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ACA 101

See below for important updates and deadlines for the Affordable Care Act:

  • The IRS recently released guidance on the excise tax (also known as the Cadillac Tax) that will be imposed on employers that offer high-cost health coverage. Notice 2015-16 discusses the purposes of the Cadillac Tax and defines and describes terms that are relevant in determining whether the tax is imposed and the amount of the tax. Section 4980I takes effect January 1, 2018. It is designed to raise revenue to offset other costs of the PPACA by imposing a 40% excise tax on any “excess benefit” of applicable coverage provided to an employee by an employer that is excludable from the employee’s gross income. The excise tax is not deductible and is not taken into account for purposes of determining the cost of applicable coverage. If the excise tax is imposed, it must be paid by the insurance provider for insured plans, the employer in the case of certain arrangements such as a Health Savings Account (HAS), or the plan administrator. The tax will be imposed on the amount of coverage the employee receives that is over the applicable dollar limit for the month. For 2018, the applicable dollar limit is $10,200 for self-only coverage, and $27,500 for coverage other than self-only coverage. The applicable dollar limit will be adjusted yearly to reflect cost-of-living changes. Additionally, the limit may be adjusted for individuals who are qualified retirees and for individuals engaged in certain high-risk professions. *NEW*
  • For 2016, the out of pocket maximums for self-only coverage will be $6,850 and for non-self-only coverage (family coverage) will be $13,700.  All plans will now have embedded out of pocket limits for each individual covered, even under a family plan.  For example, if an individual under a family plan has $20,000 health care expense, they are responsible for $6,850 and the plan is responsible for the other $13,150. *NEW
  • For 2015, a large employer is defined as one who employs at least 100 full-time or full-time equivalent employees. These employers must offer affordable minimum essential health coverage to at least 70% of their full-time employees starting 1/1/2015. Please note that this relief from the initial threshold (50+ FTE) only applies to employers if between 2/9/2014 and 12/31/2014 they do not do any of the following: Reduce the size of the workforce or the overall hours of service of its employees unless for a bona fide business reason or the employer must not eliminate or materially reduce the health coverage, if any, it offered as of 2/9/2014.
  • In early February 2015, the IRS released final versions of the forms that employers subject to the shared responsibility mandate will be required to file in 2016 for the 2015 year. The forms implement reporting obligations under the Internal Revenue Code Sections 6055 and 6056. The IRS also released a brochure which covers getting ready for monthly tracking and preparation for completing the forms. Be sure to sign up for our ACA Report Service and tune into our ACA Webinar on March 24th where we will discuss the reporting forms. Click below for the forms.
  • The ACA can impose an excise tax per affected employee on employers that fail to comply with the Act. The tax can be levied for not complying with rules one of which is employers are not permitted to provide cash (pre-tax or post-tax) to help employees purchase health insurance in the individual market. If an employer does this, they will trigger a $100 per day, per affected individual excise tax. The DOL says because these arrangements cannot be integrated with a health policy, they violate some of the ACA’s rule such as the prohibition on dollar limits for coverage. These arrangements constitute plans for the purpose of providing medical care and because an employer won’t offer an unlimited amount of cash to aid in an individual’s purchase of coverage, the “plan” has a dollar limit and is therefore is not compliant. The IRS issued Notice 2015-17 on February 18, 2015 that offers transition relief from the tax for small employers (those with less than 50 full-time equivalent employees) that have established employer payment plans through June 30, 2015. If one of these plans is in place after this date, the tax will apply.
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