091813 ppaca slide deck flinchbaugh

SMITH ELLIOTT KEARNS & COMPANY, LLC WWW.SEK.COM

An overview of the administrative and tax requirements of the Law…

2010…2011…2012…2013…2014…2015…2016…2017…2018…

» The Patient Protection and Affordable Care Act

Joel A. Flinchbaugh, CPAMember of the FirmSmith Elliott Kearns & Company, LLCJflinchbaugh@sek.comwww.SEK.com

President Obama Signs law March 23, 2010

now what???

35% tax credit applicable for:• Businesses with less than 25 FTE employees & average wages less than $50,000.• Credit reduced as # of employees exceeds 10 and average wage exceeds $25K.

Small Business Health Insurance Credits Begin

Click icon to add picture 2010

Tax applicable for services rendered after July 1, 2010.

10% Excise Tax on Indoor Tanning Services

• Over the counter drugs NO LONGER qualify.

• Non-qualified distributions subject to 20% penalty vs. 10% under old law.

Modifications to qualified expenses from FSA’s, HSA’s, and HRA’s and increased penalties.

Medical Loss Ratio Limits Begin • Small group and individual insurers-80%.• Large group-85%.• Excess premiums must be refunded.

Reporting of Health Insurance on W-2• Employers issuing more than 250 W-2’s required

to report health benefits on W-2• Still waiting for final regulations regarding

companies with less than 250• Not taxable – just information

Summary of Benefits Required• Renewals on or after 9/23/12• Notice of change in benefits must be provided 60

days before change• Insurance company should be providing this

reporting for employers

Employers Begin to Receive MLR rebates• Can be used to offset future premiums.• If employees contribute to premiums, they must

receive proportionate share of rebate.

Increased Medicare Tax (Hospital Insurance Tax)• .9% of wages in excess of…

• $200,000 if single.• $250,000 MFJ.

• Employers MUST withhold on wages paid in excess of $200,000 to individual.

Unearned Income Medicare Contribution Surtax • 3.8% on lessor of:

• Net investment income or• Excess of modified AGI over $200/S, $250/MFJ.

• Investment income (interest, dividends, royalties, rents, sale of passive activity, passive activity).

Increased Threshold for Deducting Medical Expenses• Threshold raised to 10% of AGI.• If over 65 - 7.5% limit still applies through

December 31, 2017.

Flexible Spending Account Limits• Annual limit of $2,500 for contributions to

flexible spending accounts.• No impact on premium or dependent care.

2.3% Excise Tax on Medical Device Manufacturers• Exemptions

• Eyeglasses.• Contacts.• Any device generally purchased by the public at

retail.

Patient Centered Outcomes Research Institute Fee - PCOR• Assessed on medical plans – usually paid by

carrier.• Employer may be subject with any type of self

insurance.• $1 per covered life, increasing to $2 than indexed

with inflation.

Notice of Coverage- Due 10/1/13• Employers required to provide• Must include:

• Description of services offered on Exchange• Potential eligibility for premium credit• Info about impact of purchasing through

Exchange

Individual Mandate• Maintain “minimum essential coverage” or:

• 2014 - Penalty (Tax) greater of 1% of household income OR $95 per uninsured

• 2015 – Penalty (Tax) greater of 2% of household income or $325 per uninsured

• Penalty Cap of $2,250 per household• There are some exceptions to the penalty

“Tax Credits” for Individuals Purchasing Through Exchange• A subsidy for purchasing insurance through the

Exchange. • For people with income above Medicaid limits,

but below 400% of federal poverty level.

Expansion of small business Health Insurance Credit to a 50% credit for small businesses who purchase insurance through SHOP (Exchange).

Small Business Health Insurance Credits

Click icon to add picture 2014

Pay or Play Employer MandateEmployers with 50 or more FTE employees must either offer health insurance, or pay a penalty• $2,000/employee, but first 30 are not counted• Still subject to penalty even if coverage is offered,

but employee receives tax credit

States May Allow Larger Employers to buy on Exchange• Businesses with more than 100 employees may

be able to purchase insurance in the SHOP

Excise Tax on “Cadillac” Plans • 40% Excise tax on plans with costs exceeding:

• $10,700 for individuals• $27,500 for family

That was Easy!!!!

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