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TAX ALERT
September 18, 2013
WHAT EMPLOYERS & INDIVIDUALS NEED TO KNOW ABOUT THE AFFORDABLE HEALTH CARE ACT

Recently, there has been a lot of communication at the national and state levels regarding the Affordable Health Care Act (ACA) and the Health Insurance Exchange Program.   The Health Insurance Exchange Program begins taking applications for enrollment on October 1.   Here is what Employers and Individuals need to know. 

 

Employers 

 

The employer Affordable Care Act mandate scheduled to take effect in 2014 has been delayed to 2015.  As of January 1, 2015, employers with over 50 full-time equivalent employees will be subject to a penalty if the employer either:

 

(1) fails to offer full-time employees and their dependents the opportunity to enroll in Minimum Essential Health Insurance Coverage (MEC) or

 

(2) offers its full-time employees and their dependents the opportunity to enroll in a MEC plan and employs one or more full-time employee(s) who are receiving a premium assistance tax credit or premium cost sharing reduction. 

 

Employer Penalties

 

The calculations of the employer penalty are complex and must be calculated on a case by case basis. These penalties can range from $2,000 to $3,000 per full-time employee in excess of 30 employees and will increase each year by the growth in insurance premiums.    Your tax accountant can assist you, the employer, with the appropriate calculations.

 

If you are an employer with fewer than 50 full-time equivalent employees, the employer penalty provision does not apply. Also, if you are an employer with 25 or fewer full-time equivalent employees with an average annual wage up to $50,000, you, the employer, may be eligible for a health insurance tax credit. Your tax accountant can help determine your organization's eligibility for a tax credit.

Smaller Employers
  
Qualified small employers (50 or fewer employees) will be able to offer health insurance through the Small Business Health Options Program (SHOP) starting January 1, 2014, with enrollment beginning October 1, 2013.    Beginning in 2016, SHOP will be available to employers with up to 100 employees.

 

Individuals
  
The individual Affordable Care Act mandate will take effect in 2014 as scheduled (there is no delay). 
  • The mandate requires an individual to carry health insurance, or face a penalty unless the individual meets one or more limited exceptions.  
  • Any individual who is required to carry health insurance but does not, will be subject to a penalty of $95 per adult and $47.50 per child up to $285 or 1% of family income, whichever is greater. 
  • These penalties increase substantially in 2015 to $975 or 2% of family income, whichever is greater, and in 2016 to $2,085 or 2.5% of family income, whichever is greater. 
  • Family income is defined as total income in excess of the income tax filing threshold ($10,000 individual and $20,000 family in 2013).  
If, as an individual, you do not carry health insurance either offered by an employer, a private policy that meets minimal coverage, Medicare, Medicaid, a children's health insurance program or Tricare, and you do not meet one of the limited exceptions, you must obtain health insurance in 2014 or you will be assessed a penalty on your 2014 federal income tax return.

 

Shopping for Insurance - The Marketplace
  
To facilitate the carrying of health insurance, some states are creating a Health Insurance Exchange (also referred to as The Marketplace).  The Marketplace will enable individuals to shop for and obtain health insurance.  New York State's Health Exchange is in place and can be found at www.nystateofhealth.ny.gov. 

 

Beginning October 1, individuals, as well as families and small businesses with 50 or fewer employees, can shop for health insurance coverage effective January 1, 2014.  Health insurers will be required to offer plans that meet minimum essential coverage under four tiers: bronze, silver, gold and platinum.   The bronze level of coverage will meet the minimal amount of coverage required under the ACA mandate.  Generally, the higher the level of coverage, the higher the premium, but the less amount of cost sharing to the subscriber.  Bronze plans are intended to cover 60% of subscriber health care costs while platinum plans are intended to cover 90% of subscriber health care costs.  Subscribers under 30 years of age will be able to buy "catastrophic coverage only", resulting in lower premium cost than the bronze plans.
  
Tax Credit for Individuals
  
Effective in 2014, individuals may be eligible for a tax credit to help offset the cost of obtaining health insurance from The Marketplace.  This credit may be used to reduce monthly premium cost or it may be used to reduce the individual's income tax liability for that year. 
  
Recommended websites that are useful in understanding the requirements of the ACA are:
  
The new rules, reporting requirements, penalties and tax credits associated with the Affordable Care Act are complex and may require careful tax planning.   Please call us at 315-422-1391 or email info@gsacpas.com with your specific situation and we will be happy to assist you.
  
Steven J. Dippolito, CPA is the Firm's business manager at Grossman St. Amour CPAs.  Steve is responsible for administration of Firm benefits, including group health, dental, life and disability insurance.  He can be reached at sdippolito@gsacpas.com  or 315.701.6471. 
  

Grossman St. Amour CPAs PLLC serves a diverse clientele across many industries.   Located in Syracuse New York, Grossman St. Amour CPAs PLLC provides businesses and individuals with accounting, audit, taxation, business formation and valuation, financial and retirement planning, investment management, and fraud examination and deterrence services.   For more information about how we can be of service to you, please call 315.422.1391, 800.422.1385 or visit www.gsacpas.com.

 

Grossman St. Amour CPAs is an independent member of PrimeGlobal, an Association of Independent Accounting Firms.   PrimeGlobal is the third largest association of independent accounting firms in the world.   PrimeGlobal is comprised of over 350 highly successful independent public accounting firms in 90 countries.  Through PrimeGlobal, independent member firms offer the strength and capabilities of a large, worldwide organization with technical depth and geographic reach impossible for a local firm alone.  
Grossman St. Amour Certified Public Accountants PLLC
110 West Fayette Street, Suite 900
Syracuse, NY 13202
315.422.1391
800.422.1385

Prime Global 





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