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John C. Godsoe, Esq.John J. Cureo Bond, Schoeneck & King, PLLCLawley Benefits Group LLC.

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Presentation on theme: "John C. Godsoe, Esq.John J. Cureo Bond, Schoeneck & King, PLLCLawley Benefits Group LLC."— Presentation transcript:

1 John C. Godsoe, Esq.John J. Cureo Bond, Schoeneck & King, PLLCLawley Benefits Group LLC

2 2 Topics Covered Today Background “Shared Responsibility” Requirements Exchanges and SHOP Program Small Business Healthcare Tax Credit New Taxes and Fees 2013 Action Items

3 3 Background Patient Protection and Affordable Care Act (“ACA”) passed in 2010 U.S. Supreme Court decision in 2012 November 2012 elections Many provisions of ACA already in effect

4 4 “Shared Responsibility” Requirements Shared Responsibility Requirements - Individual Mandate - Employer Mandate Shared Responsibility Requirements work in conjunction with the health insurance Exchanges (Marketplaces)

5 5 Individual Mandate Each citizen and legal resident (and his/her dependent(s)) must be covered under minimum essential coverage each month, beginning in 2014 Exceptions - Not required to file tax return based on income - Short coverage gaps - Coverage options are unaffordable

6 6 Individual Mandate Minimum tax imposed for failure to maintain coverage: - 2014: $95 - 2015: $325 - 2016 and later: $695 - If greater, penalty tax based upon a percentage of household income applies - Indexed beginning after 2016 - Dependents under age 18 are 50% of that amount

7 7 Exchanges State-based competitive marketplaces to purchase health insurance and qualify for premium tax credits and cost-sharing reductions. Initial open enrollment will run October 1, 2013 through March 31, 2014 with coverage effective dates beginning January 1, 2014 To be eligible for the premium tax credit: a taxpayer must enroll in one or more qualified health plans through an Exchange must have household income for the year between 100% (138% in NY) and 400% of the Federal Poverty Line (FPL) for the taxpayer’s family size may not be claimed as a tax dependent of another taxpayer must file a joint return, if married, and cannot be eligible for minimum essential coverage (including government-sponsored programs and eligible employer-sponsored plans)

8 8 Exchanges Health Insurance Exchange Purchaser Tax Credit/ Subsidy Product Levels Carriers Individuals Small Groups Below 400% FPL Platinum Gold Silver Bronze Cata- strophic Platinum Gold Silver Bronze Employer SelectsMember Selects Member selects from available carriers/products

9 9 2013 Federal Poverty Guidelines 48 Contiguous States and DC Note: The 100% column shows the federal poverty level for each family size, and the percentage columns that follow represent income levels that are commonly used as guidelines for health programs. Household Size100%133%150%200%300%400% 1$11,490$15,282$17,235$22,980$34,370$45,960 2$15,150$20,628$23,265$31,020$46,530$62,040 3$19,530$25,975$29,295$39,060$58,590$78,120 4$23,550$31,322$35,325$47,100$70,650$94,200 5$27,570$36,668$41,355$55,140$82,710$110,280 6$31,590$42,015$47,385$63,180$94,770$126,360 7$35,610$47,361$53,415$71,220$106,830$142,440 8$39,630$52,708$59,445$79,260$118,890$158,520 For each additional person, add: $4,020$5,347$6,030$8,040$12,060$16,080

10 10 Employer Mandate Beginning January 1, 2014, an applicable large employer is subject to an assessable payment if : - The employer fails to offer to at least 95 percent of its full-time employees (and their dependents) the opportunity to enroll in minimum essential coverage under an eligible employer-sponsored plan and any full- time employee is certified to receive a premium tax credit or cost-sharing reduction in connection with exchange coverage; or

11 11 Employer Mandate Beginning January 1, 2014, an applicable large employer is subject to an assessable payment if: - The employer offers at least 95% of its full-time employees (and their dependents) the opportunity to enroll in minimum essential coverage, but the coverage either is not affordable or does not provide minimum value, and any full-time employee is certified to receive a premium tax credit or cost-sharing reduction in connection with exchange coverage

12 12 Employer Mandate Penalty Example A Employer Fails To Offer Minimum Essential Coverage Example assumes payment for 12 months: - ABC Corp. has 100 full-time employees - ABC Corp. does not offer any health insurance coverage - One full-time employee purchases health insurance on an exchange and receives a federal subsidy (premium credit or cost-sharing reduction) - ABC Corp. is subject to penalty tax of $2,000 x number of full- time employees (first 30 employees not counted) - Penalty tax = $140,000 (70 x $2,000)

