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The Affordable Care Act “What’s in it for my Non-Profit?”

The Affordable Care Act “What’s in it for my Non-Profit?”. TAX CONSIDERATIONS May 1, 2014. INDIVIDUAL MANDATE 1/1/2014. Individual advance tax credits available Income requirements (100% to 400% of Fed. Poverty Level) 2014 2013 S ingle @ 400% = $46,680 $45,960

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The Affordable Care Act “What’s in it for my Non-Profit?”

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  1. The Affordable Care Act “What’s in it for my Non-Profit?” TAX CONSIDERATIONS May 1, 2014

  2. INDIVIDUAL MANDATE 1/1/2014 Individual advance tax credits available Income requirements (100% to 400% of Fed. Poverty Level) 20142013 Single @ 400% = $46,680 $45,960 Family of 4 @ 400% = $95,400 $94,200 Coverage requirements May not be eligible for Medicaid or Medicare or private coverage May not be eligible for Employer coverage (Affordable & Minimum Value)

  3. INDIVIDUAL MANDATE 1/1/2014 Will an offer of Employer health coverage void Employee’s ability to qualify for an Exchange credit? Yes – if coverage is Affordable & provides Minimum Value But – Employer need not offer coverage to Spouse A way to leave Spouse credit eligible But – Household Income may make spouse ineligible!

  4. Small Employer Health Coverage Small & Medium sized Employers 2014 - 2015 Small Employer Less than 50 Employees (full-time & full-time equivalents) Final 4980H Employer penalty regulations issued 2/10/2014 2015 Transition rule exemption re medium sized ERs 50-99 Employees (full-time & full-time equivalents) Certification and various other requirements Can’t reduce workforce Can’t reduce current coverage

  5. Small Employer Health Coverage Pre-tax nature of employer coverage Employer premiums are fully deductible / payroll tax free Employee portion is income & payroll tax free (if paid through a Sec. 125 plan) Employers can provide pre-tax HRAs, Health FSAs and HSAs After-tax nature of Exchange coverage Employee cost, after subsidy (if any), is after-tax Any Employer ‘bonus’ will be subject to income & payroll taxes HSAs available IF Exchange policy is a HDHP

  6. Small Employer Health Coverage Employer pre-tax payment for individual health insurance premiums – prior to 1/1/2014 One way for small Employers to provide ‘custom’ employee health coverage Direct Employer premium payment or reimbursement Use of HRAs possible Avoided income taxes and payroll taxes Non-discrimination rules have been non-existent

  7. Small Employer Health Coverage IRS Notice 2013-54 – Effective 1/1/2014 HRA, Employer Payment Plan, Section 125 Health FSA These are group health plans subject to the ACA. Standing alone, they fail ACA requirements (e.g., prohibition on annual dollar limits & first $ preventative care) They may be integrated with an ACA compliant group health plan Integration with an individual policy is not allowed REVIEW ALL SUCH PLANS IF STILL EXISTENT

  8. Small Employer Health Coverage IRS Notice 2013-54 – Effective 1/1/2014 Exceptions One-participant plans (sole-proprietors w/o employees) Standalone retiree-only plans Certain Health FSAs if carefully designed (excepted benefits) Use of HSA with individual HDHP Employer contributions must be comparable HSA $ can not be used to pay premiums (by law)

  9. Small Business HealthCare Tax Credit IRC §45R - Maximum credit equals 35% of employer health insurance premium cost for non-profits 25 or fewer FTE’s to qualify for any credit Aggregation rules apply Average annual wages less than $50,000, and Employer pays 50% or more of insurance premiums Must use SHOP starting in 2014

  10. Small Business HealthCare Tax Credit Maximum credit equals 35% of employer health insurance Premium cost 10 or fewer FTEs to qualify for maximum credit $25,000 or less average wages to qualify for maximum Credit phase out between 10-25 FTE’s Average wages 25K-50K

  11. Small Business HealthCare Tax Credit DETERMINATION OF NUMBER OF FTEs Divide total annual hours/2,080 = number of FTEs EE hours in excess of 2,080 do not count Excluded employees Owners & their family members Seasonal Workers (< 120 days/year)

  12. Small Business HealthCare Tax Credit DETERMINATION OF AVERAGE ANNUAL WAGES Divide total wages by # of FTEs = Average annual wages All wages paid to qualifying employees are included – even for hours in excess of 2,080. But – exclude wages paid to: Owners & their family members Seasonal Workers (< 120 days/year) The relevant period is the Employer’s taxable year.

  13. Small Business HealthCare Tax Credit CMS on-line tool to estimate FTEs and Credit amount Go to: https://www.healthcare.gov/will-i-qualify-for-small-business-health-care-tax-credits/

  14. INTERESTED IN MORE? Contact Roger Prince, a Senior Manager in BerryDunn’s Employee Benefit Consulting Group, to learn more. rprince@berrydunn.comPhone 207.541.2314Websiteberrydunn.comBlogberrydunn.com/firmfooting

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