Health care reform presentation

Health Care Reform

Strategies & Expectations

Presented by Manny Manso, RHU, ChHC, CDHC

All Rights Reserved 2013

Health Care Reform



THE HEALTHCARE REFORM LAW

• Patient Protection and Affordable Care Act

• Health Care and Education Reconciliation Act

Affordable Care Act


THE INDERLYING GOAL OF HEALTHCARE REFORM CAN BE

SUMMARIZED INTO 4 KEY CATEGORIES

Expand affordable access to healthcare coverage to all citizens and get everyone paying into the system

Improve the quality of care that consumers receive

Increase science and transparency technology

Promote preventive care and wellness

Overview

• Provisions Applying to Employer Plans

• Employer Mandates

• Employee mandates

• Miscellaneous Items


Tax credits of up to 35% available to smallemployers (up to 25 employees), 25% for non‐profits and increasing proportionately to 50%and 35% in 2014.

Small Business Tax Credit is Established

DISCUSSED LATER

2010


06/01/2010

Reinsurance Program for Early Retirees (55‐64) and Dependents

$5B to subsidize 80% of costs between $15K and$90K (indexed)

Terminates December 31, 2013 or when fundsexhausted (12/9/2011)


07/01/2010

Putting Information Online

Creation of .gov Website for Consumers

www.healthcare.gov / www.cuidadodesalud.gov

www.dol.gov/ebsawww.naic.orgwww.cciio.cms.govwww.smallbusinessmajority.orgwww.irs.gov

Additional Websites for Consumerswww.healthreform.kff.orgwww.chrt.orgwww.healthreform.govwww.chrt.orgwww.hhs.gov


09/23/2010Grandfathered Status

Plan must be in existence on March 23, 2010To keep grandfathered status CANNOT:eliminate benefitsincrease participant cost sharing (co‐pay, deductible, out‐of‐pocket) outside of permitted range (15% or, for copays, the greater of $5 or 15%) all plus inflation merge plans or transfer employees to other plans decrease employer contribution outside permitted range (5% with no indexing)

CANNOT CHANGE CARRIERS


09/23/2010

Lifetime Dollar LimitsProhibits in and out‐of‐network lifetime limits ondollar value of essential health benefits and noticerequired to eligible individuals who previouslyexceeded the limit

Annual Dollar LimitsAnnual limits on dollar value of essential benefitspermitted thru 2013 09/23/2012 ‐ $2 million 01/01/2014 ‐ Limits will be completely banned


09/23/2010

Extension of Child Coverage to Age 26

Up to age 26 for medical regardless of marital orstudent status, residence or support

Does not apply to stand‐alone dental and vision

Cannot charge more than for other similarlysituated individuals

NOT TO BE CONFUSED WITH FLORIDA’S AGE 30 LIMITATION FOR UNMARRIED DEPENDENTS


09/23/2010

Pre‐existing Conditions for Enrollees Under 19

Pre‐existing conditions exclusion prohibited for employees/children under age 19


09/23/2010

Preventative ServicesAll new plans must cover certain preventive servicessuch as mammograms and colonoscopies withoutcharging a deductible, co‐pay or coinsurance

Preventive Care/ImmunizationsPreventive care service must be covered at 100%

OB/GYN, Pediatrician, ER ServicePreauthorization or referral requirements prohibited

in‐networkAll Rights Reserved 2013

09/23/2010

Non‐discrimination RequirementsA group health plan cannot discriminate in favor ofhighly compensated individuals with respect toeither eligibility to participate or to benefits

Prohibition of RescissionsCan’t rescind policies unless for fraud or intentionalmisrepresentation

Prohibits eligibility rules discriminating in favor of higher wage employees

Pending IRS final ruling


09/23/2010

Appeals Process

Mandatory internal and external appealsprocess including conformity with Stateexternal review process or the Federalexternal review process

