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What EVERY Hotel Owner MUST know about the Affordable Care Act (ACA)

What EVERY Hotel Owner MUST know about the Affordable Care Act (ACA) . Presented by the Asian American Hotel Owners Association (AAHOA). #1 What is the Timeline for the Affordable Care Act?. 2013 information determines “large ” employer status for 2014 January 1 st

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What EVERY Hotel Owner MUST know about the Affordable Care Act (ACA)

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  1. What EVERY Hotel Owner MUST know about the Affordable Care Act (ACA) Presented by the Asian American Hotel Owners Association (AAHOA)

  2. #1 What is the Timeline for the Affordable Care Act? • 2013 information determines “large” employer status for 2014 • January 1st • Employers must report health coverage cost on W-2s for 2012 • October 1st – • Open Enrollment for individuals in “exchanges” • Employers must notify employees of “exchange” coverage options • January 1st • Small Business Access to SHOP Marketplaces • Small Business Health Care Tax Credit available • 90 day maximum wait-period instituted for new employees to begin coverage • Penalties assessed for individuals without health insurance coverage • January 1st • “Large employers” with 50 or more FTEs penalized for failure to offer affordable, minimum coverage • Employers must offer dependent coverage • Employers with 200+ FTE must automatically enroll new employees into offered plans • Large employers have access to “exchanges”

  3. #2 Is my Business Required to Participate? • ACA imposes penalties on “large employers” who fail to provide insurance to their employees • The ACA defines this employer mandated coverage as “shared responsibility” • A “large employer” is an employer with 50 or more “Full-Time Equivalent” employees (FTE) • “Small employers” are employers with fewer than 50 FTE and are exempt from penalties in the law

  4. Full Time Employees and Equivalents • A full-time employee is an employee who works an average of 30 hours per week or more • Seasonal employees are not counted towards FTE • To determine the total number of FTE, use this formula: ] [ Sum of the hours worked by all part-time employees Number of Full-Time Employees + 120

  5. #3 What will the ACA cost me as a hotelier? • Large employers must provide coverage options that are “affordable” and have a “minimum value” • Affordability • An employee’s contribution to the premium cannot exceed 9.5% of household income for the taxable year • Minimum Value • Minimum value must meet specified levels of generosity based on the plan’s actuarial value • An offered plan must pay at least 60% of the covered health benefits Can I keep my current plan? Yes – but offered plans must meet standards for minimum value and affordability

  6. #4 What are the Penalties for not Complying with the ACA? • Only large employers are subject to ACA penalties (50 or more FTE) • Penalties • Strong Penalty • Employer failure to offer full-time employees the opportunity to enroll in coverage; AND • At least one full time employee enrolls in an exchange • $2,000 X the total number of FTE (minus 30) • Weak Penalty • Employer offers the opportunity for coverage, but the coverage does not meet the ACA’s standards for affordability or actuarial value; AND • At least one full time employee enrolls in an exchange • $3,000 X (only) the number of employees who enroll in an exchange

  7. #5 What is a Healthcare Exchange? • Generally, an “exchange” is an online marketplace for the sale and purchase of health insurance • Individuals may access these marketplaces where insurance companies may choose to sell insurance policies • Coverage offered in exchanges will be comprehensive and meet all applicable specifications prescribed by the ACA • Plans offered through the exchanges will be certified as “qualified health plans” or QHPs

  8. Small Business Health Options Program (SHOP) Exchanges • Special exchange designed for small businesses to compare insurance plans for employees • 2014 – SHOP open to employers with 50 or fewer FTE • 2016 – SHOP open to employers with up to 100 FTE • Employers who use SHOP must provide coverage to all full-time employees • Employees may choose to enroll in SHOP plan or opt out and purchase insurance on their own • Some states have requirements for number of employees that must enroll in the SHOP plan

