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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