Health Care Reform Updates & Human Resource News Alerts

Health Care Reform News

HR360::Health Care Reform
  • Understanding the Additional Medicare Tax

    Posted on June 23, 2017
    Print

    Employers Must Withhold Tax for High Earners

    The Affordable Care Act's Additional Medicare Tax applies to an individual's wages that exceed a threshold amount based on his or her filing status ($250,000 for married taxpayers who file jointly, $125,000 for married taxpayers who file separately and $200,000 for all other taxpayers). The following are five important things employers need to know about the Additional Medicare Tax:

    1. Employers are required to withhold Additional Medicare Tax (at a rate of 0.9%) on wages or compensation paid to an employee in excess of $200,000 in a calendar year.
    2. An employer has this withholding obligation even though an employee may not be liable for Additional Medicare Tax because, for example, the employee's wages do not exceed the applicable threshold for his or her filing status. Any withheld Additional Medicare Tax will be credited against the total tax liability shown on the individual's income tax return.
    3. Employers are not required to notify an employee when they begin withholding Additional Medicare Tax.
    4. There is no employer match for Additional Medicare Tax.
    5. An employer that does not deduct and withhold Additional Medicare Tax as required is liable for the tax unless the tax that it failed to withhold from the employee's wages is paid by the employee.

    Click here for more information from the IRS.

    © 2012 - 2013 HR 360, Inc.
  • Reminder: Medicare-Eligible Employees May Impact 'Pay or Play' Penalties

    Posted on June 15, 2017
    Print

    Medicare-Eligible Employees Ineligible to Receive Premium Tax Credits

    Under the Affordable Care Act (ACA), Medicare-eligible individuals are ineligible to receive premium tax credits. As a result, employers with Medicare-eligible employees should consider how those employees may impact their potential liability under the ACA's employer shared responsibility provisions (also known as "pay or play").

    Medicare-Eligible Employees and 'Pay or Play'
    As highlighted in an IRS memorandum, because Medicare-eligible individuals are ineligible to receive premium tax credits, applicable large employers (ALEs) that offer coverage to at least 95% of their full-time employees and their dependents will not owe a pay or play penalty for any Medicare-eligible individual. For ALEs that do not offer coverage to at least 95% of their full-time employees and their dependents, however, Medicare-eligible full-time employees could potentially trigger (or increase) the penalty owed.  

    Background
    For 2017, ALEs--generally those with at least 50 full-time employees, including full-time equivalent employees (FTEs), in the preceding calendar year--will be liable for a pay or play penalty only if:

    • The ALE does not offer minimum essential coverage to at least 95% of its full-time employees and their dependents, and at least one full-time employee receives a premium tax credit. Under this scenario, the annual penalty amount is $2,260 per full-time employee, minus up to 30 full-time employees.
    • The ALE offers minimum essential coverage to at least 95% of its full-time employees and their dependents, but at least one full-time employee receives a premium tax credit (either because the employer did not offer coverage to that employee or because the coverage the employer offered to that employee was unaffordable to the employee or did not provide minimum value). Under this scenario, the annual penalty amount is $3,390 per full-time employee that receives a premium tax credit.
    © 2012 - 2013 HR 360, Inc.
  • Reminder: IRS 'Pay or Play' Estimator Available

    Posted on June 08, 2017
    Print

    Tool Provides Estimates Only

    As a reminder, the Taxpayer Advocate Service (an independent organization within the Internal Revenue Service) has developed a tool to assist employers in understanding how the Affordable Care Act's employer shared responsibility ("pay or play") provisions work and how the provisions may apply to them.

    Employer Shared Responsibility Provision Estimator
    Employers can use the Taxpayer Advocate Service's Employer Shared Responsibility Provision Estimator tool to determine their:

    • Number of full-time employees, including full-time equivalent employees (FTEs);
    • Applicable large employer (ALE) status; and
    • Estimated maximum amount of potential liability for the employer shared responsibility payment.

    The homepage for the tool provides additional information about pay or play.

    Tool Provides Estimates Only
    Given that the calculations provided by the tool are only estimates, employers are advised to use them only as a guide to assist in making decisions regarding their tax situation. The estimator will not report a payment estimate to the IRS or interact with individual tax returns.

