Presentation is loading. Please wait.

Presentation is loading. Please wait.

Health Care Reform. © 2013 Paychex, Inc. All rights reserved. 2 “Must Know” Information Health Care Reform Updated July 2013 Paychex, Inc. is registered.

Similar presentations


Presentation on theme: "Health Care Reform. © 2013 Paychex, Inc. All rights reserved. 2 “Must Know” Information Health Care Reform Updated July 2013 Paychex, Inc. is registered."— Presentation transcript:

1 Health Care Reform

2 © 2013 Paychex, Inc. All rights reserved. 2 “Must Know” Information Health Care Reform Updated July 2013 Paychex, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State Boards of Accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be addressed to the: National Registry of CPE Sponsors, 150 Fourth Avenue North, Suite 700, Nashville, TN 37219-2417. Web site: www.nasba.org for this Group-Live program.www.nasba.org The information in these materials, and that provided by the presenter, should not be considered legal or accounting advice, and it should not substitute for legal, accounting, and other professional advice where the facts and circumstances warrant. It is provided for informational purposes only. If you require legal or accounting advice, or need other professional assistance, you should always consult your licensed attorney, accountant, or other federally licensed tax professional to discuss your particular facts, circumstances, and business needs.

3 © 2013 Paychex, Inc. All rights reserved. 3 Today’s Objectives  Review the main provisions of Health Care Reform  Discuss how this legislation affects your firm/business and clients  Identify timeframes and actions necessary to prepare for these new changes  Discuss opportunities for you to play a proactive and consultative role  Highlight important resources

4 © 2013 Paychex, Inc. All rights reserved. 4 Health Care Reform Overview Health Care Reform is two laws:  Patient Protection and Affordable Care Act, signed into law by President Obama on March 23, 2010  Health Care and Education Reconciliation Act, signed into law by President Obama on March 30, 2010

5 © 2013 Paychex, Inc. All rights reserved. 5 Health Care Reform Overview Who is affected?  Small businesses  Mid-sized businesses  Large businesses  Tax-exempt businesses  Individuals

6 © 2013 Paychex, Inc. All rights reserved. 6 Health Care Reform Overview Who regulates Health Care Reform?  Health and Human Services (HHS)  Treasury and Internal Revenue Service (IRS)  Department of Labor (DOL)

7 © 2013 Paychex, Inc. All rights reserved. Prior to 2013 Young Adult Coverage Non-Discrimination Small Business Tax Credit Grandfathered Plans Over-the-Counter Medications Increased HSA Penalties Form W-2 Reporting Summary of Benefits and Coverage Medical Loss Ratio (MLR) 2013 FSA Contribution Limit Additional Medicare Payroll Taxes Deduction for Unreimbursed Medical Expense Retiree Drug Subsidy Health Insurance Tax 2014 Individual Coverage Mandate Employer Shared Responsibility Payment Premium Tax Credits Health insurance Marketplaces 2015 Employer Shared Responsibility Payment

8 © 2013 Paychex, Inc. All rights reserved. 8 Provisions Effective Prior to 2013

9 © 2013 Paychex, Inc. All rights reserved. 9 Young Adult Coverage Group health plans that already provide coverage for children must continue to provide coverage up to the age of 26. Effective Prior to 2013 Affects Individuals Affects Employers

10 © 2013 Paychex, Inc. All rights reserved. 10 Young Adult Coverage Participants can submit FSA claims through the end of the calendar year for expenses incurred by their adult dependents who will not reach age 27 by the end of the calendar year. Effective Prior to 2013 Affects Individuals Affects Employers

11 © 2013 Paychex, Inc. All rights reserved.  Tax credits for businesses that provide health insurance:  Credits are calculated on premiums, employer contributions, and tax liability.  Not all employers qualify, and not all qualified employers are eligible for the full credit. 11 Small Business Tax Credit Effective Prior to 2013 Affects Employers Small Businesses Full credit = 35% of employer’s contribution to health insurance Tax-Exempt Small Businesses Full credit = 25% of employer’s contribution to health insurance

12 © 2013 Paychex, Inc. All rights reserved. 12 Small Business Tax Credit Employers may be eligible for the maximum credit if they:  have 10 or fewer full-time equivalent employees (FTEs)  pay average annual wages of $25,000 or less, and  contribute at least 50% of total aggregate premium cost based on the cost of single coverage. Employers may be eligible for a lesser credit if they:  have fewer than 25 full- time equivalent employees (FTEs)  pay average annual wages of less than $50,000, and  contribute at least 50% of total aggregate premium cost based on the cost of single coverage.

