Preparing for an DOL Audit: Is your Employer or Client Ready?
Please join Michigan Business & Professional Association for a FREE Webinar on December 13 at 10 AM (Eastern Time). During this Webinar, we will review how to prepare when your employer or your client is notified that its health and welfare plans are being audited by the Department of Labor (“DOL”).
This Webinar will be approximately 60 minutes in length.
Are you prepared to advise your employer or your clients when this happens?
From this Webinar, you will learn:
Which areas are being audited by the DOL under Health Reform
Which areas are subject to ongoing DOL audits
How to prepare for an DOL audits
The do’s and don’t for surviving an audit
The possible fines and penalties your employer or client will be subject to if any violations are found
This will be conducted by Attorney Larry Grudzien. Title: Preparing for an DOL Audit: Is your Employer or Client Ready? Date: Thursday, December 13, 2012 Time: 10:00 AM – 11:00 PM EST
After registering you will receive a confirmation email containing information about joining the Webinar.
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PC-based attendees
Required: Windows® 7, Vista, XP or 2003 Server
Mac®-based attendees
Required: Mac OS® X 10.5 or newer
Mobile attendees
Required: iPhone®, iPad®, Android™ phone or Android tablet
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November 2012 – As the dust continues to settle after last week’s election, a clearer picture begins to unfold, as pundits, political insiders and average Michiganders continue to recover from an election cycle that included unprecedented levels of spending, a barrage of media and print activity, and a number of incumbent upsets in the State House.
As expected, Presidential turnout impacted races further down the ticket and as a result, a number of House GOP members will not be returning to Lansing in January. What is interesting, however, is that the large turnout for the President’s party did not transfer into success for those supporting some of the ballot proposals, most notably Proposals 2 and 4.
The Presidential Election
Despite a limping economy, a significantly divisive health policy agenda, and unprecedented levels of national debt, President Barack Obama will be inaugurated the 44th President of the United States. President Obama easily won Michigan with a nine point spread over “native son” Mitt Romney. His Michigan win was rather anti-climatic as the state was called surprisingly early after the polls closed.
Michigan Supreme Court
No major surprises for the state’s highest court as incumbent Justices Stephen Markman and Brian Zahra will be donning their robes again next year. Perhaps the most intriguing nugget of news surrounding the race was the fact that Democratic U of M Law Professor and now Justice-elect, Bridget McCormack, actually received 6,200 more votes than incumbent Justice Markman. Nonetheless, the Supreme Court remains under Republican control, 4-3.
Michigan House of Representatives
The State House races undisputedly provided some of the most stress-inducing and exciting moments of the night, as a strong Democratic turnout had Republicans worried well into the early hours of Wednesday morning. With a number of races neck and neck and a handful of GOP incumbents losing hotly contested races, at one point Democrats looked poised to potentially take back the House. Less than 5,000 votes prevented the Democrats from seizing control of the chamber. Although the GOP ultimately maintained the majority, five incumbent Representatives lost their races. The GOP secured 59 seats with the Democrats now at 51.
Ballot Proposals
Much has been said and hundreds of millions of dollars have been spent on this year’s ballot questions. The general theme sounded by Michigan voters was that the State’s Constitution is not something to be tampered with lightly. Voters overwhelmingly rejected the five proposed Constitutional Amendments while also rejecting the enactment of Public Act 4 of 2011 – the Emergency Financial Manager Referendum. Below are the results of the six ballot questions:
Proposal 1: Emergency Manager Referendum YES – 48% NO – 52% Proposal 2: Collective Bargaining Amendment YES – 42% NO – 58% Proposal 3: Renewable Energy 25/25 Standard YES – 37% NO – 63% Proposal 4: Home Health Care Unionization YES – 43% NO – 57% Proposal 5: 2/3 Supermajority on Taxes YES – 31% NO – 69% Proposal 6: Detroit Bridge Public Vote YES – 40% NO – 60%
Conclusions
While many conclusions will be drawn over the ensuing weeks, one underlying electoral truism held firm this election: Michigan voters have a long history of being unpredictable and producing wild swings, specifically in the Michigan House, at the ballot from cycle to cycle. It was also clear the state’s voters are very protective of their constitution. What final conclusion can be drawn from all of this? The campaign for 2012 is officially closed and the campaign for 2014 has officially opened!
November 2012 – The Affordable Care Act (ACA) is a massive, complicated and what feels like all-encompassing piece of legislation that continues to confound most Americans. Academics, bureaucrats and small business owners all continue to analyze the implications of the bill while determining how best to adapt to the changes. One central theme of the ACA that many small business owners are reviewing is the various provisions that encourage employers to develop preventive care and wellness programs for their employees.
Wellness programs may include gym memberships, smoking cessation programs, nutrition and diet counseling, diabetes prevention strategies and more. The initiatives are intended to encourage employees to adopt healthier lifestyle choices. Employers have a lot at stake; the Centers for Disease Control and Prevention have estimated that productivity losses related to personal and family health problems cost U.S. employers an estimated $1,685 per employee per year. It’s a staggering figure if considered cumulatively — $225.8 billion annually.
