Transcript MACE Tax Implications of the Patient Protection and Affordable Care Act May 21, 2015 Presented by: Scott Crane 850 Cassatt Road, Suite 310 Berwyn, PA 19312 www.tycorbenefit.com 610.251.0670 The.

MACE
Tax Implications of the
Patient Protection and Affordable Care Act
May 21, 2015
Presented by:
Scott Crane
850 Cassatt Road, Suite 310 Berwyn, PA 19312
www.tycorbenefit.com
610.251.0670
The information contained in this presentation is intended to make employer aware of their upcoming responsibilities and provide
Tycor® clients and business associates with guidance on the new health reform law. This summary does not constitute legal advice.
Supreme Court Decision
June 28, 2012
The Patient Protection and Affordable Care Act
 Declared a tax by the Supreme Court of the United States.
What Does that Mean to You?
 This presentation is good for 1 tax credit!
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Tax Implications of the
Patient Protection and Affordable Care Act
Tax Topics Covered
 Reinsurance Tax
 PCORi Tax
 Play or Pay Taxes (IRS Section 6055 and 6056)
 W-2 Reporting
 Employer Payment Plans
 Cadillac Tax
 Small Employer Tax Credit
 Health Insurance Subsidy Paybacks
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Reinsurance Taxes
Employers – All Size Groups

The reinsurance program is designed to help stabilize premiums in the individual
health insurance market.

In 2015, Group Fully-Insured and Self-Insured Plans are required to pay a fee of
$3.67 PMPM or $44 annually per covered family member.

The Reinsurance Tax is already built into most fully-insured plan premiums.

Employers with self-insured plans must file and pay.
 HHS requires an annual fee collection with plans reporting enrollment counts by
November 15 to HHS.
 HHS would then issue a payment request to the plan no later than December 15.
 Plans will have 30 days from the date of the notice to submit payment.

Integrated HRA’s Could Be Exempt.
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PCORi Tax
Employers – All Size Groups

The Patient-Centered Outcomes Research Trust Fund fee is a tax on issuers of specified
health insurance policies and plan sponsors of applicable self-insured health plans that
helps to fund the Patient-Centered Outcomes Research Institute (PCORI).

The tax applies to Fully-Insured and Self-insured plans.

The adjusted dollar amount for plan years beginning November 1, 2013 through October
1, 2014 is $2.08 (up $0.08).

To Be Filed no later than 7/31 each year.
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PCORi Tax
Employers – All Size Groups
Plan
PCOR Fee Requirement
Health Flexible Spending
Arrangement (FSA)
No, as long as FSA is HIPAA compliant
Health Savings Account (HSA)
No. The HDHP is covered the medical benefit
Health Reimbursement Arrangement
Yes
(HRA) – Stand Alone
Yes. When integrated with a self-insured plan
of the same sponsor, PCOR fee is based on a
Health Reimbursement Arrangement
combined life count. When integrated with an
(HRA) – Integrated
insured plan, PCOR fee is determined
separately as if it was a stand-alone HRA.
COBRA coverage
Yes
Dependent Care Account (DCA)
No
Commuter Benefit Account (CBA)
No
* Refer to Health Reform: Research Fee Adjusted Published September 24, 2014 available electronically
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6055 Reporting
Individual Mandate
Plans Beginning On or After January 1, 2015 – Reported in 2016
Applies to All Employers Regardless of Size
Fully-Insured Employers
 The Health Insurance Carrier is required to file Form 1095-B with the IRS and to
taxpayers about individuals (this means employee and covered dependents) who are
covered by minimum essential coverage (any health insurance coverage recognized by
HHS) and therefore are not liable for the individual shared responsibility penalty.
 Most carriers have already implemented programs to collect Tax ID numbers of all
members for the reporting required in Section 6055.
Self-Insured Employers (Section 6056)
 Employers (including government employers) subject to the employer shared
responsibility provisions sponsoring self-insured group health plans will report this 6055
information about the coverage in Part III of Form 1095-C (under 6056 regulations).
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6055 Reporting
1094-B (Carrier Transmittal)
The carrier will use the 1094-B as a “Cover Letter” when they submit all the copies of the
employee’s 1095-B to the IRS. This could include all members covered by the carrier.
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6055 Reporting
1095-B (Prepared by Carrier; sent to Each Employee and IRS)
Employees that show
they had qualified
coverage in any given
month do not have to pay
the individual mandate
penalty for that month.
All covered dependents
must be listed.
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Remember
Employer Mandate Tax
Penalties
Employers with 50 or More Employees
Tax Penalties Postponed to 2015
 If an employer DOES NOT PROVIDE its full-time employees (and their children
dependents) the opportunity to enroll in “minimum essential coverage” plan, then the
Employer Excise Tax Penalty = $2,000 for each of its full-time employees
 If the employee only share of premium exceeds 9.5% of household income, then the
Employer Penalty = $3,000 for each of employee in this situation.
 These Excise Tax Penalties are NOT Tax Deductible.
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6056 Reporting
Employer Mandate
Plans Beginning On or After January 1, 2015 – Reported in 2016
Applies to All Employers Regardless of Size
1. a.k.a. Minimum Essential Coverage Reporting
2. Applies to Plans Beginning On or After January 1, 2015
3. Employers with 50 or more full-time employees (including full-time equivalent employees) use
Forms 1094-C and 1095-C to report the information required under section 6056 about offers of
health coverage and enrollment in health coverage for their employees.
4. Employers that offer employer-sponsored self-insured coverage also use Form 1095-C to
report information to the IRS and to taxpayers about individuals who are covered by
minimum essential coverage under the employer plan and therefore are not liable for the
individual penalty.
5. The employer is required to file Forms 1094-C and 1095-C with the IRS and to furnish a copy
of Form 1095-C to the employee.
6. The return and transmittal form must be filed with the IRS on or before February 28 (March 31
if filed electronically) of the year following the calendar year of coverage.
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6056 Reporting
Information Needed
1094-C and 1095-C