13 © 2013 Paychex, Inc. All rights reserved. 13 Small Business Tax Credit “Full-time equivalent” is one full-time employee or multiple part-time employees who represent a fraction of a single, full-time employee. =+

14 © 2013 Paychex, Inc. All rights reserved. 14 Small Business Tax Credit The tax credit is claimed on Form 8941 and filed with:  the employer's annual tax returns ( for non tax- exempt organizations ), or  Form 990-T ( for tax- exempt organizations ). 14

15 © 2013 Paychex, Inc. All rights reserved. 15 Grandfathered Provision The Grandfathered Provision exempts plans from some, but not all, provisions of Health Care Reform. A plan is “grandfathered” if it provided coverage to participants on or before March 23, 2010. Effective Prior to 2013 Affects Employers

16 © 2013 Paychex, Inc. All rights reserved. 16 Grandfathered Provision Reasons to Protect Grandfathered Status  Avoid adding mandated benefits  Keep plan that favors highly-compensated individuals (HCIs)  Avoid the trouble of non-discrimination testing Reasons Not to Remain Grandfathered  Reduce or eliminate benefits pending guidance and regulations from DOL  Increase cost-sharing or employee contributions

17 © 2013 Paychex, Inc. All rights reserved. 17 Over-the-counter medications (OTCs) are not eligible under HSAs, FSAs, and HRAs unless they have been prescribed by a doctor. Over-the-Counter Medications Effective Prior to 2013 Affects Individuals Affects Employers

18 © 2013 Paychex, Inc. All rights reserved. 18 Non-qualified distributions from HSAs are now subject to a 20% tax. Tax on HSA Distributions Effective Prior to 2013 Affects Individuals

19 © 2013 Paychex, Inc. All rights reserved. Pre-existing Condition Insurance Plan (PCIP) PCIP is an interim program to help people who are unable to obtain health insurance due to pre- existing medical conditions. 19 Effective Prior to 2013 Affects Individuals Source: U.S. Department of Health & Human Services (http://www.healthcare.gov)

20 © 2013 Paychex, Inc. All rights reserved. Form W-2 Reporting Employers will be required to report the aggregate cost of employer- sponsored health coverage on their employees’ Forms W-2. Effective Prior to 2013 Affects Employers Source: IRS Website (http://www.irs.gov/pub/irs-pdf/fw2.pdf)http://www.irs.gov/pub/irs-pdf/fw2.pdf 20

21 © 2013 Paychex, Inc. All rights reserved. Form W-2 Reporting Cost excludes:  salary-reduction contributions under a section 125 health FSA  contributions to medical savings accounts (MSAs), and health savings accounts (HSAs)  cost of coverage for military personnel provided by the government (federal, state, or local), and  excess reimbursements for highly compensated individuals or payments/reimbursements made to a 2% shareholder of an S-corporation. 21

22 © 2013 Paychex, Inc. All rights reserved. Form W-2 Reporting Methods used to calculate the value of coverage:  Premium Charged Method  COBRA Applicable Premium Method  Modified COBRA Premium Method 22

23 © 2013 Paychex, Inc. All rights reserved. Summary of Benefits & Coverage (SBC) SBC is a summary of the plan or coverage with a focus on:  covered benefits  cost-sharing requirements  limits on coverage, and  excluded benefits. Effective Prior to 2013 Affects Individuals Affects Employers 23

24 © 2013 Paychex, Inc. All rights reserved. Medical Loss Ratio (MLR) Requires a minimum percentage of premium payments collected by health insurance carriers be applied toward medical claims and quality improvement. Effective Prior to 2013 Affects Individuals Affects Employers 24

25 © 2013 Paychex, Inc. All rights reserved. Medical Loss Ratio (MLR) Carriers that do not meet these thresholds must send a rebate of the excess premium payments to either the affected businesses or policyholders. Employers can: rebate the premium back to the employees use it to pay for future premiums, or use it to enrich health plan benefits. 25

26 © 2013 Paychex, Inc. All rights reserved. 26 Provisions Effective 2013

27 © 2013 Paychex, Inc. All rights reserved. 27  Medical FSA employee contributions will be limited to the lesser of a $2,500 cap for a taxable year or the company maximum.  The statutory maximum will be adjusted annually for inflation beginning in 2014. FSA Employee Contribution Limit Effective 2013 Affects Individuals Affects Employers

28 © 2013 Paychex, Inc. All rights reserved. 28 Effective: 2013 Medicare Hospital Insurance (HI)Tax Additional 0.9% Medicare Hospital Insurance (HI) tax:  on wages and self-employment income above the threshold  for employees only (does not increase the employer portion) Applies to employees with wages and self-employment income:  more than $200,000 (single)  more than $250,000 (joint) Effective 2013 Affects Individuals