Urgent claims – 72 hours / 30 days non urgent / denial 60 days / 10% linguistic


2011

Treatment of OTC Drugs as Medical Expense

Prohibits reimbursement of over‐the‐counter drugspurchased after December 31, 2010 from FSAs, HRAsand HSAs, unless prescribed by a physician

HSA Nonqualified Withdrawals

Penalty increased from 10% to 20%


2012

Incentives for physicians to join together tobetter coordinate patient care and improve thequality, help prevent disease and illness, andreduce unnecessary hospital admissions andreadmissions

Accountable Care Organizations


2012

Reporting Plan Value on W‐2

Beginning in January 2013 employers with 250 or morenumber of issued W‐2’s (not employees) must report onan employee’s Form W‐2 for the year 2012 , in Box 12,Code DD, the cost of coverage under a group health planthat the employer makes available to the employee thatis non‐taxable to the employee including major medicalinsurance, mini‐med plans, on‐site clinics, wellnessprograms and executive reimbursement plansThe provision is currently optional for businesses thatfiled fewer than 250 Forms W‐2 in the previous tax yearAll Rights Reserved 2013

08/01/2012

Women’s Preventive ServiceEight new services without a copay or any cost sharing

Well‐woman visitsGestational diabetes screeningHPV DNA testingSTI counselingHIV screening and counselingContraception and contraceptive counselingBreast‐feeding support, supplies and counseling Interpersonal and domestic violence screening and counseling


08/01/2012

Rebates made to enrollees in insured plans in largegroup market (more than 50 employees) where lossratio (ratio of claims to premium) is less than 85%

Rebates made to enrollees in insured individual plansand small employers (less than 50 employees where lossratio (ratio of claims to premiums) is less than 80%

Cost Reporting and Rebate

Rebates issued August 1, 2012, must be sent to eligiblemembers within 90 days

Ex‐employees may be excludedAll Rights Reserved 2013

09/23/2012

Four page double‐sided (8) summary of benefits with aprescribed format and with culturally linguisticallyappropriate content in counties in which at least 10percent of the population residing in the county isliterate only in the same non‐English language

County Spanish Percent Chinese Percent Tagalog Percent Navajo PercentCollier County 13 ‐ ‐ ‐DeSoto County 18 ‐ ‐ ‐Glades County 13 ‐ ‐ ‐Hardee County 22 ‐ ‐ ‐Hendry County 24 ‐ ‐ ‐

Miami‐Dade County 32 ‐ ‐ ‐Okeechobee County 10 ‐ ‐ ‐

Osceola County 16 ‐ ‐ ‐

2012 List of South Florida Counties Requiring Culturally and Linguistically Appropriate Services

Uniform Summary of Benefits and Coverages (SBC)


09/23/2012

Some group health plans, including grandfatheredplans, may be required to furnish SBCs as early asSeptember 23, 2012, depending on when their planyear and open enrollment period fallIf a plan’s open enrollment period begins beforeSeptember 23, 2012, the SBC would not be requireduntil the 2013 open enrollment for the 2014 plan year


The SBC must be provided along with open enrollmentmaterials


09/23/2012

Provided to all applicants including COBRA‐qualifiedbeneficiaries


One SBC if COBRA enrollees live at the same addressor a separate SBCs is required to be provided to thebeneficiary at the beneficiary’s last known address

Must provide 60 days advance notice of materialmodifications that affect the content of the currentSBC (enhancements, reductions, changes that increasecost‐sharing, impose new referral requirements, etc.)


09/23/2012

Upon request, the SBC must be sent within sevenbusiness days following the request as soon aspracticable, to a participant or beneficiary


Self‐funded plans are subject to same SBC rules (plansponsor or plan administrator must provide the SBC)

Failure to provide SBC is subject to a fine of not morethan $1,000 for each such failure and each participantor beneficiary constitutes a separate offense.


