Tag Archives: PPACA

Healthcare Reform in 2015: Employer Responsibilities

Employers in the twenty-teens are dealing with some major changes set in place by the Patient Protection and Affordable Care Act (PPACA) of 2010. This massive healthcare reform has altered the way that employees receive healthcare, and it’s critical for employers to understand what these changes entail. Here are some of the main employer responsibilities associated with the reform so you can ensure that you remain compliant.

 

Employer Share Responsibility Provisions

As of January 1, 2015, any employer with 50 or more full-time employees will be responsible for offering employees the chance to enroll in an employer-sponsored healthcare plan or the employer may receive a penalty. The catch is that this doesn’t necessarily mean that there has to be 50 full-time employees. Instead, there can be a combination of full-time and part-time employees as long as the hours equal that of 50 full-time employees.

So for example, you could have two part-time employees whose combined hours are equivalent to a one full-time employee. If you are wondering what number of hours constitute as full-time, the IRS states that “a full-time employee is an individual employed on average at least 30 hours of service per week.”

 

Requirements for Large Employers

Businesses with more than 50 full-time employees are classified as a large employer. When they fall into this category, they must adhere to the PPACA’s guidelines or may be liable for an employer shared responsibility payment. However, smaller businesses with fewer than 50 full-time employees are not required to offer employer-sponsored health coverage. They are exempt and don’t have to worry about any backlash stemming from the PPACA.

 

Non-compliance Penalties

According to the IRS, an employer can be penalized because of one of the following scenarios:

  • They don’t offer health coverage or offer coverage to fewer than 95% of their full-time employees and the dependents of those employees, and at least one of the full-time employees receives a premium tax credit to help pay for coverage on a marketplace.

Or

  • They offer health coverage to all or at least 95% of their full-time employees, but at least one full-time employee receives a premium tax credit to help pay for coverage on a marketplace.

In terms of specifics, a large employer that fails to offer health insurance coverage will be responsible for paying a $2,000 penalty each year for every full-time employee beyond the first 30 if they have one or more employees who receive subsidized coverage from the marketplace. In the event that en employer does offer insurance, they will be required to pay $3,000 annually for every full-time employee who is offered coverage, but receives a premium credit to buy insurance from the marketplace.

While the PPACA serves multiple purposes, one was to make it meet the increasing demands of employers wanting employer-sponsored health coverage. The problem is that all of the details can be difficult to understand, and some business owners may be unaware of their employer responsibilities. And although it won’t affect smaller business owners, it’s important to stay up-to-date on PPACA regulations and stay compliant.

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How the PPACA Affects Payroll

The Patient Protection and Affordable Care Act (PPACA) of 2010 was the biggest healthcare reform since 1965 and has resulted in big changes for businesses. Besides altering the way that employers provide their employees with healthcare, it’s also changed certain aspects of financial record keeping. As a result, it’s important to stay on top of these changes to ensure that your business remains compliant in the future. Here are some specific ways that the PPACA affects payroll.

 

Medicare Payroll Tax

For individuals earning more than $200,000 annually, there has been an increase in their payroll tax. Although there was a Medicare payroll tax of 1.45 percent in the past, the PPACA has resulted in a new surtax for some employees. This means that high-income earners must now pay 2.35 percent when their wages are higher than $200,000. The interesting thing about this is that the increase in payroll tax doesn’t actually contribute to Medicare, but simply covers the PPACA’s expansion.

 

Increased Tax on High-Income Earners

While normal Medicare tax on most employees is 2.9 percent, there is now an added 0.9 percent tax on wages exceeding $200,000 for individuals who are single or head of the household and $250,000 for those who are married and filing jointly. This means that these high-income employees now pay a grand total of 3.8 percent. Consequently, you are now responsible for withholding the extra 0.9 percent for qualifying employees.

 

Health Insurance Coverage Aggregation for W-2 Reporting

Although it won’t impact smaller businesses, the PPACA will affect payroll reporting for employers who file 250 or more W-2 forms each year. Under the new system, employee sponsored health coverage for the following items must be aggregated when filing this volume of forms:

  • Major medical coverage
  • Domestic partner coverage included in gross income
  • Hospital and indemnity or specified illness paid through salary reduction or by employers
  • Health flexible spending accounts in excess of employee’s cafeteria salary reductions for all qualified benefits.