Employer Name, Address, Tax Identification Number

Certification as to whether the employer offers its full-time
employees (and dependents) the opportunity to enroll in
minimum essential coverage under an eligible employersponsored plan

The length any waiting period

Show that Health Insurance was available by employee by month

Monthly premiums for the lowest-cost option by employee

The employer plan’s share of covered health care expenses

The number of fulltime employees

Each full time employee name, address, and tax identification
number

The employer will have to provide information about the plan for
which the employer pays the largest portion of the costs (and the
amount for each enrollment category- Single,
Employee/Children, Employee/Spouse, Family)

More
Notice
This report will
become more
complex in 2016
when employers with
51-100 employees will
have individualized
pricing based on age
and tobacco usage
like the 2-50 employee
groups have now.
Each dependent could
have a different
premium
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6056 Reporting
1094-C IRS Employer Summary Information
(Page 1 of 3)
ALE
A Applicable
L Large
E Employer
51 or more fulltime equivalent
employees
If line 21 is
checked Yes, you
must complete
page 3
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6056 Reporting
1094-C IRS Employer Summary Information
(Page 2 of 3)
Note the requirement to
report by month.
Reports which months
the employer offered
health insurance that met
minimum essential
coverage.
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6056 Reporting
1094-C IRS Employer Summary Information
(Page 3 of 3)
This section is only used
if the employer is part of
an Aggregated ALE
Group. See Line 21
An Aggregated ALE
Group refers to a group
of ALE members that
treated as a single
employer under section
414(b), 414(c), 414(m),
or 414(o).
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6056 Reporting
1095-C (Proof of Coverage Sent to Employee and IRS)
Note the requirement to
report by month.
If the employer is selfinsured, they must
include all covered
dependents.
Over age 21 dependents
need proof of coverage
for their tax filing.
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W-2 Reporting
Value of Life Insurance
Employees that are provided more than $50,000 of group life insurance by the employer are
required to pay tax on an equivalent age-rated premium as determined by the federal
government. Owners (except for C-corporations) must pay a tax on the full value of the
insurance.
Employer Contributions to Health Savings Accounts
When an employer makes any contribution to an employee Health Savings Account (HSA),
the employer must report that amount on the employees W-2 in Box 12 Code W.
Value of Health Insurance
Employers that issued 250 or More W-2’s are responsible to report the value of health
insurance on W-2’s for the 2014 tax year, which would be issued in 2015.
The IRS regulations (Notice 2012-9) still exempts employers with fewer than 250 W-2’s to
file that report . HHS/DOL/IRS announced that they will give smaller employers a 6-month
notice before they will need to comply.
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2015 Compliance Reminders
W-2 (Health Insurance Value), 6055 (Individual Mandate), and 6056 (Employer Mandate) Reporting
Does your company (combine all common ownership companies) generate 50 or more W-2’s?
YES – 50 or More Employees
NO - Under 50 Employees
Did You Distribute 250 or More W-2’s for 2014?
YES
The employer is
Responsible for:
1. W-2 Reporting*
Do You Have a Self-Insured Medical Plan?
NO
NO
YES
The employer has no
Responsibility for:
1. W-2 Reporting*
The employer has no
Responsibility for:
1. W-2 Reporting*
2. 6055 Reporting
3. 6056 Reporting
The employer has no
Responsibility for:
1. W-2 Reporting*
2. 6056 Reporting
Do You Have a Self-Insured Medical Plan?
YES
The employer is
Responsibility for:
1. 6055 Reporting
2. 6056 Reporting
* Referring to the value of
Health Insurance to be
reported on W-2’s
The employer is
Responsible for:
1. 6055 Reporting
NO
The employer has no
Responsibility for:
1. 6055 Reporting
The employer must
1. Calculate FTE to
determine if they have
50 or more Full Time
Equivalent Employees.
NO
YES
The employer has no
Responsibility for:
1. 6056 Reporting
The employer is
Responsible for:
1. 6056 Reporting
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Employer Payment Plans
Not Allowed
 Employer payment plans include arrangements that reimburse some or
all of an employee’s individual health insurance premiums on a tax-free
basis (including an HRA reimbursement or a direct payment by the
employer to an insurance company).
 Under PPACA an employer payment plan is considered a group
health plan subject to the market reforms. These arrangements
cannot be integrated with individual policies to satisfy PPACA
requirements.
 Employers offering such a program may be subject to a $100/day
excise tax per applicable employee (which is $36,500 per year, per
employee).
 An employer payment plan generally does not include an arrangement
under which an employee may have an after-tax amount applied toward
health coverage or may take that amount in cash compensation.
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Cadillac Tax
Scheduled for 2018
The now-famous former outside adviser
on ObamaCare, Jonathan Gruber of
MIT, spoke about the Cadillac tax
before an audience at the Pioneer
Institute in 2011.
He said:
 "It turns out politically, it's really
hard to get rid of. And the only way
we could get rid of it was:
 Mislabeling it,
 Call it a tax on insurance plans
rather than a tax on people,
 We all know it's a tax on people
who hold those insurance plans."
 It was "clever" exploitation of
Americans' "lack of economic
understanding."
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Cadillac Tax
Scheduled for 2018
 Single Premium may not exceed $10,200
 Family (H/W – P/C – F) Premium may not exceed $27,500
 40% Tax on Excess Premium
 Tax is not deductible
 Currently no adjustment for:
 Geographic Location
 Age
 State Mandates
 Federal Cost Shifts and Taxes built into Premium Rates
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Small Employer Tax Credit
Employers with 25 or Fewer Employees
Since
2010