So, how does the ACA propose to help the plight of the small business owner — $200 million over the course of five years to start. The ACA includes a section that provides grants for small businesses that, as of enactment of the act, were not offering comprehensive workplace wellness programs. The ACA defines “eligible employer” as an employer with less than 100 employees who work 25 hours or more per week. The act also specifies that wellness programs should be grounded in evidence-based research and best practices and should include the following components:
A) Health awareness initiatives, including health education, preventive screenings, and health risk assessments;
B) Efforts to maximize employee engagement including mechanisms to encourage employee participation;
C) Initiatives to change unhealthy behaviors and lifestyle choices; efforts could include counseling, online programs and self-help materials;
D) Supportive environment efforts including workplace policies to encourage healthy lifestyles, healthy eating, increased physical activity and improved mental health.
The ACA also increases the incentives that may be made available to wellness program participants. Currently, employers are allowed to provide a financial reward of up to 20 percent of the costs of coverage for employees who participate in wellness programs and satisfy a standard related to health status. After January 1, 2014, employers will be allowed to discount 30 percent of the cost of individual or family health care premiums. That amount could rise to as high as 50 percent if the Secretaries of Health and Human Services, Labor and Treasury approve of the change.
As with all things surrounding the ACA, remaining apprised of changes or the issuance of new policy guidelines is important. The scope of the act and the potential implications on your business warrants close monitoring.
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What premium tax credits and cost-sharing subsidies are available to individuals in 2014 and who is eligible for them?
To assist individuals and families who do not qualify for Medicare or Medicaid and are not offered affordable health coverage by their employers, a refundable tax credit (the “premium tax credit”) and a cost sharing subsidy will be available beginning in 2014 to help pay for insurance purchased through an Exchange. Generally, taxpayers with income between 100 percent and 400 percent of the federal poverty line (FPL) who purchase insurance through an Exchange will qualify them, as provided in Code Section 36B. and Section 1402 of the Patient Protection and Affordable Care Act (PPACA).
A premium assistance tax credit will be provided monthly to lower the amount of premium the individual or family must pay for their coverage. Cost sharing subsidies will limit the plan’s maximum out-of-pocket costs, and for some individuals will also reduce other cost sharing amounts (i.e., deductibles, coinsurance or copayments) that would otherwise be charged to them by their coverage.
Both types of assistance will be tied in some way to the value of the coverage available in the Exchanges. Four levels of plans will be offered by insurers in the exchanges. All the plans must offer a set of essential health benefits. The four plan levels vary in the total value of coverage they must provide. This amount is sometimes called “actuarial value” and represents the proportion of health insurance expenditures for covered benefits that, for an average population, would be paid by the plan. Section 1302(d)(1) of PPACA requires that the actuarial value be 60 percent for “bronze” plans, 70 percent for “silver” plans, 80 percent for “gold” plans and 90 percent for “platinum” plans. In addition, the out-of-pocket maximum for any of these plans may not exceed a limit that is determined annually. For 2013, the limit is $6,250 for individual coverage and $12,500 for family coverage. It will be adjusted higher for 2014.
Who is eligible for the premium tax credit and cost sharing subsidy?
Citizens and legal residents in families with incomes between 100 percent and 400 percent of poverty who purchase coverage through a health insurance exchange are eligible for a premium tax credit cost sharing subsidy to reduce the cost of coverage. individuals eligible for public coverage are not eligible for premium assistance in Exchanges. In states without expanded Medicaid coverage, individuals with incomes less than 100 percent of poverty will not be eligible for Exchange subsidies, while those with incomes at or above poverty will be.
Would an individual be eligible for premium tax credits and cost-sharing subsidies in the Exchange if he or she is offered “minimum essential coverage” by his or her employer in that it is both affordable and provides minimum value, but declines it and obtains coverage in the Exchange?
No. As a general rule, if an eligible employer-sponsored plan constitutes “minimum essential coverage” in that it is both affordable and provides minimum value merely being eligible for the plan will make an individual ineligible for the tax credit. In Treasury Regulation Section 1.36B-2(c)(3)(iii)(A), the IRS indicates that an eligible employee who declines enrollment in such a plan remains ineligible for the tax credit for each month in the coverage period related to the enrollment period (e.g., for the full plan year in the case of an annual enrollment period).
Would an individual be eligible for premium tax credits and cost sharing subsidies in the Exchange if he or she is enrolled coverage offered by his or employer that is either unaffordable and does not provides minimum value?