2013

Health FSA CapSalary reductions capped at $2,500, indexed after 2013

The limit applies at the end of the plan year (not 1/1/2013)

Exchange NoticeNotice to employees concerning availability

of exchanges by 1/1/2013 04/1/2013 (no model notice yet)

GET READY FOR 2014All Rights Reserved 2013

THE BIG YEAR


01/01/2014

Pre‐existing Condition ExclusionsPre‐existing condition exclusions prohibited for allenrollees

Auto EnrollmentAuto enrollment required with employee having abilityto opt out of coverage, although regulations will not beissued before 2014

Annual Dollar LimitsAnnual limits on the dollar value of essential benefitsprohibited (exclude FSAs, HSAs and integrated HRAs)


01/01/2014

Clinical TrailsInsurers will be prohibited from dropping or limitingcoverage because an individual chooses to participate ina clinical trial including clinical trials that treat cancer orother life‐threatening diseases.

Maximum Deductibles and OOP LimitsDeductibles generally limited to $2,000/$4,000(indexed); OOP maximum same as for HSA compatibleHDHP (2013 ‐ Single: $6,250 / Family: $12,500)

Applies to all clinical trials that treat cancer or other life‐threatening diseases


01/01/2014

Waiting PeriodsWaiting periods over 90 days prohibited

The 90‐Day Rule appears to be counted on a day‐by‐day basis anddoes not appear to be equivalent to "three months" or "threecalendar months." The 3‐Month Rule could result in employeesbecoming enrolled well before 90 days have passed. Because theIRS is using the phrase "calendar month" (rather than "month"), itappears that any partial month is treated as a full month.

2 MONTH 3 MONTH IN PLAN

HIRED EFFECTIVE

6/1/2014 7/1/2014 8/1/2014 9/1/2014

5/14/2014 8/1/2014

1 MONTH


01/01/2014

ExchangesState‐based exchanges for individuals and small employers under101 employees (in 2017 states can make available to largeemployers)

Minimum Benefit Package Bronze, Silver, Gold and Platinum plans covering cover essentialbenefits with actuarial values of 60%, 70%, 80% & 90% andcatastrophic plan for individuals under 30

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

LEVE

L

Four Levels of Coverage

Silver

Bronze

Gold

Platinum


01/01/2014

Individual Mandate: Penalty for Failure to Have Coverage

Greater of 1.0% of AGI or $95/person in 2014, 2.0% or $325/person in 2015, 2.5% or $695/person in 2016; indexed. Family dollar amount capped at 300% of individual penalty

