if you’re interested in getting advice on the best course of action for your business, contact us today. For additional information on key elements of the new healthcare law and the best way to comply with upcoming deadlines, contact Robert Puerto, CPA, at 516-248-7361, or click here to email Robert. In a brief consultation he can assess your situation and provide guidance on the best way to proceed.

 

Source: IRS

 

 

 
 

Boris Benic and Associates LLP - Certified Public Accountants and Consultants - Garden City, Long Island, New York

 

Boris Benic and Associates LLP - Certified Public Accountants and Consultants - Garden City, Long Island, New York