By the end of 2017 the IRS plans to send notification to applicable large employers (ALE) of potential liability for failure to comply with the “pay or play” mandate of the Affordable Care Act (ACA). These notifications (Letter 226J) will be sent to ALE employers that the IRS determines had one or more employee, in at least one month in 2015, that received a subsidy toward health care premiums purchased through the marketplace because the employer failed to provide health coverage that is compliant with the ACA requirements (affordable and providing minimum essential coverage). The IRS will make this determination based on information provided by employers on Forms 1094-C and 1095-C (required ACA reporting forms) as well as information provided to the IRS on individuals’ tax returns. Continue reading
If your organization employs seasonal workers or part-timers for the holidays, take note: The IRS has issued a Health Care Tax Tip on how these individuals affect whether your business is subject to the shared responsibility provisions of the Affordable Care Act (ACA).
A major component of the Affordable Care Act is guaranteed preventive care services at no cost to any person with healthcare insurance. At first glance it would appear that free preventive care would include annual wellness exams from the subscriber’s primary care physician along with other yearly checkups at no cost to the subscriber. However further review of this mandate makes it clear that it has a much broader intention.
Historically, employers that wanted their employees to be protected with health coverage, but didn’t want the hassle of having a company health plan, could simply give them an amount of money sufficient to reimburse them for the cost of buying that coverage or some portion of it. As long as the individuals provided evidence that they used those funds for that purpose, the dollars were excludable from taxable income for the employees.
Alternatively, employers could just pay the premiums directly to the insurance carrier.
Back in November 2014, however, the Department of Labor (DOL) declared that companies reimbursing employees for medical care instead of offering a health care plan is equivalent to a health plan and is subject to the Affordable Care Act (ACA). And since those reimbursement arrangements failed to meet ACA requirements in two ways — that is, the condition that group health plans have no annual limits on benefits, and also that no co-pay for certain preventive health services must be paid — they were ruled to be noncompliant with the law.
Although many payroll and other employment provisions of the Affordable Care Act (ACA) are only just taking effect — or will go into effect soon — at least one significant element of the law has been kicking around for several years, but not without some difficulty.
Under the ACA, a qualified small business can claim a tax credit for providing health insurance to eligible employees. But numerous questions have dogged this credit since its inception in 2010. Now the IRS has issued final regulations on the credit that should make the law clearer. These regulations, which adopt and add regulations proposed in 2013, are effective as of June 30, but employers have the option of still applying the proposed regulations this year.
- Many small businesses become eligible for a tax credit worth up to 35% of the employer’s contribution to the employees’ health insurance (up to 25% for tax-exempts) to help them provide insurance benefits.
- A new Patient’s Bill of Rights goes into effect, addressing the worst abuses of the insurance industry.
2011 – The Affordable Care Act Holds Insurance Companies Accountable
- To ensure premium dollars are spent primarily on medical care, the law’s “80/20” rule requires that at least 80% of premium dollars collected by insurance companies must be spent on benefits and quality improvement.
- Another tough reform requires insurance companies to publicly justify premium rate increases of 10% or more, holding insurers accountable to the small businesses they serve, which has led to a sharp decline in double-digit rate hikes. To date, these two protections alone have already saved small businesses and consumers more than $2 billion.
The Obama administration has released new rules they say will give employees of religiously affiliated organizations a way to obtain contraceptive services as part of their health insurance coverage while respecting the religious beliefs of their employers.
The announcement follows a controversy that has dogged the administration as religiously affiliated employers objected to efforts to expand contraceptive options for women under the health law. The latest regulations seek to satisfy complaints about earlier guidance on contraception coverage that instructed these employers to notify their insurers or third-party administrators if they did not want to comply with the law’s contraception coverage based on religious objections.
Large employers have self-insured their health benefits for decades. In fact, 93 percent of employers with at least 5,000 employees were self-insured in 2012, according to a Kaiser Foundation survey. Compare this with just 15 percent of self-insured employers having fewer than 200 workers. If the survey was taken today, the 15 percent figure would likely be higher. This is because previously, in most geographic markets, there had been plenty of competition among insurers interested in providing health benefits to smaller employers, and most offered plenty of flexibility in plan design. That’s all changing.
The Wall Street Journal reports that, even though businesses with fewer than 50 employers are exempt from the health law’s most stringent requirements, they still face challenges.
Q. I understand that having access to affordable employer-sponsored coverage doesn’t prohibit me from purchasing coverage on the exchange, but it does eliminate access to premium tax credits that I might otherwise be eligible for. What about cost-sharing subsidies? If I could qualify for a plan with cost-sharing subsidies on the exchange, would I be eligible for one of those plans instead of taking the coverage offered by my employer?