If you charge a COBRA premium, then you must also aggregate:

  • Employee assistance plans providing employer sponsored healthcare coverage
  • Employee sponsored wellness programs
  • On-site medical clinics provided by employers

The amount that you report should cover your portion as an employer and whatever your employees pay for one lump sum.

Regardless of your stance on this healthcare reform, there’s no denying the impact it’s had on business owners and employees. While the changes to payroll aren’t necessarily monumental and primarily impact larger companies, you will still want to be aware of how the PPACA affects payroll taxes and reporting. It’s also important to stay updated on this and similar laws and regulations that can influence your business and the way you handle taxes.

ACA FAQ

Top Resources for Answering Your ACA Questions

Ever since the ACA was signed into law in early 2010, it’s left many employers wondering about the full implications and how it will impact their businesses. Some employers may be curious whether or not it affects them at all. In this post, we will explain the basics of the ACA and provide you with some helpful resources that should answer any questions you may have.

 

What is the ACA?

At its core, the ACA is a healthcare reform that was designed to provide Americans with adequate health coverage at a reasonable price. It’s also meant to prevent healthcare companies from discriminating against or excluding individuals with existing medical conditions. According to the U.S. Department of Health & Human Services, “the Affordable Care Act puts consumers back in charge of their health care. Under the law, a new “Patient’s Bill of Rights” gives the American people the stability and flexibility they need to make informed choices about their health.”

 

ACA FAQs

Here are some ACA FAQs by employers regarding this reform:

  • Do I have to provide my employees with health coverage?
  • Are small businesses affected differently than larger businesses?
  • Will I be penalized if I fail to provide coverage?
  • How much do penalties cost?
  • Am I eligible for tax credits if I provide coverage?
  • What is the long-term impact of the ACA going forth?

To help clear up any confusion, here are some great resources to check out:

Healthcare.gov

This site is where can sign up to get coverage for your employees and they can enroll. Under the All Topics section, you can get a quick rundown on how the marketplace works and how to use it. Learn about health insurance basics and the types of coverage that is offered. A key area you will want to focus on is the Businesses section, which goes over the small business health option program (SHOP) and how to enroll. You can learn about the differences between coverage for large vs. small businesses. There’s also information on the qualifications needed to receive tax credits.

HHS.gov

The Healthcare section of this site provides a brief overview of the ACA and has some personal stories from people with direct experience with enrollment. This is helpful because of the firsthand insight you can gain, which can come in handy in your decision making process. There is a discussion on how the insurance marketplace works and how employees can find a doctor. In terms of how the law works, this resource explains coverage for children and adults, premium costs and explains the rights of individuals. Some other subjects include prevention and wellness for adults, women and children and facts and figures.

Dol.gov

Finally, the U.S. Department of Labor has some great information about the ACA and goes fairly in depth to answer any leftover questions. There is an abundance of info on regulations and guidance, which goes over topics like ACA implementation, enrollment, health benefits, health plans and wellness programs. Numerous studies and surveys should help you learn about any other details you can’t find elsewhere. There are even a few webinars and webcasts for any other concerns you may have.

These resources should help provide a better  understanding of the ACA and how it specifically affects your business. For more help in making the best decisions regarding health coverage for your employees download our e-book:  What Every Small Business Needs to Know about PPACA.

 

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ACA

Affects of ACA on Small Businesses vs. Large Businesses

The ACA is a major healthcare reform and the most significant change to the healthcare system since Medicare and Medicaid. One area that’s been affected dramatically is the way that businesses offer health coverage to employees. The primary factor that determines how a company is affected is the size of its workforce. Let’s now take a look at the differences between small businesses vs. large businesses.

 

ACA for Small Business

Small businesses are by no means impacted in the same way that large businesses are. For employers with fewer than 50 employees, it’s their choice whether or not they want to offer coverage. On the other hand, businesses with more than 50 employees are obligated to provide coverage or they may be hit with an employer shared responsibility payment (ESRP). This occurs if one or more employees receive a premium tax credit from the health insurance marketplace.

