I had the fortune of attending the
Pottstown Society of Human Resources (SHRM) Meeting yesterday. It was an informative and interesting look at
the Patient Protection and Affordable Care Act (PPACA) presented by Charon
Planning consulting. I would like to
share some of the highlights from that PPACA presentation, supplemented with
some additional information pulled from the SHRM and IRS websites.
PPACA Rollout
Now that the PPACA is the law of the land, there are
significant changes that will fundamentally transform almost every aspect of
pay and benefits in the United States between now and 2018.
For quite some time, many businesses were holding off on
making changes due to the possible change in the landscape. However, the election is over. There will not be any changes in leadership
between now and the rollout of this plan.
It is imperative for HR, Payroll, and Benefits waste no time in starting
the change procedure. Be sure to
communicate changes to your employees as they happen as they will need the
information to make their decisions.
FSA Changes 2013
The PPACA limits pre-tax contributions to Flexible
Spending Accounts to $2,500 for calendar 2013.
There has been some further clarification by the IRS on that limit: Employers that offer more generous FSAs have
until Dec. 31, 2014 to roll out the changes to existing employees, but no new
employees can have the higher limit during 2013 or 2014. As a result of the PPACA, the “Use it or Lose
it” rule may or may not be lifted, pending resolution by the Treasury Dept and
the IRS.
Full Time
Employees
The definition of Full Time Employee is changing in 2014,
starting with a required “measurement period” for existing employees on Jan. 1,
2013. Full Time is considered any
employee who on average works 30 hours in a month, or could reasonably have been
expected to have worked 30 hours. After
the “measurement period” of 1 year ends, the employees will be eligible for
coverage based on the calculation. There
is than a 90 day time frame known as the “administrative period” where
employees will be notified of their status and options. Following that comes a “stability period”,
which happens concurrently with the next “measurement period”. There is a more complicated calculation which
will be required for new 2013 employees where a calculation of an overlapping “stability
period” will be required for 2014 and after.
90 Day Waiting
Period
Starting in 2014, Employers will be required to determine
within the first 90 days following hire whether an employee will be eligible to
enter the employer based insurance. Since
a “measurement period” will not yet have been completed, employers will need to
base this determination on expectation of whether the employee could be
expected to work full time over the next year.
Full Time Employee
Penalties
Per IRS codes 4980H(a) and 4980H(b), companies with
greater than 50 employees of any sort will be required to offer coverage. Full Time Employees will be required to be
covered by “affordable” medical insurance.
If you do not offer coverage to these Full Time Employees, a $2,000 per
employee penalty will apply. If medical
insurance is provided, but it is determined that it is not affordable under
Safe Harbor calculations and any single employee chooses to use a heathcare
exchange, the lesser of $3,000 per employee using the exchange or a $2,000 per
employee (every employee) penalty will be applied. If a penalty is applied, the employer will
also lose their 35% pretax corporate tax savings on the cost of the medical
plan. Additionally, if the penalty is
applied, the employer will also lose their 0.0765% FICA tax break. In the event affordable coverage is offered
by the employer, affordability being determined per the Safe Harbor calculation
applied to both the individual, spouse, and family; and the employee chooses to
enter the exchange, then there will not be a penalty applied.
Healthcare Subsidy
An employee can decide for any reason that an employer
offered plan is not right for them, whether it is due to affordability or other
issues. Should they choose to decline
the offer, they may receive a government subsidy for their healthcare. Individual employees making less than $44,680
annually will be eligible to receive a subsidy.
Employees with a spouse making less than $60,520 will be eligible to
receive a subsidy. There is a graduated
scale of subsidies which will be provided from the government based on the
number of children and marriage status.
Out of Time
Okay, I am out of time to post for today. There is really so much stuff here, I have
barely scratched the surface of the PPACA.
I have not even gotten to the Heathcare exchanges. If I
have time, I will circle back around to PPACA in the future. There is still so much information.
Disclaimer
Please note, this information is based on my
understanding and is only to be used for informational and educational
purposes. Do not take what I am writing
as advice. Seek legal counsel before
making business or personal decisions.
Relevant Links:
http://www.shrm.org/hrdisciplines/benefits/articles/pages/fsaguidance.aspx
http://www.shrm.org/hrdisciplines/benefits/articles/pages/ppaca-full-time-employees.aspx
http://www.gpo.gov/fdsys/pkg/USCODE-2011-title26/pdf/USCODE-2011-title26-subtitleD-chap43-sec4980H.pdf
http://www.gpo.gov/fdsys/pkg/BILLS-111hr3590enr/pdf/BILLS-111hr3590enr.pdf
Organizational Links:
Charon Planning consulting group (http://www.charonplanning.com/)
Pottstown SHRM (http://gtrpottstown.shrm.org/)
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