Understanding Affordable coverage and Minimum Value coverage

Here is information to help you understand affordable coverage and minimum value coverage.

Affordable coverage: If the lowest cost self-only only health plan is 9.5 percent or less of your full-time employee’s household income then the coverage is considered affordable. Because you likely will not know your employee’s household income, for purposes of the employer shared responsibility provisions, you can determine whether you offered affordable coverage under various safe harbors based on information available to you.

Minimum value coverage: An employer-sponsored plan provides minimum value if it covers at least 60 percent of the total allowed cost of benefits that are expected to be incurred under the plan.

Under existing guidance, employers generally must use a minimum value calculator developed by the Department of Health and Human Services and the IRS to determine if a plan with standard features provides minimum value. Plans with nonstandard features are required to obtain an actuarial certification for the nonstandard features. The guidance also describes certain safe harbor plan designs that will satisfy minimum value.

Courtesy of IRS

For more information contact Neikirk, Mahoney and Smith at 502-896-2999

Three Tax Considerations during Marketplace Open Enrollment

From Neikirk, Mahoney & Smith, the IRS has just published some tips on the health insurance marketplace. When you apply for assistance to help pay the premiums for health coverage through the Health Insurance Marketplace, the Marketplace will estimate the amount of the premium tax credit that you may be able to claim.  The Marketplace will use information you provide about your family composition, your projected household income, whether those that you are enrolling are eligible for other non-Marketplace coverage, and certain other information to estimate your credit.

Here are three things you should consider during the Health Insurance Marketplace Open Enrollment period:

1. Advance credit payments lower premiums - You can choose to have all, some, or none of your estimated credit paid in advance directly to your insurance company on your behalf to lower what you pay out-of-pocket for your monthly premiums.  These payments are called advance payments of the premium tax credit or advance credit payments.  If you do not get advance credit payments, you will be responsible for paying the full monthly premium.

2. A tax return may be required - If you received the benefit of advance credit payments, you must file a tax return to reconcile the amount of advance credit payments made on your behalf with the amount of your actual premium tax credit.  You must file an income tax return for this purpose even if you are otherwise not required to file a return.

3. Credit can be claimed at tax time - If you choose not to get advance credit payments, or get less than the full amount in advance, you can claim the full benefit of the premium tax credit that you are allowed when you file your tax return. This will increase your refund or lower the amount of tax that you would otherwise owe.

For more information about open season enrollment, which runs through January 31, 2016, visit Healthcare.gov. You can also contact Neikirk, Mahoney & Smith PLLC at 502-896-2999, or through our website contact form.

Understanding Your Form 1095-B, Health Coverage

From Neikirk, Mahoney & Smith, the IRS has just released the following information to help the public understand Form 1095-B.

"Form 1095-B, Health Coverage, is used to report certain information to the IRS and to taxpayers about individuals who are covered by minimum essential coverage and therefore aren't liable for the individual shared responsibility payment.

Minimum essential coverage includes government-sponsored programs, eligible employer-sponsored plans, individual market plans, and other coverage the Department of Health and Human Services designates as minimum essential coverage.

By January 31, 2016, health coverage providers should furnish a copy of Form 1095-B, to you if you are identified as the “responsible individual” on the form.

The “responsible individual” is the person who, based on a relationship to the covered individuals, the primary name on the coverage, or some other circumstances, should receive the statement. Generally, the recipient should be the taxpayer who would be liable for the individual shared responsibility payment for the covered individuals. A recipient may be a parent if only minor children are covered individuals, a primary subscriber for insured coverage, an employee or former employee in the case of employer-sponsored coverage, a uniformed services sponsor for TRICARE, or another individual who should receive the statement. Health coverage providers may, but aren't required to, furnish a statement to more than one recipient.

The Form 1095-B sent to you may include  only the last four digits of your social security number or taxpayer identification number, replacing the first five digits with asterisks or Xs. In general, statements must be sent on paper by mail or hand delivered, unless you consent to receive the statement in an electronic format.  The consent ensures that you will be able to access the electronic statement. If mailed, the statement must be sent to your last known permanent address, or, if no permanent address is known, to your temporary address."

If you have any questions or concerns, contact Neikirk, Mahoney & Smith PLLC at 502-896-2999. You can also contact us through our website contact form.

Employer health coverage questions addressed

BY PAUL BONNER

FEBRUARY 9, 2012

The IRS and Treasury Department, along with two other federal departments, on Thursday further described planned guidance on provisions for employer-sponsored health coverage mandated by the Patient Protection and Affordable Care Act (PPACA), P.L. 111-148, scheduled to take effect in 2014.
Treasury and the IRS issued Notice 2012-17 covering frequently asked questions (FAQs) by employers. The Departments of Labor and Health and Human Services simultaneously issued substantively identical notices, and the three departments will collaborate in developing the anticipated guidance.
Automatic enrollment to be delayed
Under regulations to be issued by the Labor Department, employers with more than 200 employers are required by the PPACA to automatically enroll new full-time employees in a health benefit plan they offer. FAQs issued last year indicated the Labor Department planned to issue the regulations by 2014. However, according to the FAQs released Thursday, Labor says the regulations will not be ready to take effect by 2014, because of a need for coordination in developing the guidance and its smooth implementation. Moreover, Labor has taken the position that employers are not required to comply with the automatic enrollment provisions until it issues the regulations.
Counting full-time employees
The FAQs also described planned approaches to determining whether an employee meets the 30-hour-per week threshold for being considered a full-time employee and thus counted toward the threshold of 50 or more employees that subjects an employer to the “shared responsibility” provisions of Sec. 4980H. Under those provisions, an employer is subject to a penalty if the employer-sponsored health coverage does not provide “minimum essential coverage” or is not affordable relative to the employee’s household income.
The IRS and Treasury are considering a safe harbor of a look-back period of three months (and not more than 12 months) for determining if an employee meets the definition of a full-time employee. This approach was outlined in Notice 2011-36.
Another planned safe harbor will allow use of the employee’s Form W-2 wages, in lieu of household income, to determine whether coverage is affordable.
Waiting period
The PPACA also limits to 90 days a group health insurer’s enrollment waiting period. The agencies are developing guidance on how to coordinate this period with the look-back safe harbor for determining the number of full-time employees.
Comments are requested by April 9 and should be sent to the Labor Department in a form and manner described in the notice. All comments will be shared by the three departments.
From the Journal of Accountancy