Ind. $95.00 $95.00Spouse $95.00 $190.00

1 $47.50 $237.502 $47.50 $285.00

ANNUAL INCOME WHICH APPLY

$20,000$30,000$40,000$50,000

YEAR 2014

PENALTY

AD

UL

T

UP

TO

MA

XIM

UM

OF

$285

CH

ILD

THE GREATER OF PENALTY OR 1% OF INCOME

1% $200.00

PEN

ALT

Y

1% $300.001% $400.001% $500.00

Ind. $695.00 $695.00Spouse $695.00 $1,390.00

1 $347.50 $1,737.502 $347.50 $2,085.00

ANNUAL INCOME WHICH APPLY

$20,000$30,000$40,000$50,000 2.5% $1,250.00

YEAR 2016

PENALTY

AD

UL

T

UP

TO

MA

XIM

UM

OF

$2,0

85

CH

ILD

THE GREATER OF PENALTY OR 2.5% OF INCOME

2.5% $500.00

PEN

ALT

Y

2.5% $750.002.5% $1,000.00


01/01/2014

Low Income Premium Subsidy in the Exchange

20 30 40 50 60 20 30 40 50 60 60 30 40 50100% Medicaid Medicaid Medicaid Medicaid Medicaid 100% Medicaid Medicaid Medicaid Medicaid Medicaid 100% Medicaid Medicaid Medicaid Medicaid125% Medicaid Medicaid Medicaid Medicaid Medicaid 125% Medicaid Medicaid Medicaid Medicaid Medicaid 125% Medicaid Medicaid Medicaid Medicaid150% $690 $690 $690 $690 $690 150% $2,700 $275 $3,810 $6,288 $9,481 150% 20% 20% 15% 10%175% $1,037 $1,037 $1,037 $1,037 $1,037 175% $2,354 $2,403 $3,463 $5,941 $9,135 175% 31% 30% 23% 15%200% $1,450 $1,450 $1,450 $1,450 $1,450 200% $1,941 $1,991 $3,050 $5,529 $8,722 200% 43% 42% 32% 21%225% $1,857 $1,857 $1,857 $1,857 $1,857 225% $1,533 $1,583 $2,643 $5,121 $8,314 225% 55% 54% 41% 27%250% $2,315 $2,315 $2,315 $2,315 $2,315 250% $1,075 $1,125 $2,185 $4,663 $7,856 250% 68% 67% 51% 33%275% $2,776 $2,776 $2,776 $2,776 $2,776 275% $614 $664 $1,724 $4,202 $7,395 275% 82% 81% 62% 40%300% $3,279 $3,279 $3,279 $3,279 $3,279 300% $112 $161 $1,221 $3,699 $1,893 300% 97% 95% 73% 47%325% $3,391 $3,440 $3,552 $3,552 $3,391 325% $0 $0 $948 $3,426 $6,619 325% 100% 100% 79% 51%350% $3,391 $3,440 $3,826 $3,826 $3,826 350% $0 $0 $674 $3,153 $6,346 350% 100% 100% 85% 55%375% $3,391 $3,440 $4,099 $4,099 $4,099 375% $0 $0 $401 $2,879 $6,073 375% 100% 100% 91% 59%400% $3,391 $3,440 $4,372 $4,372 $4,372 400% $0 $0 $128 $2,606 $5,800 400% 100% 100% 97% 63%425% $3,391 $3,440 $4,500 $6,978 $10,172 425% $0 $0 $0 $0 $0 425% 100% 100% 100% 100%450% $3,391 $3,440 $4,500 $6,978 $10,172 450% $0 $0 $0 $0 $0 450% 100% 100% 100% 100%475% $3,391 $3,440 $4,500 $6,978 $10,172 475% $0 $0 $0 $0 $0 475% 100% 100% 100% 100%500% $3,391 $3,440 $4,500 $6,978 $10,172 500% $0 $0 $0 $0 $0 500% 100% 100% 100% 100%525% $3,391 $3,440 $4,500 $6,978 $10,172 525% $0 $0 $0 $0 $0 525% 100% 100% 100% 100%

Tables by Income as Percent of the Poverty Level and Age, 2014

Subsidy Amounts Percent of Premium Paid by Person/FamWhat the Person/Family Pays

Medicaid eligibility available between 133% (138%) and400% of FPL (employer coverage is below minimum valueor contributions are unaffordable.


01/01/2014

Play or Pay

The decision to pay the penalty and drop benefitsmay or may not be the right choice

There are several consequences that many haveoverlooked where the temptation to take the easy wayout and pay the penalty may have much deeperfinancial consequences to your organization

Yes or No?


01/01/2014

Play or Pay

And if you decide to continue to provide benefits,there could still be loopholes you can avoid bypreventing individuals from qualifying for an“Affordability Waiver” through one of the exchanges

Yes or No?

Do you fully understand the consequences and ways to craft the right model and avoid

paying any type of penalty?


01/01/2014


Health Care Reform's

Shared Responsibility Provision

Guidance on “Play or Pay”


HOW DOES IT WORK?

“SLEDGE HAMMER PENALTY”

Play or Pay Penalty for not Offering Coverage

$2,000 times the number of full time employees(excludes first 30 FTEs)

FTE defined as 30 or more hours per week

No part‐time employee coverage requirement

No minimum employer subsidy required.



SHOULD COMPANY DROP BENEFITS?

REPORTS WITH AND WITHOUT TURNOVER COSTS

SHOULD COMPANY DROP BENEFITS?