Employee health insurance expenses of small employers provides a sliding scale tax
credit to small employers with fewer than 25 employees and average annual wages of
less than $50,000 that purchase health insurance for their employees.

To be eligible for a tax credit, the employer must contribute at least 50% of the total
premium cost or 50% of a benchmark premium. 70% of Businesses with fewer than 25
employees may qualify.

The full credit will be available to employers with 10 or fewer employees and average
annual wages of less than $25,000.

Employers must enroll their employees through the SHOP Exchange which is
virtually non-existent in most states.
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Health Insurance Subsidies
Did Your Client Receive An Illegal Subsidy?
Must Pay Back on 2014 Tax Return
1.
2.
3.
4.
Did your Client purchase Health Insurance for themselves from the Exchange?
Did your client receive a full or partial subsidy for the cost of that insurance?
Did your client work for an employer that offered health insurance?
Was the employee share of the premium less than 9.5% of the household adjusted gross
income?
If the answer is yes to all four questions:
 Your client was not entitled to a subsidy.
 They will be required to pay back any subsidies received on their 2014 tax return!
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Compliance Reminder
Health Plan Identifier
All Health Plans Must Enumerate
 The Health Plan Identifier (HPID) is a standard, unique health plan identifier required by
the Health Insurance Portability & Accountability Act of 1996 (HIPAA).
 The HPID was originally intended for self-insured plans.
 Under PPACA, all health plans must create an HPID by November 5, 2015.
 Carriers will enumerate fully-insured plans.
 Employers will enumerate self-insured plans.
Enumeration is the process of getting an HPID.
In order to enumerate (obtain an HPID), a health plan should:
1. Create an account in the CMS Enterprise Portal to obtain a user ID and password.
2. Select the link to register in the Health Insurance Oversight System (HIOS).
3. After registering in HIOS, select the link for the Health Plan and Other Entity Enumeration
System (HPOES), and follow the prompts.
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The information contained in this presentation is intended to make employer aware of their upcoming responsibilities and provide
Tycor® clients and business associates with guidance on the new health reform law. This summary does not constitute legal advice.
For More Information
Tycor Benefit Administrators, Inc.®
Scott Crane
610.251.0670
[email protected]
850 Cassatt Road, Suite 310 Berwyn, PA 19312
610.251.0670
www.tycorbenefit.com