Businesses with more than 50 workers will be fined $2,000 per employee excluding the first 30 employees when they don’t offer coverage to full-time employees. It’s also important to remember that the hours of several part-time employees can be combined to equal that of a full-time employee. Therefore, this should be taken into consideration when determining the number of full-time employees.

 

ACA Exemptions

A common misconception is that small businesses have to provide health coverage to workers or they will be penalized. This isn’t the case, and any company with fewer than 50 employees isn’t required to offer coverage and will not incur any penalties. However, there are some definite advantages of small business owners offering coverage to workers.

 

Benefits of ACA

Perhaps the biggest benefit of the ACA is the tax credits that employers can get. Prior to 2014, they could only get a tax credit of up to 35 percent of their employees’ contributions. Starting in 2014 and going forth, they can now get up to 50 percent as long as they purchase coverage through the SHOP marketplace. Unlike in the past where business owners were often forced to complete a lot of administrative tasks, the establishment of online healthcare exchanges has simplified things considerably. Consequently, they aren’t required to fill out piles of paperwork and can provide employees with quality health coverage with minimal hassle.

Due to the number of different health insurance plans available through the marketplace, employees are usually able to find the right coverage for the right price. There is a high level of customizability so all of their healthcare needs can be taken care of without being over-insured. Because healthcare providers cannot discriminate against individuals with existing medical conditions, the ACA makes it possible for nearly everyone to get coverage at a reasonable price.

The bottom line is that offering health coverage is simply an option for small businesses and a requirement for large businesses with more than 50 employees. Smaller operations don’t have to deal with penalties, while larger ones may have considerable penalties if they fail to provide coverage. However, with multiple benefits of the ACA, it would still behoove many small business owners to provide health insurance to their employees.

 

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PPACA

The PPACA: What’s Still to Come in 2014?

The Patient Protection and Affordable Care Act (PPACA) is perhaps better known as Obamacare. It’s a major healthcare reform that was effective on March 23, 2010, and has brought about much change for both individuals and businesses. While there are several reasons why this reform was put into place, the main goal was to increase the percentage of Americans with health insurance and to provide more affordable coverage. Insurance companies must also offer coverage to individuals with pre-existing medical conditions.

 

What is the Patient Protection and Affordable Care Act?

The PPACA was established to create a set of standards for health insurance policies. Regardless of a person’s age, pre-existing condition and income-level, they must have access to minimum coverage and can’t be denied. Failure to have the required coverage can result in a financial penalty. According to Larson Allen, “in 2014, the penalty is $95 or 1 percent of the individual’s income, whichever is greater. By 2016, it increases to $695 or 2.5 percent of income.”

This act resulted in the launching of health insurance exchanges, which involve an online marketplace where small business owners and employees can shop for healthcare plans. The first exchange began on October 1, 2013 and closed on March 31, 2014. This type of system utilizes web-based technology for a streamlined approach that wasn’t possible in the past.

 

What You Can Expect in 2014

The PPACA mandates that all health insurance companies offering coverage in your state have to accept every employer and individual that applies. They also have to renew coverage for you and your employees. This is beneficial for anyone with a pre-existing condition or elderly workers that would have previously had difficulty finding affordable health insurance.

In terms of waiting periods where a certain amount of time must pass before coverage begins, health insurance companies can’t require a period of more than 90 days. At the same time, you can retain a waiting period of up to 90 days for new employees that are hired without incurring penalties. Health insurance companies are also not allowed to have annual limits on essential health benefits.

A major advantage for employers that provide health coverage to their employees is that there is a significant tax credit increase. In fact, the tax credit will be raised from 35 percent to 50 percent for qualified employers in 2014. This can be a big help on your business come tax season and alleviate much of the financial burden. However, the tax credit is only available to employers who purchase a group health plan through the SHOP (small business health options program).

Regardless of your opinion of the PPACA, it’s important to understand the basics of how it works and how it will impact your company. This reform has been a catalyst for major changes in healthcare and will continue to move in phases into 2020. Knowing your options should ensure that employees have adequate coverage and prevent you from being penalized.

 

 

 

 

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