01/01/2014

Play or Pay Penalty for not Offering Coverage if at Least One Employee Gets Subsidy in Exchange

“TACKHAMMER PENALTY”

Play and Pay penalty for opt‐outs electing coveragethrough exchange will be $3,000 (indexed) for each FTEwho enrolls in exchange and receives subsidy ifemployee’s contribution for single coverage underemployer plan exceeds 9.5% of his or her W‐2 income


DETERMINING WHETHER

COVERAGE IS “AFFORDABLE”

Are employee contributions over 9.5%?

OPTIONS TO ADDRESS

AFFORDABILITY PROBLEMS

Is increasing premiums the right strategy?

Is raising wages the right strategy?

HOW TO AVOID FURTHER PENALTIES


GROSS UP WAGES?

IMPACT OF OTHER ALTERNATIVES



IMPACT OF OTHER ALTERNATIVES

CONSIDERING DEFINED

CONTRIBUIONS?

So What Do I Do?

SIMPLE DATA COLLECTION


01/01/2011

01/01/2012

01/01/2013

01/01/2010

Small Business Tax Credit

25 FTE OR LESS, AVG. INCOME $50,000 OR LESS & PAY50% OF PREMIUM & WORK AT LEAST 30 HOURS A WEEK


01/01/2014

01/01/2010 AND BEYOND

Small Business Tax CreditMaximum Tax Credits

Small for-profit employerhave a 35% credit from2010 through 2013. Thecredit increases to 50% in2014.

Tax-exempt employerhave a 25% credit from2010 through 2013. Thecredit increases to 35% in2014.


Small Business Tax CreditA recent GAO study found that only 170,300small employers from a pool estimated atbetween 1.4 million and 4 million eligible firmsclaimed the tax creditThe cost of the credit, pegged by theCongressional Budget Office at $2 billion infiscal 2010, was only $480 millionThese are unclaimed tax credits

01/01/2010

Why?All Rights Reserved 2013



Why? ComplicatedWe have more than 25 employees Our average annual salary is over $25,000 Did not hear about it Told it was not worth it

Why?All Rights Reserved 2013

01/01/2010 01/01/2013

Small Business Tax Credit2010/2011/2012/2013

The credit is 35% of the employer’s contribution to providehealth insurance for employees and up to a 25% credit forsmall non‐profit organizations

Firm size Up to $25,000 $30,000 $35,000 $40,000 $45,000 $50,000

Up to 10 35% 28% 21% 14% 7% 0%11 33% 26% 19% 12% 5% 0%12 30% 23% 16% 9% 2% 0%13 28% 21% 14% 7% 0% 0%14 26% 19% 12% 5% 0% 0%15 23% 16% 9% 2% 0% 0%16 21% 14% 7% 0% 0% 0%17 19% 12% 5% 0% 0% 0%18 16% 9% 2% 0% 0% 0%19 14% 7% 0% 0% 0% 0%20 12% 5% 0% 0% 0% 0%21 9% 2% 0% 0% 0% 0%22 7% 0% 0% 0% 0% 0%23 2% 0% 0% 0% 0% 0%24 0% 0% 0% 0% 0% 0%25 0% 0% 0% 0% 0% 0%

Average Wage




The credit is 50% of the employer’s contribution to providehealth insurance for employees and up to a 35% credit forsmall non‐profit organizations

# of Employees Up to $25,000 $30,000 $35,000 $40,000 $45,000 $50,000

up to 10 50% 40% 30% 20% 10% 0%11 47% 37% 27% 17% 7% 0%12 43% 33% 23% 13% 3% 0%13 40% 30% 20% 10% 0% 0%14 37% 27% 17% 7% 0% 0%15 33% 23% 13% 3% 0% 0%16 30% 20% 10% 0% 0% 0%17 27% 17% 7% 0% 0% 0%18 23% 13% 3% 0% 0% 0%19 20% 10% 0% 0% 0% 0%20 17% 7% 0% 0% 0% 0%21 13% 3% 0% 0% 0% 0%22 10% 0% 0% 0% 0% 0%23 7% 0% 0% 0% 0% 0%24 3% 0% 0% 0% 0% 0%25 0% 0% 0% 0% 0% 0%

Average Wage

IT GE

TS BE

TTER



• The owner of a sole proprietorship• A partner in a partnership• A shareholder who owns more than 2% of anS corporation

• A person who owns more than 5% of the capital or profits interest in any other business that is not a corporation

• Family members

SINCE 01/01/2010

Who Does Not Count?