If an employee actually enrolls in an eligible employer-sponsored plan, the tax credit is not available-even if the plan does not meet the affordability and minimum value conditions, as provided in Code Section 36B(c)(2)(C)(iii). Employees who are automatically enrolled in an eligible employer-sponsored plan have a grace period to unwind the enrollment to maintain their eligibility for the tax credit, as provided in Treasury Regulation Section 1.36B-2(c)(3)(vii)(B). An employee is not considered eligible for minimum essential coverage (i.e., may qualify for the tax credit) during any required waiting period before coverage becomes effective under an eligible employer-sponsored plan. The IRS is expected to provide a safe harbor under which an employer would not have to pay the shared responsibility tax penalty under Code § 4980H for failing to offer coverage for at least the first three months after an employee’s hire date, as provided in Department of Labor Technical Release 2012-01, Q/A-3.
Individuals who meet these thresholds for unaffordable employer-sponsored insurance are eligible to enroll in a health insurance exchange and may receive tax credits to reduce the cost of coverage purchased through the exchange.
What are the amounts of the premium tax credit and cost-sharing subsidies to be provided?
Under Code Section 36B(b), the amount of the tax credit that a person can receive is based on the premium for the second lowest cost silver plan in the Exchange . A silver plan is a plan that provides the essential benefits and has an actuarial value of 70 percent. (A 70 percent actuarial value means that on average the plan pays 70 percent of the cost of covered benefits for a standard population of enrollees.)
Under Code Section 36B(b)(3), the amount of the tax credit varies with income such that the premium that the premium a person would have to pay for the second lowest cost silver plan would not exceed a specified percentage of their income (adjusted for family size), as follows:
Household Income (as percentage of Federal Poverty Line (FPL)
Premium as a Percent of Household Income
Up to133%
2% of income
133-150%
3-4% of income
150-200%
4-6.3% of income
200-250%
6.3-8.05% of income
250-300%
8.05-9.5% of income
300-400%
9.5% of income
In addition, Section 1402(b) of PPACA limits the total amount that people must pay out-of-pocket for cost sharing for essential benefits. Generally, the limits are based on the maximum out-of-pocket limits for Health Savings Account-qualified health plans ($6,250 for single coverage and $12,500 for family coverage in 2013), which will be indexed to the change in the Consumer Price Index until 2014 when the provision takes effect.
After 2014, the limits will be indexed to the change in the cost of health Coverage. Individuals with incomes at or below 400 percent of federal poverty line have their out-of-pocket liability capped at lower levels, as follows:
Household Income (as a percentage of Federal Poverty Line FPL)
Reduction in Out-of-Pocket Liability
100-200%
Two-thirds of the maximum
200-300%
One-half of the maximum
300-400%
One-third of the maximum
The limits on out-of-pocket maximum amounts means that a person with income of 150 percent of poverty purchasing coverage in the exchange would have the limit on their out-of-pocket spending reduced to at least two-thirds of the generally applicable maximum value (for example, if the provision were in effect in 2013, the out-of-pocket maximum for single coverage for such a person would be about $2,083 for single coverage and $4,166 for family coverage).
In addition, Section 1402(c) of PPACA provides that federal payments will be made to health insurers to increase the actuarial value of the plan for individuals with household incomes under 250 percent of the federal poverty line. For example, for individuals with household incomes between 100 percent and 150 percent of federal poverty line, the actuarial value of the plan will be increased to 94 percent. That means that in addition to keeping within the lower out of pocket maximums established above, insurers must make other changes to increase the actuarial value of the coverage. Most likely this will mean reducing plan deductibles, coinsurance or copayments in order to meet the higher actuarial value requirements.
For individuals with household incomes over 250 percent of federal poverty line, the actuarial value of their plan may not exceed 70 percent, which is the basic value of the silver plan even for those who receive no financial assistance. This means that, for some individuals, some cost sharing amounts could increase. That would happen if their out of pocket maximum was decreased to keep within the required lower maximum, because the deductibles, copayments or coinsurance that would otherwise apply would have to be increased to keep the actuarial value at 70 percent.
The last cost sharing subsidy is summarized below:
Household Income (as percentage of Federal Poverty Line (FPL)
Net Value of the Subsidy (% of Actuarial Value)
Out-of-Pocket Liability
100-150%
94%
150-200%
87%
200-250%
73%
250-400%
70%
Who determines an individual’s eligibility for the premium tax credit and the cost-sharing subsidies?
Under 45 CFR Section 155.300, HHS is requiring the Exchanges to establish a system of coordinated eligibility and enrollment so that an individual can simultaneously apply for enrollment in a Qualified Health Plan (“QHP”), as well as Insurance Affordability Programs (“IAPs”), including the premium tax credit and cost-sharing reductions. Under Treasury Proposed Regulation Section 301.6103(l)(21). The IRS is permitted to disclose income and other specified information about an individual taxpayer to HHS for purposes of making eligibility determinations for advance payments of the premium tax credit or the cost-sharing reductions.
When an individual purchases a Qualified Health Plan how are any credits and subsidies applied?
