|March 27, 2014|
Previously published on March 19, 2014
Another delay in implementation of the Affordable Care Act (“ACA” or “Obamacare”) has prompted PK Law to update our material on the Act. Here are some points to bear in mind as March 31 approaches:
- The ACA’s “employer mandate” generally requires that employers offer certain minimum levels of “affordable” health care coverage to a certain percentage of their employees or pay a “penalty” of up to $2,000 for each employee not offered coverage, though workers are not required to sign up for the benefits offered by the employer..
- “Affordable” is defined as premiums of no more than 9.5 percent of an employee’s income. Employers must pay for the equivalent of 60 percent of the actuarial value of a worker’s coverage.
- Employers with less than 50 full-time employees (30 hours a week) are already exempt from the ACA’s employer mandate. They are eligible to secure coverage from a marketplace designed for them known as the “Small Business Health Options Program or “SHOP”.
- Employers with 50 to 100 full-time employees must comply with the employer mandate beginning in 2016 - a delay recently granted by the Administration.
- Employers with 100 or more full-time employees “large employers” must comply with the employer mandate in 2015, having already received a delay in implementation.
- Large employer implementation will be “phased in” in 2015 by allowing those employers to offer coverage to 70% of their workers as opposed to the 95% coverage level presently required under law. 95% coverage must be provided in 2016.
- Volunteer firefighters, part-time teachers and adjunct professors who teach less than 15 hours a week will not be counted as full-time employees, according to a recently released “final regulation”.
- Employers must certify via a report that employees were not released or reduced in hours to avoid provision of coverage.
- Adjunct professors’ status as full-time employees is to be based on an hour and 15 minutes of preparation outside the classroom for every hour spent teaching in the classroom, according to the final regulation.
- The new rule determines that and that teachers working full-time during the school year do not count as part-time employees if they have the summer off.
For Individuals and Families:
- Most individuals who make less than 400% of the federal poverty level, or $94,200 for a family of four, are eligible for subsidies to help pay for their health insurance.
- Individuals must have health care insurance by March 31, 2014, either through an employer or a “Health Insurance Marketplace” (a “Marketplace”)(see other PK Law material on the Affordable Care Act) when “open enrollment” for the “marketplaces” ends, or face a penalty for failing to obtain coverage.
- If an individual or family obtains health insurance through the Marketplace, advance payments of the premium tax credit may be available to immediately help lower the monthly premium.
- For most people, the ACA has no effect on their 2013 federal income tax return.
- However, for some people, a few provisions could affect their tax returns, such as increases in the itemized medical deduction threshold, the additional Medicare tax and the net investment income tax
- The “individual shared responsibility” provision of the ACA and its “premium tax credit” provision do not affect a “payor” of premiums’ 2013 federal income tax return.
- “Individual Shared Responsibility Payment” requires that as of January, 2014, individuals (including children) must have health care coverage, have an exemption from coverage, or make a payment when filing their 2014 tax return in 2015. Those who already have qualifying health care coverage will not need to do anything more than maintain that coverage throughout 2014.
- The “Premium Tax Credit” (“PTC”) is available if insurance is obtained through a “Marketplace”. If so, the premium payor may be eligible to claim the PTC. The payor may elect to have advance payments of the PTC sent directly to the payor’s insurer during 2014, or wait to claim the credit until the filing of his or her tax return in 2015. If the payor chooses to have advance payments sent to his or her insurer, the payor will have to reconcile the payments on his or her 2014 tax return, which will be filed in 2015. If the payor is already receiving advance payments of the PTC, he or she need do nothing at this time unless he or she has a “change in circumstance” such as a change in income, marital status or family size. Any of those changed circumstances should be reported to the Marketplace from which insurance is obtained.
- Filing Requirement: If a premium payor does not have a tax filing requirement, he or she need not file a 2013 federal tax return to establish eligibility or qualify for financial assistance, including advance payments of the premium tax credit to purchase health insurance coverage through a Health Insurance Marketplace.
The ACA remains a complicated piece of legislation. The grant of delays in compliance with the law has made the rules more confusing. PK Law’s Corporate and Business Services Attorneys and Labor and Employment Law Attorneys can assist employers with the law and its associated regulations.