29 © 2013 Paychex, Inc. All rights reserved. 29 Effective: 2013 Medicare Tax on Unearned Income  New 3.8% Medicare tax on unearned income  Applies to the lesser of: –“net investment income” and –modified adjusted gross income (AGI) over the threshold. Effective 2013 Affects Individuals

30 © 2013 Paychex, Inc. All rights reserved. 30 Unreimbursed Medical Expense Deduction  Threshold increases to 10% of AGI.  Increase is waived for individuals age 65 and older. Effective: 2013 Effective 2013 Affects Individuals

31 © 2013 Paychex, Inc. All rights reserved. 31 Retiree Drug Subsidy  Employers will not be able to take tax deductions for drug benefits provided to Medicare-eligible retirees.  FAS 106 may require expenses related to the loss of the deduction to be recognized immediately. Effective: 2013 Effective 2013 Affects Employers

32 © 2013 Paychex, Inc. All rights reserved. Patient Centered Outcomes Research Institute (PCORI) Fees PCORI fees apply for plans on or after October 1, 2012, including: –major medical –health reimbursement arrangements (HRAs) –certain health flexible spending accounts (Health FSAs) –most dental and vision plans –Employee Assistance Programs (EAPs), and –wellness programs. Insurance carriers are responsible for fees for fully-insured plans, and plan sponsors pay fees for self-insured plans. 32 Effective 2013 Affects Employers

33 © 2013 Paychex, Inc. All rights reserved. 33 Provisions Effective 2014

34 © 2013 Paychex, Inc. All rights reserved. 34 Small Business Tax Credit Effective 2014 Affects Employers  Small Business Tax Credits increase:  Credit is limited to two consecutive years. Tax-Exempt Small Businesses Full credit = 35% of employer’s contribution to health insurance Small Businesses Full credit = 50% of employer’s contribution to health insurance

35 © 2013 Paychex, Inc. All rights reserved. 35 Individual Tax Penalties Effective 2014 Affects Individuals

36 © 2013 Paychex, Inc. All rights reserved. 36 Individual Tax Penalties YearPenalty 2014$95 or 1% of taxable income 2015$325 or 2.0% of taxable income 2016$695 or 2.5% of taxable income BeyondIncreased annually with inflation Effective 2014 Affects Individuals The penalty will be the greater of:  a fixed amount ($95 for 2014) and  a percentage of household income (1% for 2014).

37 © 2013 Paychex, Inc. All rights reserved. Premium Tax Credits Available to individuals with incomes between 100% and 400% of federal poverty level. Effective 2014 Affects Individuals 37

38 © 2013 Paychex, Inc. All rights reserved. 38 Heath Insurance Marketplace A Health Insurance Marketplace is a state-based competitive health insurance marketplace in which individuals and small businesses can obtain health insurance. Effective 2014 Affects Individuals Affects Employers

39 © 2013 Paychex, Inc. All rights reserved. States HHS IRS Health Insurance Marketplace Marketplace Individual/Group Employers Navigators Medical Providers Insurance Carriers Employees Producers 39

40 © 2013 Paychex, Inc. All rights reserved. Small Business Health Options Program Small Business Health Options Programs (SHOPs) are designed to enable small businesses and their employees to buy health insurance at competitive rates. A SHOP:  provides simplified choices  expands employee options, and  preserves employer control. Effective 2014 Affects Employers 40

41 © 2013 Paychex, Inc. All rights reserved. 41 Provisions Effective 2015

42 © 2013 Paychex, Inc. All rights reserved. Employer Shared Responsibility Payment Effective 2015 Affects Employers Large employers may be subject to a fee if they:  do not offer health coverage to their full-time employees, or  offer coverage that is considered unaffordable. 42

43 © 2013 Paychex, Inc. All rights reserved. Employer Penalties Effective 2015 Affects Employers 43 Large employers who offer insurance… Large employers who don’t offer insurance… Large employers who offer insurance that is considered unaffordable or fails to provide minimum value… …will be subject to the penalty if one or more full-time employees receive a premium tax credit through the marketplace. $2,000 per full-time employee (above the first 30 full-time employees). $3,000 for each non-covered full-time employee or full-time employee who’s coverage is inadequate or unaffordable, and who receives a premium tax credit.

