PPACA Tax Overview BenefitMall Reference Guide - (Page 4)

SECTION 2.0 PREMIUM SUBSIDIES PPACA authorizes the payment of premium subsidies for qualified health coverage for certain individuals and families when their income is under 400% of the federal poverty level. Section 2.0 provides some background on the payment structure. 2.1 What types of premium subsidies will be available for individuals? Beginning in 2014, PPACA will provide subsidies for individuals with incomes between 133% and 399% of the federal poverty level (FPL). Individuals eligible for government programs are not eligible for health insurance premium subsidies. Likewise, individuals who are offered employer health benefits coverage are not eligible for premium tax credits unless the employer plan does not comply with at least a 60% actuarial value, or unless the individual’s share of the premium for employer-sponsored health insurance exceeds 9.5% of their income. The subsidy offered is tied to the second lowest cost Silver level benefit plan offered by the exchange. This plan is estimated to cover 70% of the average person’s health care expenditures for one year. Individuals who have coverage that fails to meet the thresholds are eligible for the followings subsidies: Reported Income (% poverty level) <133 133–149 150–199 200–249 250–299 300–399 ≥400 Premiums & Cost Sharing Subsidies Under the Patient Protection & Affordable Care Act Actuarial Value Premium Subsidies (% of income cap) 0% 3%–4% 4%–6.3% 6.3%–8.05% 8.05%–9.5% 9.5% – 100% 94% 87% 73% 70% 70% 60% – $1,983 $1,983 $2,975 $2,975 $3,967 $5,950 Although the premium subsidies will greatly assist individuals with lower incomes, these subsidies will likely prove extraordinarily complex for these individuals to understand, and to use to their advantage. Likewise, the process of enforcing the subsidies and tax credits will consume a great deal of time and resources for the IRS. 2.2 How do premium subsidies impact employees? Employees who are offered employer-sponsored health benefits are not eligible for the premium tax credits if: • The employer sponsored health benefits comply with the 60% actuarial value threshold, and, • The employee’s share of the premium for the health insurance benefit does not exceed 9.5% of their income. 4 Published by BenefitMall® Employees who are offered employer-sponsored health benefits are eligible for the premium tax credits if: • The employer sponsored health benefits do not comply with at least a 60% actuarial value, • The employee’s share of the premium for employer-sponsored health insurance exceeds 9.5% of their income, and • The employee seeks health care coverage through a state health insurance exchange and receives a subsidy. Out-of-Pocket Maximum

Table of Contents for the Digital Edition of PPACA Tax Overview BenefitMall Reference Guide

PPACA Tax Overview BenefitMall Reference Guide
Table of Contents
Individual Mandate & Tax Implications
Premium Subsidies
Employer Requirements & Tax Implications
PART A: Small Employer Tax Credits
PART B: Large Employer Tax Penalties
PART C: Employer W-2 Reporting Requirements
PART D: Employer Deductions for Retiree Drug Coverage
Additional PPACA Tax Provisions Impacting Employers & Employees
PART A: The Unearned Income Medicare Contribution Tax
PART B: Excise Tax on Comprehensive, High-Cost Health Insurance Plans
PART C: Assessing the Impact of PPACA on HSAs, MSAs, FSAs, & HRAs
Medicaid & Medicare Changes & the Impact on Employers
PART A: The Expanding Medicaid Program
PART B: Emphasis on Prevention & Related Services
PART C: Medicare Part D Updates
PART D: Putting the Coverage Puzzle Together

PPACA Tax Overview BenefitMall Reference Guide

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