Healthcare Reform



It Affects Employers and Individuals, you are not immune



  • In 2013, the Health FSA Contribution will be limited to $2,500
  • In 2014, employers cannot have a waiting period longer than 90 days
  • In 2014, employers offering coverage must also offer a voucher to any employee with an income less than four times the federal poverty level whose share of the premium is greater than 8% but less than 9.8% of their income, and who chooses to enroll in a state exchange rather than participate in the employer’s group health insurance plan.
  • The current tax-credit (up to 35%) available to employers with 25 or fewer FTE employees who provide health insurance will increase to a maximum of 50% for employers to purchase insurance coverage for their employees through a state exchange. Employers with 10 or fewer FTE employees whose average, annualized wages are less than $25,000 will receive the full 50% credit for up to two consecutive years.
  • All states must establish a Small Business Health Options Program (SHOP) that will assist employers with less than 100 FTE employees to aid in obtaining group coverage. This is part of the requirement for all states to create an exchange to facilitate the purchase of qualified health plans. In addition, a Consumer Operated and Oriented Plan (CO-OP) program will be developed to facilitate the creation of not-for-profit, member-run health insurance companies.
  • Employers with more than 200 employees must (a) notify their employees of the automatic enrollment and instructions on how to opt-out as well as (b) automatically enroll employees in the health insurance plans offered. Even though there is no date specified for this requirement, it is forthcoming and employers should be prepared.
  • In 2014, employers with an average of 50 employees (based on the average employee count from the previous calendar year), that don’t offer coverage for all full-time employees (those working 30+ hours/week) or employers that offer inadequate coverage will be required to pay a penalty if any full-time employee purchases health insurance through a state exchange to which a tax credit or cost-sharing reduction is allowed or paid by the employee.
  • In 2017, employers with more than 100 employees will be able to join the state exchanges, but only at the state’s discretion.
  • In 2013, Medicare taxes will increase by 0.9% to 2.35% on wages of more than $250k for joint returns/$125k for married filing separate/$200k for other individuals. In addition to the additional taxes on wages, a 3.8% Medicare tax will be imposed on the lesser of investment income (interest, dividends, royalties, rents, etc.) or modified annual gross income of more than $250k for joint returns or $200k for other individuals.
  • In 2013, the threshold for the unreimbursed medical expenses “itemized deduction” will increase to 10% of the annual gross income. However, if an individual or individual’s spouse has turned 65 years of age before the close of the tax year, their itemized deduction will remain 7.5% through 2016.
  • As of the 2014 tax year, individuals will be eligible to receive a premium assistance credit. This credit is a refundable tax credit that will help cover the premium cost for health insurance purchased through a state health benefit exchange. The Treasury Department will pay the premium assistance credit amount directly to the enrollee’s insurance plan. Individuals will pay the dollar difference between the premium tax credit amount and the total premium charged to the plan in which they are enrolled.
  • In lieu of taking the premium assistance credit, individuals may pay the full premium out of pocket and claim the credit on their tax returns. To be eligible, household incomes must be between 100 percent and 400 percent of the federal poverty level based on family size and health insurance is not available through an employer or a spouse’s employer. The credit amount is based on the excess premium over a threshold amount. The threshold rises from 2 percent of income for those at 100 percent of the federal poverty level to 9.5 percent of income for those at 400 percent of the federal poverty level based on family size. The threshold amounts are adjusted for inflation after 2014.
  • In 2014, individuals will be required to carry health insurance. A penalty will be assessed for those who fail or refuse to get health coverage. The penalty will be (2014) $95 or 1% of the annual gross income, (2015) $325 or 2% and (2016 and beyond) $695 or 2.5%. It is important to note that a penalty will also be assessed for each dependent who does not have coverage (that penalty will be half the amount outlined above for children under 18 years of age).
  • However, no penalty will be assessed if the cost for the least-expensive insurance coverage exceeds 8% of their income. Members of the American Indian tribes, incarcerated individuals, individuals who claim a religious exemption and for individuals not legally present in the USA will not be penalized.
  • No criminal penalties will be assessed against those who do not pay the penalty and the IRS cannot use liens or seizures to enforce the penalty.


About the Author

Employers have to readjust and comply with more changes than ever. On top of the multitude of employment law changes, the continued economic stresses and now employers are scrambling to remain or become compliant to the endless requirements set forth by the Healthcare Reform.
This is a special report created to help employers as well as individuals arm themselves with the upcoming changes.
The items listed below relate to all employers:
The items listed below relate to smaller to mid-sized employers as of 2014:
The items listed below relate to larger employers:
With the scrambling to meet all of the health care reform deadlines, many have forgotten that the health care reform affects individuals as well. The items listed below relate to how individuals are affected:
The goal is this article is to alert all employers regarding their responsibility to comply with the guidelines and regulations. The Health Care Reform affects everyone – employers and individuals. And, even though employers are not required to “help” the individuals, it is an important step of being an employer that cares about their employees.
The information provided is an overview of the Health Care Reform and is not all-inclusive. It is important to keep in mind that the laws have not been etched in stone, and can continue to be adjusted through the legal initiatives that overturn, withdraw and/or reaffirm today’s health care reform process. So, it is important for employers of all sizes as well as individuals to keep current as this process unfolds during the next few months and years. As we have seen, “mandates” have been delayed such as the W2 reporting requirements, and some “mandates” have been overturned such as the 1099 reporting requirements that would have overburdened the majority of employers. No one really knows what the final result of the health care reform will be, but we can say that it should be on everyone’s radar.
Kristin Sian Shutler
President
All-Inclusive Human Resources, LLC
www.allinclusiveresources.net


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