Under the Actuarial Value and Cost-Sharing Reductions Bulletin (released by HHS), when an individual receives covered essential health benefits, the provider would collect from the individual only the amount of cost-sharing specified in the silver plan variation in which the individual is enrolled. The federal government would pay in advance to the insurer amounts estimated to cover the cost-sharing reductions associated with the specific silver plan variation. HHS intends to propose that this advance cost-sharing reduction payment to the insurer would occur monthly, and that after the end of the calendar year, the federal government would reconcile the advance payments to actual cost-sharing reduction amounts.
The Exchange must report to the IRS and to each taxpayer required information for the Qualified Health Plan in which the employee (or a member of the employee’s family) is enrolled through the Exchange, as provided in Treasury Regulation Section 1.36B-4. In turn, individuals who receive advance payments of the premium tax credit must file an income tax return for that taxable year, as provided in Treasury Regulation Section 1.36B-5.
Larry Grudzien is an attorney practicing exclusively in the field of employee benefits. He has experience in dealing with qualified plans, health and welfare, fringe benefits and executive compensation areas. He has more than 35 years of experience in employee benefit law and is an adjunct faculty member of John Marshall Law School’s LL.M. program in employee benefits and at the Valparaiso University School of Law, where he teaches a number of courses.
November 2012 – January 1, 2013 is just around the corner….and as you may know, it marks the effective date for some of the most significant provisions of the Patient Protection and Affordable Care Act of 2010 (PPACA and the “Act”). So are you confused about how the Act’s changes may affect your small business in the coming years? Well, you’re certainly in good company.
Many business owners find themselves spinning in circles attempting to navigate the lengthy legislation that continues to be altered and has, at times, confused even the most competent professionals in the accounting and legal communities. So, I am sure that the question remains: “What do I need to know and what can I do to prepare for the impact of this Act?” To attempt to answer this question, we have compiled the following information addressing specific concerns of small business owners.
Just what is a “Small Business” under PPACA?
So you may be wondering: “Under PPACA just what is a ‘Small Business’?” This is a good question as depending upon which aspects of PPACA you are referring to, the definition of a small business seems to vary somewhat. If you are talking about reporting the cost of health insurance on an employee’s W-2, then the split between a large or small employer is at 250 employees. If you are talking about the ability of a business to access the Small Employer Health Insurance Credit, then the threshold for a small business is at 50 employees. Differences such as these, and PPACA’s yet unknown and misunderstood consequences, will continue to impact small business owners in many ways. In fact, earlier this year, a Gallup survey indicated that nearly half of all small business owners who aren’t hiring cited fear about the potential cost of health care as a reason.
Does a Small Business have to provide Health Insurance?
This is a good question. In the past, providing health insurance to employees was at the employer’s discretion. Starting January 1, 2014, if you have 50 or more full-time employees, it’s effectively mandated and failure to comply comes with a cost. Small employers coming close to the 50 full-time-employee threshold may have to think twice about hiring more employees knowing that it could burden the company with additional taxes. Under what has been termed “pay or play penalties,” a nondeductible excise tax may apply to employers with 50 or more full-time employees. Such employers that offer coverage but have at least one employee receiving a federal health insurance premium credit will have to pay the lesser of $3,000 for each employee receiving a premium credit or $2,000 for every full-time employee in excess of 30 employees.
Health insurance premiums reportable on W-2s
I’m sure you’ve heard about the numerous updates and changes regarding the reporting of health insurance premiums on your employees’ W-2s since 2011, when this part of PPACA was originally to go into effect. It’s probably safe to say you and your accounting staff have been dreading the additional time and cost that would come with compliance with this requirement, especially being a small business. It turns out I have some good news for you. The government finally agreed with those very concerns and has decided to exempt employers that file 250 or fewer Forms W-2. You can find out more details regarding W-2 reporting guidance within IRS Notice 2012-9. In case you were also wondering about the proposed expansion of Form 1099 reporting requirements, rest assured this measure was officially repealed in 2011.
Continuation of Small Employer Health Insurance Tax Credit
Does your business have fewer than 25 full-time employees who are earning on average less than $50,000 per year? If so, and you provide them health insurance coverage, you’re in luck! You will very likely continue to be eligible under Phase One of the Small Employer Health Insurance Tax Credit that began in 2010. While a bit more complex than what can be set forth in an article such as this, generally, during Phase One of the program, qualifying employers can receive a federal tax credit of up to 35 percent of the cost of health insurance premiums paid on behalf of employees if the employer paid at least 50 percent of those premiums. Phase One will continue through 2013. So you might be wondering, what happens in 2014? If you have 10 or fewer full-time employees who earn on average $25,000 or less, then you’re still eligible! These employers may qualify under Phase Two of the tax credit, which increases the credit from 35 percent up to 50 percent of health insurance premiums paid. Phase Two will be in effect from 2014 through the end of 2017. But, even if you have more than 10 full-time employees or they make more than $25,000, you might still be in luck. At this point, some complex calculations will dictate if you qualify, and if so for how much, based on the amounts by which these two criteria are exceeded.