    Background
    The pay or play provisions require ALEs--generally those with at least 50 full-time employees, including FTEs--to offer affordable health insurance that provides a minimum level of coverage to full-time employees (and their dependents) or pay a penalty tax (known as the employer shared responsibility payment) if any full-time employee is certified to receive a premium tax credit for purchasing coverage through the Health Insurance Marketplace. 

    © 2012 - 2013 HR 360, Inc.
  • New Expiration Date for Health Insurance Exchange Notices is May 31, 2020

    Posted on May 30, 2017
    Print

    Model Notices Previously Set to Expire on May 31, 2017

    The U.S. Department of Labor's Employee Benefits Security Administration (EBSA) has extended the effective date of its model Health Insurance Exchange Notices through May 31, 2020. Previously, these model notices were set to expire on May 31, 2017. No other changes have been made to these notices.

    Click here to access the model notices with the new expiration date. Please note that there are two separate notices--one for employers that offer a health plan to some or all employees, and another for employers that do not offer a health plan.

    These model notices are the most current versions provided by the EBSA. For further guidance regarding these notices, please contact the EBSA directly at 1-866-444-3272.

    © 2012 - 2013 HR 360, Inc.
  • 'Pay or Play' Guidance for Companies Under Common Ownership

    Posted on May 24, 2017
    Print

    Related Companies Generally Combined for Determining ALE Status

    Applicable large employers (ALEs)—generally those with at least 50 full-time employees, including full-time equivalent (FTE) employees—are subject to the "pay or play" provisions of the Affordable Care Act. If these employers do not offer affordable health insurance that provides a minimum level of coverage to their full-time employees, they may be subject to a penalty if at least one full-time employee receives a premium tax credit or cost-sharing reduction for purchasing coverage on an Exchange.

    According to the IRS, companies that have a common owner or are otherwise related generally are combined and treated as a single employer for purposes of determining ALE status. If the combined group meets the 50 full-time employee threshold, then each separate company in the group is subject to the "pay or play" provisions—even those companies that individually do not employ enough employees to meet the threshold.

    Note: There is an important distinction for employers to keep in mind regarding the aggregation rules described above. Although related employers generally are combined and treated as a single employer for purposes of determining ALE status, potential liability under the "pay or play" provisions is determined separately for each member of the ALE group.

    © 2012 - 2013 HR 360, Inc.
  • CMS to Propose Major Changes to Federal SHOP Marketplaces

    Posted on May 17, 2017
    Print

    If Finalized, Changes Would Expand Role of Insurance Brokers

    The Centers for Medicare and Medicaid Services (CMS) has announced its intention to propose major changes to how small employers in Small Business Health Options Program (SHOP) Marketplaces using HealthCare.gov would enroll in SHOP plans taking effect on or after January 1, 2018. Among other things, CMS intends to promote broker participation in SHOP plan enrollment.

    Background
    Established as part of the Affordable Care Act (ACA), SHOP Marketplaces offer eligible small employers an online process for offering health insurance coverage to their employees. The federal government operates federally facilitated SHOP Marketplaces in states that did not elect to establish their own state-based Marketplace, while some state-based SHOP Marketplaces also use the federal HealthCare.gov platform. Currently, employers wishing to purchase health insurance coverage through a federally facilitated SHOP Marketplace or a state-based SHOP Marketplace on the federal platform must verify eligibility for coverage, enroll in coverage, and make premium payments via HealthCare.gov.

    Intended Changes to SHOP Marketplaces
    Under the approach CMS intends to propose, SHOP enrollment in states that currently use the federal platform would be removed from HealthCare.gov. Instead, small employers would enroll in SHOP coverage with the assistance of a broker registered with a federally facilitated SHOP, or directly with an insurance company offering SHOP plans, for plan years beginning on or after January 1, 2018.  Employers would still obtain a determination of eligibility by going to HealthCare.gov.

    In addition, CMS anticipates that its intended proposal will give state-based SHOP Marketplaces the option to direct small employers to SHOP-registered brokers and insurance companies for SHOP plan enrollment.

    Click here for more information from CMS. 