• A shareholder who owns more than 5% of theoutstanding stock or stock possessing morethan 5% of the total combined voting powerof all stock of a corporation that is not an SCorp

• Seasonal employee who worked 120 or fewerdays during the tax year

• Leased employees

Who Does Not Count?

SINCE 01/01/2010




EXCLUDED EMPLOYES

The owner of a sole proprietorship

A partner in a partnership

A shareholder who owns (after applying the section 318 constructiveownership rules) more than 2% of an S corporation

A shareholder who owns (after applying the section 318 constructiveownership rules) more than 5% of the outstanding stock or stockpossessing more than 5% of the total combined voting power of all stockof a corporation that is not an S corporation

A person who owns more than 5% of the capital or profits interest in anyother business that is not a corporation




EXCLUDED EMPLOYESFamily members or a member of the household who is not a familymember but qualifies as a dependent on the individual income tax return ofa person listed above. Family members include a child (or descendant of achild), a sibling or step sibling, a parent (or ancestor of a parent), a step-parent, a niece or nephew, an aunt or uncle, or a son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law. A spouseis also considered a family member for this purpose

Do not include hours of service of any seasonal employee who worked 120or fewer days during the tax year

Leased employees are counted in the FTE and wage calculation. However,premiums for health insurance coverage paid by a leasing organization arenot taken into account in computing the service-recipient’s credit.




EMPLOYEE HOURS OF SERVICE

Actual hours worked method — determine actual hours of service fromrecords of hours worked and hours for which payment is made or due(payment is made or due for vacation, holiday, illness, incapacity etc.)

Days-worked equivalency method — use days-worked equivalencywhereby the employee is credited with 8 hours of service for each day forwhich the employee would be required to be credited with at least one hourof service

Weeks-worked equivalency method — use a weeks-worked equivalencywhereby the employee is credited with 40 hours of service for each week forwhich the employee would be required to be credited with at least one hourof service


• Limited scope dental or vision plans• Home health care plans• Hospital indemnity or other fixed indemnityinsurance

• Long‐term care plans• Coverage only for a specified disease orillness

• Certain other supplemental coverage

Health Insurance Plans Include






STEP 1:

Calculating Full-Time Equivalent Employees

To satisfy the first step of eligibility, the employermust have employed 25 or fewer full-timeequivalent employees (FTE) in the tax year forwhich they are trying to receive the tax credit.



STEP 1: Calculate FTE (actual worked hours)125240

2,08012

24,960

Weeks WorkedHours per Week Total Hours (can not exceed 40 X 52 = 2080 hours)

FTE

FT EmployeesTotal Hours for All in Year

1020

200

5210,400

35,3602,080

17.0017.00round to next lowest whole number

FT Annual Hours (can not exceed 2,080 a year) (3)

Equivalent Employees

PTE Hours Worked per Week

Weeks Worked Total Hours for All in Year

Total Aggregate Hours (number from worksheet)(FTE) 24,960 + (PTE) 10,400 = 35,360

PTE & OTHER QUALIFIED FTEHours Worked per Week

Less than 25 FTE





STEP 2:

Calculating Average Annual Wages

To be eligible, the employer’s full-time equivalentemployees must have average annual wages thatdo not exceed $50,000



Small Business Tax CreditSTEP 2: Calculating Average Annual Wages

FTE 12Avg. Salary $30,000.00FTE Annual Salary Paid $360,000.00

PTE & OTHER QUALIFIED FTE 10Hours Worked per Week 20

PTE Hours Worked per Week 200

Weeks Worked 52Total Hours for All in Year 10,400Wage per Hour $10.00PET Annual Salary Paid $104,000.00Combined Salaries (number from worksheet) $464,000.00Equivalent Employees 17

