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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