Contribution limitations being imposed on health care Flexible Spending Accounts
Effective January 1, 2013, annual contribution limits to a Flexible Spending Account (FSA) for medical expenses will now be mandated by the Federal Government. What does this mean to you and your employees? In the past, FSA plan limits were set by the plan sponsors to accommodate the needs and desires of its participants. As you well know, many employees relied heavily on these tax-free funds to pay for, amongst many things, their children’s braces or their own specific medical needs. This legislation caps contributions for 2013 at just $2,500. It would likely benefit many of your employees to know about this drastic change ahead of time so they can plan accordingly. Luckily, this change only affects medical FSAs, so employees’ dependent care FSAs will be unaffected. While considering alternatives, keep in mind that although the contributions to Health Savings Accounts and Health Reimbursement Accounts have not been affected, certain restrictions have been placed on them. For instance, over-the-counter medicine is no longer a qualified expense under these plans unless prescribed by a doctor. Also, the penalty for unqualified distributions rose steeply from 10 percent to 20 percent.
Additional Medicare Part A hospital insurance tax on high earners
Does your small business rely heavily on valuable employees who are earning wages in excess of $200,000 ($250,000 in the case of married filing jointly, $125,000 married filing separately)? As an owner, do you draw wages in this range? If so, it is important to know that one of the more significant financing mechanisms of the Act will be an additional Medicare tax of .9 percent on all wages in excess of these amounts starting January 1, 2013. You may want to look at withholdings to assure compliance with this part of the Act.
Conclusion
The January 2013 implementations of the Patient Protection and Affordable Care Act will have varying impacts on small businesses based on numerous criteria, including the size and the current insurance offerings to name just two. What is important for small business owners such as you to keep in mind is that regardless of changes that may still come, we must use the best information available to begin planning today. The sooner your particular situation is analyzed, the better chance you will have to mitigate the new requirement’s impacts and protect the financial health of your company.
With extensive experience providing financial solutions to clients – from business operation & efficiency assessments to consulting & corporate tax guidance – Don McAnelly is ideally positioned to provide the support today’s businesses need. Don serves as Rehmann’s primary CPA contact for health care clients in East Michigan and his experience extends to tax, valuation and financial matters. Don has been with Rehmann for 18 years, with prior Big Five national accounting firm experience. Additionally, he is a member of the Michigan Association of CPAs, has authored overviews on the Patient Protection and Affordable Care Act for the Firm’s BWD magazine and has spoken on the Act to various chambers of commerce.
https://mb-wp-uploads.s3.us-east-1.amazonaws.com/2024/04/MichBusiness-logo.png00michbusinesshttps://mb-wp-uploads.s3.us-east-1.amazonaws.com/2024/04/MichBusiness-logo.pngmichbusiness2012-11-08 00:00:002015-10-08 00:00:00Patient Protection and Affordable Care Act Impact on Small Businesses
November 2012 – On January 1, 2013, we will ring in the New Year and also start to ring in some of the most significant provisions of the Patient Protection and Affordable Care Act of 2010 (PPACA and the “Act”). Although you may be part of a large business with plenty of people-power to help you understand the new Act, you still may find yourself feeling confused about how the Act’s changes may affect your company in the years to come.
It has been said that this piece of legislation signifies the most comprehensive transformation of the U.S. health care system since the creation of the Medicare and Medicaid programs nearly 50 years ago. Therefore, with such a monumental piece of legislation, it is without wonder that the question remains for many: “What do I need to know and what can I do to prepare for the impact of this Act?” To help you with this, this article addresses some specific concerns of large businesses.
Health insurance premiums reportable on W-2s
Effective for the year ending December 31, 2012, employers who will be filing in excess of 250 Forms W 2 will be required to include the cost of the employee’s health insurance on their W-2s. This inclusion is for informational purposes only and will cause no additional tax liability for employers or employees. IRS Notice 2012-9 provides interim guidance on informational reporting to employees of the cost of their group health insurance coverage. In case you were also wondering about the proposed expansion of Form 1099 reporting requirements, rest assured this measure was officially repealed in 2011.
Contribution limitations being imposed on healthcare Flexible Spending Accounts
Effective January 1, 2013, annual contribution limits to a Flexible Spending Account (FSA) for medical expenses will now be mandated by the Federal Government. What does this mean to you and your employees? In the past, FSA plan limits were set by the plan sponsors to accommodate the needs and desires of its participants. As you well know, many employees relied heavily on these tax-free funds to pay for, amongst many things, their children’s braces or their own specific medical needs. This legislation caps contributions for 2013 at just $2,500. It would likely benefit many of your employees to know about this drastic change ahead of time so they can plan accordingly. Luckily, this change only affects medical FSAs, so employees’ dependent care FSAs will be unaffected. While considering alternatives, keep in mind that although the contributions to Health Savings Accounts and Health Reimbursement Accounts have not been affected, certain restrictions have been placed on them. For instance, over-the-counter medicine is no longer a qualified expense under these plans unless prescribed by your doctor. Also, the penalty for unqualified distributions rose steeply from 10 percent to 20 percent.