13 13 Employer Mandate Penalty Example B Employer Offers “Deficient” Coverage Example assumes payment for 12 months: - ABC Corp. has 100 full-time employees - ABC Corp. offers minimal essential coverage - ABC Corp.’s coverage is “unaffordable” - Twenty employees decline company coverage and purchase health insurance on an exchange and receive a federal subsidy (premium credit or cost-sharing reduction) - ABC Corp. is subject to penalty tax of $60,000 ($3,000 x 20 employees enrolled in exchange with subsidy) − Penalty subject to cap of [total FT employees – 30 x $2,000]

14 14 Important Questions For Your Business Am I an applicable large employer? - 50 FTE standard Who are my full-time employees that must be offered coverage to avoid penalties? - 30 hours/week standard - FT status determined based on “lookback” measurement period; coverage offered during subsequent stability period Is my coverage “affordable”? Does my coverage provide “minimum value”?

15 15 Affordable Employer Coverage Employer sponsored coverage is considered affordable if - The employees’ contribution for self-only cover of the lowest cost plan providing minimum value does not exceed 9.5% of the employee’s W-2 wages for the current year, or - The employees’ monthly contribution for self-only coverage of the lowest cost plan providing minimum value does not exceed 9.5% of the employees’ computed monthly wages, or Salaried employees – use monthly salary Hourly employees – determine monthly wage amount by multiplying employees’ hourly rate of pay by 130 hours per month - The employees’ monthly contribution for self-only coverage of the lowest cost plan providing minimum value does not exceed 9.5% of the FPL for a single individual ($90.96/month based on 2013 FPL of $11,490/year)

16 16 Affordable Employer Coverage Example - Employer makes 70% contribution towards single premium for HDHP with $2,000 single deductible - Total premium cost is $317.50/month - Employee contributes $95.25/month - All salaries above $12,031 would meet the 9.5% affordability test

17 17 Minimum Value The plan’s share of total allowed costs of benefits provided under the plan is at least 60% of those costs (i.e., 60% actuarial value) Methods to determine value - Minimum Value Calculator - Design-Based Safe harbor Checklists (no need for calculations or actuary) - Actuarial Certification

18 18 SMALL BUSINESS HEALTH OPTIONS PROGRAM (SHOP) Designed to assist small businesses in providing health insurance options to employees at lower costs Eligible Employers - 2014 and 2015: small businesses with 50 or fewer employees - 2016: 100 or fewer employees - Post-2016 states can include larger employers Coverage options - Select among qualified health plans (QHPs) offered by a specific carrier - Select QHPs offered by multiple carriers - Select metal tier of coverage www.healthbenefitexchange.ny.gov

19 19 Small Business Healthcare Tax Credit Credit of up to 35% of health premiums paid in 2013 (50% in 2014 and thereafter) Eligibility requirements - Pay at least 50% of cost of single coverage for all employees - Employ fewer than 25 FTEs - Employees must have average wages of <$50k/yr - Stricter requirements for full premium credit - Must participate in SHOP (beginning in 2014) IRS Form 8941

20 20 New Taxes Additional Medicare Tax - Effective 1/1/13, an additional.9% tax on wages in excess of $200,000 ($250,000 for joint returns) will be assessed for hospital insurance - The employer must withhold and report the tax only to the extent the wages the taxpayer receives from the employer exceed $200,000. Wages received by the spouse are disregarded.

21 21 New Fees Patient Centered Outcome Research Institute (PCORI) fees - Funds research to evaluate and compare health outcomes and clinical effectiveness of medical procedures and drugs Fees are payable beginning with the first plan or policy year ending on or after October 1, 2012: – one dollar multiplied by the average number of lives covered under the policy or plan, in the case of policy or plan years ending before October 1, 2013; and – two dollars multiplied by the average number of lives covered under the policy or plan thereafter until 2019 (indexed annually).

22 22 New Fees Insured plans – fee paid by insurance carrier Self-insured plans – paid by plan sponsor - HRAs and certain Health FSAs with employer contributions are exempt if integrated with other self-insured plan coverage - First payment deadline is July 31, 2013. Use/file IRS Form 720

23 23 New Fees Transitional Reinsurance Program Fee - Designed to fund reinsurance repayments to health insurance issuers that cover high risk individuals in the individual market Effective in 2014 Fee = $63 per covered life Insured Plans – fee paid by insurance carrier Self-insured plans – fee paid by plan sponsor Exemptions - FSAs, integrated HRAs, HSAs, retiree plans (if secondary to Medicare), stand alone self-insured prescription drug arrangements

24 24 Other 2013 Action Items $2,500 Health FSA limit - Plan years beginning in 2013 - Applies to employee contributions Health Exchange Notices - Designed to notify employees of the availability of the Exchanges - Required for employers subject to the FLSA - Provide notice no later than October 1, 2013 - www.dol.gov/ebsa

25 25 Questions? 132804


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