44 © 2013 Paychex, Inc. All rights reserved. 44 Provisions Effective 2018

45 © 2013 Paychex, Inc. All rights reserved. 45 Excise Tax Effective 2018 Affects Employers A 40% tax on the total value of group coverage more than:  $10,200 (for single coverage)  $27,500 (for family coverage)  $11,850 (for single high-risk professionals and qualified retirees), or  $30,950 (for family high-risk professionals and qualified retirees). *Dental and Vision Plans Excluded

46 © 2013 Paychex, Inc. All rights reserved. 46 Provisions Effective Pending Guidance

47 © 2013 Paychex, Inc. All rights reserved. 47 Auto Enrollment Employers must automatically enroll eligible employees in their health plans.  Applies to those with 200 or more full- time employees.  Employees may opt out. Effective TBD Affects Individuals Affects Employers

48 © 2013 Paychex, Inc. All rights reserved. 48 Non-Discrimination Rules Prohibits discrimination in favor of highly compensated individuals (HCIs). An HCI is: –one of the five highest paid officers –a shareholder* of more than 10%, or –one of the 25% highest paid employees. * Including certain employed family members Effective Pending Additional Guidance Affects Individuals Affects Employers

49 © 2013 Paychex, Inc. All rights reserved. 49 Discrimination Penalties  Employer penalties could be significant.  An employer could be charged $100 per day, per individual discriminated against.

50 © 2013 Paychex, Inc. All rights reserved. 50 SIMPLE Cafeteria Plan  Employers with 100 or fewer employees are eligible.  The plan must satisfy alternative requirements regarding: –eligibility –participation, and –contribution.

51 © 2013 Paychex, Inc. All rights reserved. 51 SIMPLE Plan Requirements  Employers must employ an average of 100 or fewer employees.  Employees who worked at least 1,000 hours during the previous plan year must be eligible to participate.  Employers must contribute: –a uniform percentage (not less than 2%), or –an amount not less than the lesser of 6% and twice the amount of the contributions of each qualified employee.

52 © 2013 Paychex, Inc. All rights reserved. 52 Consultative Opportunities for Accountants

53 © 2013 Paychex, Inc. All rights reserved. 53 Consultative Opportunities for Accountants Provide client education and awareness regarding key Health Care Reform provisions. Individual and Employer Requirements  Advise clients on costs and benefits. Small Business Tax Credit  Identify clients best suited for the credits.  Model financial implications.  Determine eligibility.  Assist with filing.  Recommend how clients can apply tax credits.

54 © 2013 Paychex, Inc. All rights reserved. 54 Consultative Opportunities for Accountants Forms W-2  Assist clients with establishing and implementing procedures to collect data from premium statements. MLR Rebates  Help clients determine how to handle rebates. HSAs  Ensure that clients with HSAs are aware that non- qualified distributions will be taxed at 20% instead of 10%.

55 © 2013 Paychex, Inc. All rights reserved. 55 Consultative Opportunities for Accountants Medicare Taxes  Ensure clients withhold the proper amounts.  Evaluate return on investments affected by the “investment” tax. Provide recommendations about:  the impact of plan design changes  non-discrimination rules and SIMPLE cafeteria plans, and  other tax changes.

56 © 2013 Paychex, Inc. All rights reserved. 56 Health Care Reform www.irs.govwww.irs.gov (search for “health care tax credit”) www.healthcare.gov www.americanbenefitscouncil.org Paychex www.paychexinsurance.com/healthcarereform Additional Resources 56

57 © 2013 Paychex, Inc. All rights reserved. 57 How Paychex and Paychex Insurance Agency Can Help

58 © 2013 Paychex, Inc. All rights reserved. How Paychex Can Help? Paychex provides:  education on the Affordable Care Act Process and other Health Care Reform provisions  information about any legislative changes that may affect you and your clients, and  resources to help your clients comply with provisions. 58

59 © 2013 Paychex, Inc. All rights reserved. Paychex Insurance Agency Website  White Papers  Recorded Seminars  Interactive Tools  Tax Credit Estimator 59

60 © 2013 Paychex, Inc. All rights reserved. Small Business Tax Credit – Why It’s Important  Low utilization  Difficult process  Small businesses leaving money on the table 60

61 © 2013 Paychex, Inc. All rights reserved. Small Business Tax Credit Estimator Learn if your clients’ businesses may be eligible for federal tax credits, and see how much they may be able to save. 61

62 © 2013 Paychex, Inc. All rights reserved. Small Business Tax Credit Package The Small Business Tax Credit Package provides information to help employers file for the Small Business Tax Credit. 62

63 © 2013 Paychex, Inc. All rights reserved. Health Care Reform Alerts Sign up to receive timely email updates. 63

64 © 2013 Paychex, Inc. All rights reserved. 64 Thank you! www.paychexinsurance.com


Download ppt "Health Care Reform. © 2013 Paychex, Inc. All rights reserved. 2 “Must Know” Information Health Care Reform Updated July 2013 Paychex, Inc. is registered."

Similar presentations


Ads by Google