Additional Medicare Plan A hospital insurance tax on high earners
Does your business rely heavily on valuable employees who are earning wages in excess of $200,000 ($250,000 in the case of married filing jointly, $125,000 married filing separately)? If so, it is important to know that one of the more significant financing mechanisms of the Act will be an additional Medicare tax of .9 percent on all wages in excess of these amounts starting January 1, 2013. You may want to look at withholdings to assure compliance with this part of the Act.
Excise Tax on Medical Equipment
Is the sale or purchase of medical equipment a significant part of your operations? Then you should be aware that beginning in January 2013, there will be an excise tax of 2.3 percent placed on nearly all medical devices. Manufacturers and importers of medical devices will have this tax levied on all sales. Currently, the tax will not apply to items such as eyeglasses, contact lenses, hearing aids, or any other medical device that the public generally buys at retail for individual use. Although this tax is levied on sales, if you are a large purchaser of the non-exempt items, you should assume that this additional cost will be passed on to you. This may mean some tough financial decisions will need to be made before this new tax takes effect.
Large-Employer Health Insurance Requirements
Effective January 1, 2014, employers with 50 or more full-time employees will incur a nondeductible excise tax if they offer health insurance and they have at least one employee receiving a premium tax credit. This excise tax will be the lesser of $3,000 for each employee receiving a premium credit or $2,000 for every full-time employee in excess of 30 employees. Employers with more than 200 full-time employees are required to automatically enroll all employees in their health insurance plan with no exceptions. Employees do, however, have the option to then opt out of the plan should they choose to.
Conclusion
The January 2013 implementations of the Patient Protection and Affordable Care Act will have varying impacts on large businesses based on numerous criteria, including the size and the current insurance offerings to name just two. What is important for large business owners such as you to keep in mind is that regardless of changes that may still come, we must use the best information available to begin planning today. The sooner your particular situation is analyzed, the better chance you will have to mitigate the new requirement’s impacts and protect the financial health of your company.
With extensive experience providing financial solutions to clients – from business operation & efficiency assessments to consulting & corporate tax guidance – Don McAnelly is ideally positioned to provide the support today’s businesses need. Don serves as Rehmann’s primary CPA contact for health care clients in East Michigan and his experience extends to tax, valuation and financial matters. Don has been with Rehmann for 18 years, with prior Big Five national accounting firm experience. Additionally, he is a member of the Michigan Association of CPAs, has authored overviews on the Patient Protection and Affordable Care Act for the Firm’s BWD magazine and has spoken on the Act to various chambers of commerce.
https://mb-wp-uploads.s3.us-east-1.amazonaws.com/2024/04/MichBusiness-logo.png00michbusinesshttps://mb-wp-uploads.s3.us-east-1.amazonaws.com/2024/04/MichBusiness-logo.pngmichbusiness2012-11-08 00:00:002015-10-08 00:00:00Patient Protection and Affordable Health Care Act Impact on Large Businesses
November 2012 – As any employer sponsoring a group health plan knows, the Patient Protection and Affordable Care Act (“PPACA”) significantly impacts the way group health plans operate going forward. While many of the changes under PPACA are already in effect, there are still many important changes looming around the corner in the years to come.
Many of these changes will have a profound impact on employer-sponsored group health plans, such as the employer mandates that take effect in 2014. Although some uncertainty over PPACA remains due to the upcoming 2012 elections, as of right now PPACA remains the law of the land and employers should take heed and prepare themselves, and their health plans, for the fast approaching PPACA deadlines.
Below is a summary of just some of the most important upcoming PPACA deadlines impacting employers and employer-sponsored group health plans in 2012 and beyond.
2012
• W-2 Reporting: Employers who filed at least 250 Form W-2s for the preceding calendar year must report the cost of employer-sponsored health care on employees’ W-2s.
• Summary of Benefits and Coverage (“SBC”) and Uniform Glossary: Plan sponsors must prepare and distribute a SBC and Uniform Glossary beginning with the first open enrollment period or plan year beginning on or after September 23, 2012.
2013
• Health FSA Employee Contribution Cap: Effective with the first plan year beginning on or after January 1, 2013, the employee maximum contribution amount under a health FSA plan is limited to $2,500. Plan documents must be formally amended, if necessary, to reflect this change no later than December 31, 2014.
• Medicare FICA Tax Increases: Effective for taxable years beginning after January 1, 2013, PPACA provides for an increase in the Medicare payroll tax by 0.9 percent on wages in excess of $200,000 for single filers, and $250,000 for joint filers. Employers must withhold the employee’s share, but PPACA does not increase the employer’s share of FICA Medicare tax.
• Notice of Exchange Option: Effective March 1, 2013, and in accordance with agency guidance to be issued, employers must provide notice to employees of the existence of state exchanges, information regarding premium tax credits and cost-sharing reductions through the exchanges, and options and implications of obtaining health care through an exchange.