Equivalent Salary $27,294.12round to next lowest multiple of $1,000 $27,000.00

Less than $50,000




STEP 3:

Contribution Arrangement Requirements

Employer’s non-elective contribution on behalf ofeach employee equals a uniform percentage (notless than 50%) of the premium cost of healthinsurance and other qualified coverages offered toemployees



Small Business Tax CreditSTEP 3: Calculating Contributions

$425.00$5,100.00

$6.00$72.00

$5,172.0012

$62,064.00$31,032.00

50.00%

Annual Premium Billed (number from worksheet)Annual Premium Paid (number from worksheet)Employer Percentage Contribution

EE Medical Monthly Premium EE Medical Annual PremiumEE Vision Monthly PremiumEE Vision Annual PremiumTotal EE Annual PremiumNumber of Covered Insured EEs

Meets 50%

Insured premiums cannot exceed the stateaverage premium for the small group market(Florida is $5,218 single and $12,550 Family)



Small Business Tax CreditSTEP 3: Calculating Contributions

o

o

o

o

o

o

o

o

o Certain other supplemental coverage.o Similar supplemental coverage provided to coverage under a

Health insurance includes coverage under the following plans:Limited scope dental or vision plans.Long-term care plans.Nursing home care plans. Home health care plans.

Hospital indemnity or other fixed indemnity insurance.Coverage only for a specified disease or illness.Community-based care plans.

Medicare supplemental health insurance.

group health plan.

o

o Coverage issued as a supplement to liability insurance.o Liability insurance, including general liability insurance and

o Workers’ compensation or similar insurance.o Automobile medical payment insurance.o Credit-only insurance.o

o

other insurance benefits.

Coverage only for accident, or disability income insurance, or

which benefits for medical care are secondary or incidental to Other similar insurance coverage, specified in regulations, under Coverage for on-site medical clinics.

Health insurance does not include the following benefits:

any combination thereof.

automoblie liability insurance.

o

o

oFlexible spending arrangements (health FSAs).Health savings accounts (HSAs).

insurance provider as discussed above, health insurance coverage does not include benefits provided by the following:

Also, because the coverage must be offered by a health

Health reimbursement arrangements (HRAs).




FINAL STEP

Calculating The Tax Credit

Formulas to determine averages required to claimtax credits



Small Business Tax CreditFINAL STEP: Calculating The Tax Credit

Employer Contribution $31,032Maximum Credit 35%Full Credit Amount $10,861

Equivalent Employees 17FTEs in Exceeds of 10 (10 is a constant) 10Result (number of EE minus 10) 7Denominator is Always 15 15Multiplier (Divide result by denominator) 0.46667Full Credit Amount $10,861Tax Credit $5,069

STEP 1:Determine the full credit amount by multiplying the

nonelective premiums paid, by 35 percent Before Any Reduction

STEP 2:Multiply the initial full credit amount by a fraction with a

numerator equal to the employer's FTEs in excess of 10 and a denominator of 15Credit Reduction for FTEs in Excess of 10

Average Annual Wage (Step 2 above) $27,000Avg. Ann. Wages Above $25,000 ($25,000 is a constan $25,000Results $2,000Multiplier (Divide result by denominator) 0.080Full Credit Amount $10,861Calculation (Multiplier times full credit amount) $869

Step 2 $5,069Step 3 $869Total Credit Reduction $5,937

STEP 4:Add the amounts arrived at in the second and third steps and subtract that sum from the initial full credit amount (calculated

in Step 1). This gives you the amount of tax credit that is available to the small employer. Total Credit Reduction