    © 2012 - 2013 HR 360, Inc.

    HR News and Alerts

    HR360::Health Care Reform
    • Understanding the Additional Medicare Tax

      Posted on June 23, 2017
      Print

      Employers Must Withhold Tax for High Earners

      The Affordable Care Act's Additional Medicare Tax applies to an individual's wages that exceed a threshold amount based on his or her filing status ($250,000 for married taxpayers who file jointly, $125,000 for married taxpayers who file separately and $200,000 for all other taxpayers). The following are five important things employers need to know about the Additional Medicare Tax:

      1. Employers are required to withhold Additional Medicare Tax (at a rate of 0.9%) on wages or compensation paid to an employee in excess of $200,000 in a calendar year.
      2. An employer has this withholding obligation even though an employee may not be liable for Additional Medicare Tax because, for example, the employee's wages do not exceed the applicable threshold for his or her filing status. Any withheld Additional Medicare Tax will be credited against the total tax liability shown on the individual's income tax return.
      3. Employers are not required to notify an employee when they begin withholding Additional Medicare Tax.
      4. There is no employer match for Additional Medicare Tax.
      5. An employer that does not deduct and withhold Additional Medicare Tax as required is liable for the tax unless the tax that it failed to withhold from the employee's wages is paid by the employee.

      Click here for more information from the IRS.

      © 2012 - 2013 HR 360, Inc.
    • Reminder: Medicare-Eligible Employees May Impact 'Pay or Play' Penalties

      Posted on June 15, 2017
      Print

      Medicare-Eligible Employees Ineligible to Receive Premium Tax Credits

      Under the Affordable Care Act (ACA), Medicare-eligible individuals are ineligible to receive premium tax credits. As a result, employers with Medicare-eligible employees should consider how those employees may impact their potential liability under the ACA's employer shared responsibility provisions (also known as "pay or play").

      Medicare-Eligible Employees and 'Pay or Play'
      As highlighted in an IRS memorandum, because Medicare-eligible individuals are ineligible to receive premium tax credits, applicable large employers (ALEs) that offer coverage to at least 95% of their full-time employees and their dependents will not owe a pay or play penalty for any Medicare-eligible individual. For ALEs that do not offer coverage to at least 95% of their full-time employees and their dependents, however, Medicare-eligible full-time employees could potentially trigger (or increase) the penalty owed.  

      Background
      For 2017, ALEs--generally those with at least 50 full-time employees, including full-time equivalent employees (FTEs), in the preceding calendar year--will be liable for a pay or play penalty only if:

      • The ALE does not offer minimum essential coverage to at least 95% of its full-time employees and their dependents, and at least one full-time employee receives a premium tax credit. Under this scenario, the annual penalty amount is $2,260 per full-time employee, minus up to 30 full-time employees.
      • The ALE offers minimum essential coverage to at least 95% of its full-time employees and their dependents, but at least one full-time employee receives a premium tax credit (either because the employer did not offer coverage to that employee or because the coverage the employer offered to that employee was unaffordable to the employee or did not provide minimum value). Under this scenario, the annual penalty amount is $3,390 per full-time employee that receives a premium tax credit.
      © 2012 - 2013 HR 360, Inc.
    • Reminder: IRS 'Pay or Play' Estimator Available

      Posted on June 08, 2017
      Print

      Tool Provides Estimates Only

      As a reminder, the Taxpayer Advocate Service (an independent organization within the Internal Revenue Service) has developed a tool to assist employers in understanding how the Affordable Care Act's employer shared responsibility ("pay or play") provisions work and how the provisions may apply to them.

      Employer Shared Responsibility Provision Estimator
      Employers can use the Taxpayer Advocate Service's Employer Shared Responsibility Provision Estimator tool to determine their:

      • Number of full-time employees, including full-time equivalent employees (FTEs);
      • Applicable large employer (ALE) status; and
      • Estimated maximum amount of potential liability for the employer shared responsibility payment.

      The homepage for the tool provides additional information about pay or play.

      Tool Provides Estimates Only
      Given that the calculations provided by the tool are only estimates, employers are advised to use them only as a guide to assist in making decisions regarding their tax situation. The estimator will not report a payment estimate to the IRS or interact with individual tax returns.