• Comparative Clinical Effectiveness Research Fees: Effective July 31, 2013, certain health insurance issuers and self-funded health plans will be required to pay a temporary annual fee of $2.00 ($1.00 during the first year the provision is applicable), indexed for inflation starting in 2014, times the average number of covered lives under the health plan for the year to the IRS on Form 720. The fees will be used to fund the Patient-Centered Outcomes Research Institute. The fee must be paid on the July 31st following the plan year (for example, July 31, 2013 for the 2012 plan year) and is scheduled to end for plan years ending after September 30, 2019.
2014
• Employer Shared Responsibility Penalties: Large employers (those with 50 or more full-time equivalent employees) must provide health coverage that meets affordability and minimum value requirements or face penalties if one or more of its full-time employees obtains a premium credit and obtains coverage on a State insurance exchange.
• Wellness Programs: The reward/incentive limit under a wellness program increases to 30 percent effective January 1, 2014.
• Pre-existing Condition Exclusions: Effective for plan years beginning on or after January 1, 2014, pre-existing condition exclusions are no longer allowed in group health plans.
• Waiting Periods: Effective for plan years beginning on or after January 1, 2014, group health plans may not impose waiting periods in excess of 90 days.
• Annual Limits: Effective for plan years beginning on or after January 1, 2014, group health plans may no longer include annual limits on essential health benefits for participants.
2018
• “Cadillac Plan” Tax: Effective January 1, 2018, employers sponsoring a health plan with an aggregate value of $10,200 for individual coverage and $27,500 for family coverage (indexed annually) will be assessed an excise tax based upon the excess value of coverage and the number of participants in the plan.
Provisions with Unknown Effective Dates
• Automatic Enrollment: Employers with more than 200 full-time employees who sponsor a group health plan will be required to automatically enroll full-time employees in health coverage. The original effective date for this provision was January 1, 2014, but the Department of Labor has postponed compliance until further guidance is issued.
• Insured Plan Nondiscrimination Testing: Insured health plans will be subject to similar nondiscrimination rules as self-insured plans, which generally prohibit discrimination in favor of highly compensated employees. The Internal Revenue Service has delayed implementation of these rules until further guidance is issued.
*This article is not intended to give legal advice. It is comprised of general information. Employers facing specific issues should seek the assistance of legal counsel.
Kristi R. Gauthier is a senior attorney in Clark Hill’s Birmingham office and concentrates her practice in Employee Benefits Law. Kristi has represented clients in a wide variety of employee benefits issues involving health and welfare benefits, as well as retirement plans. Kristi is admitted to practice in the State of Michigan, the U.S. District Court for the Eastern District of Michigan, and the U.S. Sixth Circuit Court of Appeals. She also is active in the legal community with memberships in the American Bar Association, the State Bar of Michigan, and the Oakland County Bar Association where she is a member of the Employee Benefits Committee. Kristi also serves as a member of the Clark Hill Diversity and Inclusion Committee. Kristi has lectured on various employee benefits issues, including ERISA compliance, healthcare reform, COBRA, section 125 plans, 403(b) plans and IRS plan correction programs. Kristi is also a co-author of the ABA publication ERISA Survey of Federal Circuits. Kristi was named a “Rising Star” by Michigan Super Lawyers in 2011.
https://mb-wp-uploads.s3.us-east-1.amazonaws.com/2024/04/MichBusiness-logo.png00michbusinesshttps://mb-wp-uploads.s3.us-east-1.amazonaws.com/2024/04/MichBusiness-logo.pngmichbusiness2012-11-08 00:00:002015-10-08 00:00:00Are Your Health Plans on the Right Track for PPACA Compliance?
As a writing agent with MBPA and MFBA, you now have the answers that you need to help you navigate reform issues with your clients. Health Reform Connect will give you:
Expert advice on complicated compliance issues and technical guidelines to assist you.
Access to monthly webinars and seminars on Reform
An Email Hotline for specific client questions that you need answered
Links and Feeds on the latest news on PPACA and Health and Human Services
A plethora of tools that you can use in your agency including client presentations, white papers and reform PDFs for your clients
Compliance Solutions such as W2 compliance payroll services
The ability to request the MBPA Legislative team to come out and make a presentation to your team or for your client meetings
IRS and tax compliance, credits and penalty, information and tools
Experts that you can lean on for implementation of reform for your clients.
To view our latest edition of the Health Care Connect Newsletter, pleaseClick Here.
To take advantage of these services continue to write your Blues with the MBPA.
Our service team is ready to help you at 888.277.6464.
https://mb-wp-uploads.s3.us-east-1.amazonaws.com/2024/04/MichBusiness-logo.png00michbusinesshttps://mb-wp-uploads.s3.us-east-1.amazonaws.com/2024/04/MichBusiness-logo.pngmichbusiness2012-11-06 16:00:502015-10-08 00:00:00Introducing Health Care Reform Connect Newsletter, Exclusive for MBPA Agents and Members
To help members reduce their costs, the Associations are providing complimentary services such as Section 125 Plans and Summary Plan Descriptions (SPD) documents to all dues paying members in good standing.
