PPACA Tax Overview BenefitMall Reference Guide - (Page 7)
3.9
How much will the tax penalty cost?
The monthly penalty a large employer is
obligated to pay for not offering any coverage is
equal to $2,000 divided by 12, times the number of
full-time employees employed during the applicable
month, minus the first 30 full-time employees. Only
full-time employees (not full-time equivalents) are
counted for purposes of determining the penalty.
A large employer who offers coverage that does not
satisfy the minimum value or minimum affordability
threshold is assessed a penalty of $3,000 divided
by 12 times the number of employees that qualify for
the tax credit. The purpose of the tax penalty in this
case is to reimburse the federal government the cost
of the premium assistance tax credit afforded to the
employee.15
PART C: Employer W-2 Reporting Requirements
3.10
What is the W2 reporting requirement
that the PPACA establishes?
An additional requirement imposed on employers
by PPACA concerns reporting the cost of employersponsored
healthcare coverage on employees’
W-2 forms for all tax years starting on or after
January 1, 2011.16
This deadline was revised via
IRS Notice 2010-69. Additional guidance on this
subject was issued in March, 2011 by the IRS.
3.11
Who must report the cost of employerprovided
health insurance?
The reporting requirement is applicable to all
employers that provide group health plans, including
federal, state, and local governments, and religious
organizations. The Notice provides two exemptions.
An employer need not report if:
1. The employer was required to file fewer than
250 W-2 Forms for the preceding calendar year; or
2. The employer is a federally recognized Indian
tribal government.
3.12
3.9
What exactly must an employer report?
Guidance issued by the IRS clarifies
that employers must report the aggregate cost of
applicable employer-sponsored coverage.17
Key terms include:
Applicable employer-sponsored coverage is defined
as “the total cost of coverage under any group health
plan made available to the employee by an employer
that is excludable from the employee’s gross income,
or would be so excludable if it were employer-provided
coverage.”18
A group health plan is defined as “a plan (including a
self-insured plan) of, or contributed to by, an employer
(including a self-employed person) or employee
organization to provide health care (directly or
otherwise) to the employees, former employees, the
employer, others associated or formerly associated
with the employer in a business relationship, or their
families.”19
3.13
What costs are excluded from the
aggregate reportable cost?
Several costs are not included in the aggregate
reportable cost of the applicable employer-sponsored
coverage. The following is a list of those costs:
• The amount contributed to any Health Savings
Account (HSA) or Archer Medical Savings Account
(MSA)
• The amount of Health Flexible Spending
Arrangement funded solely by salary reduction
amounts.
• An employer’s contributions to a multiemployer
plan (this requirement is optional)
• Costs of coverage under a stand-alone dental plan
or a vision plan (this requirement is optional)
• Costs of coverage provided by the federal
government, the government of any state or
political subdivision thereof, or any agency or
instrumentality of any such government, under
a plan maintained primarily for members of the
military or for members of the military and their
families.20
7
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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