      Background
      The pay or play provisions require ALEs--generally those with at least 50 full-time employees, including FTEs--to offer affordable health insurance that provides a minimum level of coverage to full-time employees (and their dependents) or pay a penalty tax (known as the employer shared responsibility payment) if any full-time employee is certified to receive a premium tax credit for purchasing coverage through the Health Insurance Marketplace. 

      © 2012 - 2013 HR 360, Inc.
    • New Expiration Date for Health Insurance Exchange Notices is May 31, 2020

      Posted on May 30, 2017
      Print

      Model Notices Previously Set to Expire on May 31, 2017

      The U.S. Department of Labor's Employee Benefits Security Administration (EBSA) has extended the effective date of its model Health Insurance Exchange Notices through May 31, 2020. Previously, these model notices were set to expire on May 31, 2017. No other changes have been made to these notices.

      Click here to access the model notices with the new expiration date. Please note that there are two separate notices--one for employers that offer a health plan to some or all employees, and another for employers that do not offer a health plan.

      These model notices are the most current versions provided by the EBSA. For further guidance regarding these notices, please contact the EBSA directly at 1-866-444-3272.

      © 2012 - 2013 HR 360, Inc.
    • 'Pay or Play' Guidance for Companies Under Common Ownership

      Posted on May 24, 2017
      Print

      Related Companies Generally Combined for Determining ALE Status

      Applicable large employers (ALEs)—generally those with at least 50 full-time employees, including full-time equivalent (FTE) employees—are subject to the "pay or play" provisions of the Affordable Care Act. If these employers do not offer affordable health insurance that provides a minimum level of coverage to their full-time employees, they may be subject to a penalty if at least one full-time employee receives a premium tax credit or cost-sharing reduction for purchasing coverage on an Exchange.

      According to the IRS, companies that have a common owner or are otherwise related generally are combined and treated as a single employer for purposes of determining ALE status. If the combined group meets the 50 full-time employee threshold, then each separate company in the group is subject to the "pay or play" provisions—even those companies that individually do not employ enough employees to meet the threshold.

      Note: There is an important distinction for employers to keep in mind regarding the aggregation rules described above. Although related employers generally are combined and treated as a single employer for purposes of determining ALE status, potential liability under the "pay or play" provisions is determined separately for each member of the ALE group.

      © 2012 - 2013 HR 360, Inc.
    • CMS to Propose Major Changes to Federal SHOP Marketplaces

      Posted on May 17, 2017
      Print

      If Finalized, Changes Would Expand Role of Insurance Brokers

      The Centers for Medicare and Medicaid Services (CMS) has announced its intention to propose major changes to how small employers in Small Business Health Options Program (SHOP) Marketplaces using HealthCare.gov would enroll in SHOP plans taking effect on or after January 1, 2018. Among other things, CMS intends to promote broker participation in SHOP plan enrollment.

      Background
      Established as part of the Affordable Care Act (ACA), SHOP Marketplaces offer eligible small employers an online process for offering health insurance coverage to their employees. The federal government operates federally facilitated SHOP Marketplaces in states that did not elect to establish their own state-based Marketplace, while some state-based SHOP Marketplaces also use the federal HealthCare.gov platform. Currently, employers wishing to purchase health insurance coverage through a federally facilitated SHOP Marketplace or a state-based SHOP Marketplace on the federal platform must verify eligibility for coverage, enroll in coverage, and make premium payments via HealthCare.gov.

      Intended Changes to SHOP Marketplaces
      Under the approach CMS intends to propose, SHOP enrollment in states that currently use the federal platform would be removed from HealthCare.gov. Instead, small employers would enroll in SHOP coverage with the assistance of a broker registered with a federally facilitated SHOP, or directly with an insurance company offering SHOP plans, for plan years beginning on or after January 1, 2018.  Employers would still obtain a determination of eligibility by going to HealthCare.gov.

      In addition, CMS anticipates that its intended proposal will give state-based SHOP Marketplaces the option to direct small employers to SHOP-registered brokers and insurance companies for SHOP plan enrollment.

      Click here for more information from CMS. 

      © 2012 - 2013 HR 360, Inc.