The adoption agreements are now compliant documents reflecting ALL the Health Care Reform Law changes as of January 2013. These documents are FREE to our members…Effective 5/1/12, the cost to non-members is $50 each.
New Summary of Benefits Coverage (SBC) Option:
Simply send us your clients SBC and MBPA will make a combined SPD/SBC customized document available to all Association Members who have BCBSM insurance through MBPA or MFBA.
MBPA will create a combined document in its original DOL mandated form with no alterations, as permitted pursuant to the DOL final regulations.
MBPA will issue this combined document with a letter containing clear disclaimers about differences in distribution requirements for SBC’s and SPD’s, consulting their own legal counsel, etc…
NEW Material Modification Sheet Available:
Now Available for Summary Plan Description by request. Please contact the Membership Service Team at 888-277-6464 or info@michbusiness.org
What’s Different about MBPA/MFBA’s Summary Plan Descriptions?
The Employer Retirement Income Security Act (ERISA) guidelines make it mandatory for all businesses with 2 or more employees to provide employees with a Summary Plan Description. We continue to take a leading role in informing and helping our members meet their obligations under ERISA.
Types of benefits covered by Summary Plan Descriptions include: Medical, Long Term Disability, Short Term Disability, Life/AD&D and freestanding Dental/Vision.
The MBPA SPD is a comprehensive document that satisfies the all Department of Labor (DOL) requirements for SPDs.
The MBPA SPD can be tailored to cover all of an employer’s employee benefit plans, and is not limited to only insured medical or medical/vision bundled programs.
The MBPA is essentially a “wrap plan SPD” under which an employer can combine all of its benefits into one plan and one plan document for ease of administration and for purposes of DOL reporting requirements (e.g. Form 5500s) for those employers subject to such reporting.
The MBPA SPD can be used for both insured and self-insured benefits.
Section 125 Document:
The Section 125 Plan has a separate adoption agreement from the Benefits Wrap SPD adoption agreement. The Benefits SPD adoption agreement is one compliant document rather than creating 5 different forms for different types of plans.
For Section 125s: 1) Download the adoption agreement from our Agent Pavilion; 2) complete it IN WORD FORMAT and return it to us at info@michbusiness.org with your complete contact information, 3) we will complete the materials and return them to you within two working days.
NOW, Two Easy Ways to Get Your Client’s SPD for Active Members:
1) Let Us Do It For You:
Access an SPD adoption agreement from our Agent Pavilion
Complete it and e-mail it back to us IN WORD FORMAT at info@michbusiness.org, being sure to provide your complete contact information
We complete and return the documents within two working days.
2) Create Your Own On-Line (NEW):
Go to our Agent Pavilion and click on Summary Plan Description on the main menu.
Follow the instructions to create your client’s plan…..you can save it in your client’s ‘library’ for their/your future use.
We look forward to continuing to provide you and your clients with the most up to date and easily accessible services in this important area.
If you have questions or are in need of assistance, please contact our Member Services Team at 1-888-277-6464 or 1-586-393-8800.
https://mb-wp-uploads.s3.us-east-1.amazonaws.com/2024/04/MichBusiness-logo.png00michbusinesshttps://mb-wp-uploads.s3.us-east-1.amazonaws.com/2024/04/MichBusiness-logo.pngmichbusiness2012-11-06 16:00:452015-10-08 00:00:00Agents – More Robust & Compliant SPDs & Section 125s – at NO COST To Members!
The MBPA & MFBA can provide you and your client’s state-of-the-art COBRA administration through BASIC, a Michigan-based award winning company providing a wide-range of HR Solutions for businesses. Best of all, the Associations’ COBRA Administration program is open to all members – starting at $25.00 per month!
Our COBRA Administration program with BASIC reduces your clients’ risk and frees up valuable time and resources, allowing your clients time to focus on their active employees and business operations. With BASIC COBRA, your clients will be relieved to know that their COBRA administration is being handled consistently and accurately by experts.
As a friendly reminder the MBPA & MFBA also provides the following BASIC products:
Discounted FMLA Administration
Flexible Spending Account Program
Guru – HR Online Benefits Management Software Solution
Discounted HRA Administration
Payroll Service Program.
If you have questions or need assistance, please contact our Membership Services Team at 1-888-277-6464 or 1-586-393-8800.
https://mb-wp-uploads.s3.us-east-1.amazonaws.com/2024/04/MichBusiness-logo.png00michbusinesshttps://mb-wp-uploads.s3.us-east-1.amazonaws.com/2024/04/MichBusiness-logo.pngmichbusiness2012-11-06 16:00:402015-10-08 00:00:00BASIC’s COBRA Makes A Difference: Reduce Risk and Free Up Valuable Time