STEP 3:Multiply the initial full credit amount by a fraction with a

numerator equal to the employer's average annual wages above $25,000 and a denominator of $25,000Credit Reduction

for Average Annual Wages Over $25,000



Small Business Tax CreditFINAL STEP: Calculating The Tax Credit

Full Credit Amount $10,861Total Credit Reduction $5,937Tax Allowance $4,924

$4,924

$31,032

$26,108

STEP 5:Total Tax Credit

Company's Health Care Tax Credit

Company's Premium Contribution

Cost/Business Expense After Credit

Tax/Premium deductionThe health care credit will reduce any income tax for the business. Also,employers generally may deduct the cost of health insurance premiumspaid on behalf of employees. The health care reform package does notchange this general rule and since the amount of the health insurancepremium payments are more than the total credit, eligible smallbusinesses can still claim a business expense deduction for thepremiums in excess of the credit. That's both a tax credit and adeduction for employee premium payments.


01/01/2010 01/01/2013

FOR P

ROFIT

UP TO 50% IN 2014


01/01/2010 01/01/2013

NON

PROF

IT

UP TO 35% IN 2014


Small Business Tax CreditSo What Do I Do?

SINCE 01/01/2010

SimpleAll Rights Reserved 2013

So What Do I Do?

IRS FORM 8941 – FOR PROFIT


So What Do I Do?

IRS FORM 990‐T NON PROFIT


WHAT YOU MAY NOT KNOW ABOUT

PPACA?


Income Tax Provisions

Itemized Medical Deductions Threshold increasedform 7.5% to 10%

Medical Devise Excise Tax of 2.3% Sales of MedicalDevices will be Subject to a 2.9% National Sales TaxOccurring After December 31, 2012

A Non‐deductible Federal Tax on Health InsuranceIndustry Tax Starting at $8B in 2014 Increasing to$14.3B in 2018; Trended After 2018

Pharmacy Manufacturer Tax of $2.5B in 2011Increasing to $4.2B in 2018; $2.8B in 2019+


Income Tax Provisions

Exchange Reinsurance Tax of $25B on Insurers andTPAs from 2014 to 2016

Medicare Hospital Insurance Tax Rate Increased from1.45% to 2.35% for high Income and 3.8% Tax on NetInvestment Income (Income in Excess of $250K JointFilers; $200K others)

Comparative Effectiveness Research Tax on Insuredand Self‐funded Plans of $1/Participant/Year FirstYear; $2 Second Year and Indexed Thereafter


Workplace Breastfeeding Support

Employers shall provide reasonable, unpaid break timeand a private, non‐bathroom location for an employeeto express breast milk for her nursing child for up to oneyear after the child’s birth with “undue hardship”exclusions for employers with less than 50 employees

Domestic Violence HelpAs of Aug. 1, 2012, the law requires that allinsurance plans cover screening andcounseling for domestic abuse, a provisionfound under preventive services forwomen’s health


Tanning Service Tax 7/01/2010

Indoor tanning services have to pay a 10% taxIndoor tanning has been linked with skin cancers includingmelanoma, squamous cell carcinoma, and cancers of the eye

Smokers SurchargeSmokers can pay up to 50% more thannonsmokers for health insurance beginning in2014The surcharge is an effective method of discouragingsmokers and may result in more wellness programsaimed at reducing the number of workers who lightup


Caloric Reality Restaurants with 20 or more locations to list caloriecounts on menus, menu boards and even drive‐throughand the entire nutrition label would have to beavailable in writing upon request

Greater Mental Health Attention PPACA mandates coverage parity, puttingmental health treatment on par with medicalcare, which means deductibles, co‐paymentsand doctor visits can’t be more restrictive formental illnesses than medical and surgicalcoverage (applies to employers with 50 ormore employees)


01/01/2018

"Cadillac Plan" Excise Tax40% tax on value above $10,200/individual and$27,500/family (Indexed at CPI‐+1% for 2019, CPIonly after 2019)

$11,850/$30,950 for pre‐Medicare retirees

Adjusted for high risk industries, age, gender

Excludes dental and vision

For multiemployer plans all coverage is consideredfamily


QUESTIONS


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