  9. #6 What if I own Multiple Businesses? • If an employer has multiple companies, each company may or may not be considered separate employers under the ACA • Determining the total number of full-time employees requires an analysis of the “controlled group” rules established in the Internal Revenue Code (IRC) • If a controlled group exists, then the total number of employees must be added to determine “large employer” status under the ACA Types of Controlled Groups • Brother-Sister • Parent-Subsidiary • Combination

  10. Brother-Sister Controlled Groups • A group of two or more businesses in which 5 (or fewer) common owners own a “controlling interest” of the group and have “effective control” of the businesses • “Controlling Interest” – 80% or more of the stock of each corporation (but only if the common owner owns stock in each corporation) • “Effective Control” – More than 50% of the stock of each corporation counting the least of each owners share

  11. Brother-Sister Controlled Groups Example Controlling Interest (Step 1): • Is total ownership equal to 80% or greater? Effective Control (Step 2): • Add the smallest interest each individual owns in each overlapping business. If that combined interest is greater than 50%, then a brother-sister controlled group exists

  12. Parent-Subsidiary Controlled Group • One business owns a controlling interest (80% or more) in at least one other business • “Chain Businesses” – same concept applies, a parent owns a subsidiary and the subsidiary owns 80% or more of a second subsidiary • Example: • Corporation A owns: • 90% of B Corp. • 85% of C Corp. • 65% of D Corp. • A is a common parent of B and C Corporations and thus its employees will be added together to determine “large employer” status under the ACA

  13. Combination Controlled Group • Each business is a member of either a parent-subsidiary or brother-sister group; AND • At least one corporation is the common parent of a parent-subsidiary and is ALSO a member of a brother sister group

  14. Combined Controlled Group Example A owns: 80% of Y Partnership and 90% of Z Corp. Y Partnership owns 85% of T Corp. Y Partnership, Z Corp and T Corp are members of the same controlled group under common control because: • all three are members of a parent-subsidiary or a brother sister group; and • Y Partnership is the common parent of T Corp. and a member of the Y Partnership – Z Corp. brother-sister group

  15. #7 Do owners and Family Members Count as Employees? • An owner is not counted if he/she is a sole proprietor, a partner in a partnership, a shareholder owning more than 2% of an S corporation or an owner of more than 5% of other businesses • Family members are not counted if they are children or grandchildren; siblings or step-siblings; parents or grandparents; step-parents; nieces or nephews; aunts or uncles; sons- or daughters-in-law; fathers- or mothers-in-law; or brothers- or sisters-in-law • Owners and family member hours and wages do not apply to the FTE calculation

  16. #8 What are the Reporting Requirements? • The Department of Treasury expects to publish proposed rules describing the reporting requirements for businesses later this summer • The complexity of the reporting requirements in these sections contributed to the delay of the employer mandate to 2015 • Employers are required to provide employees with a standard “Summary of Benefits and Coverage” form explaining what the employers plan covers and what it costs

  17. #9 Is my Business Eligible for Tax Credits? • Businesses may qualify for employer health care tax credits if they have fewer than 25 FTE employees who earn an average of $50,000 a year or less • To qualify for the Small Business Health Care Tax Credit, a business must pay at least 50% of its full-time employees’ premium costs. There is no requirement to offer coverage to part-time employees or to dependents • Starting in 2014, the Small Business Health Care Tax Creditis worth up to 50% of your contribution toward employees’ premium costs • The Small Business Health Care Tax Credit is highest for companies with fewer than 10 employees who earn an average of $25,000 or less. The smaller the business, the larger the credit

  18. #10 Are there any Other Changes Expected? • The Treasury Department will issue guidelines for employer reporting during the summer of 2013 • The House and Senate are currently considering legislation that may impact the law – stay tuned • The Obama Administration has stated there will be no additional delays in implementation of the ACA

  19. What Resources are Available to Me? • www.aahoa.com • www.healthcare.gov • www.sba.gov/healthcare • www.irs.gov • Be sure to consult legal counsel to review your personal situation before making decisions on healthcare options for your employees

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