PPACA Tax Overview BenefitMall Reference Guide - (Page 6)

The tax credit for small business employers, or “for-profit” companies that meet the requirements, equals 35% of the employee’s annual premiums the employer pays for the years before 2014, and will increase to 50% after 2014. The tax credit for “not-for-profit” organizations is substantially lower, with those employers only eligible for a 25% tax credit computed in the same manner as described above.6 The income tax credit is subject to several limitations. Employers are only eligible for up to 50 percent of an average premium costs for the surrounding area.7 Also, the credit is effectively phased out as additional employees are hired, beginning with the eleventh employee.8 as the average wage paid by the employer raises above $25,000 annually. PART B: Large Employer Tax Penalties 3.4 How does PPACA define a large employer? A large employer is defined as employing at least 50 full-time equivalent employees in the previous calendar year, for at least 120 days.9 A full-time employee is defined as one who works at least 30 hours of service per week.10 Part-time employees are also added into this calculation by adding together the total hours worked by all part-time employees and dividing that total by 120.11 3.5 3.6 Do large employers get help funding employer-sponsored coverage? No. Under PPACA, a premium subsidy program is not established for a large employer. In fact, a tax penalty may be assessed against a large employer as described below. What is the tax penalty that may be assessed against a large employer? Perhaps the most important requirement that PPACA imposes on large employers is the requirement that large employers must offer medical coverage to substantially all of its full-time employees and their dependents beginning in 2015.12 If a large employer fails to offer appropriate coverage, that employer may be liable for a tax penalty. 3.7 What triggers the tax penalty for large employers? The tax penalty can be triggered in one of two ways: 1. If the employer does not offer coverage, and at least one of its full-time employees claims the premium assistance tax credit, or 2. The employer does offer coverage, but the coverage fails to meet the minimum essential 6 Published by BenefitMall® 3.8 Finally, the amount of the credit decreases coverage threshold (as defined in section 1.3) and one full-time employee is certified to claim the premium tax credit.13 What is the minimum essential coverage threshold? The type of coverage an individual, employer, or health plan must meet to satisfy the requirements under PPACA, avoid paying tax penalties and qualify for premium subsidies are outlined in section 1.3 of this reference guide. Minimum essential coverage can include individual market policies, job-based coverage, Medicare, Medicaid, CHIP , TRICARE and certain other coverage. For example, a bare bones or catastrophic only policy would not qualify. Minimum essential coverage can be obtained through a government sponsored plan, an employer-sponsored plan, plans obtained in the individual market, grandfathered health plans, and any other health benefits coverage recognized by the Secretaries of HHS and the Treasury. The IRS defines “minimum essential coverage” as a term “to include health insurance coverage offered in the individual market (such as a qualified health plan enrolled in through an Affordable Insurance Exchange (Exchange)), an eligible employer-sponsored plan, or governmentsponsored coverage such as Medicare, Medicaid, the Children’s Health Insurance Program, TRICARE, or veterans’ health care under chapter 17 or 18 of Title 38 U.S.C.”14 T EMPLOYER AX PENALTY? LARGE

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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