pay or play?
DESCRIPTION
"Should I provide health insurance for my employees?" The process for determining the cost of providing health care benefits and the impact of health benefits an retaining and attracting best-in-class employees.TRANSCRIPT
E D U C A T I O N S E R I E S
Pay or Play?
Date: August 10, 2010
Presented by:
Dominic Franchini
Vice President Market Development, HORAN
William Freedman
Attorney, Dinsmore & Shohl
Marty Howard, CPA
Cassedy Schiller
Agenda - Pay or Play
Define the regulation, employers affected and timeline
Review the moving parts
Model options and costs
Identify tax consequences
Discuss employer notification requirements
Share other key points to consider
Regulation Highlights
Beginning in 2014, individuals must maintain “minimum essential coverage” or pay a penalty
Applicable large employers with 50 FTE’s may owe penalties• Failure to offer “minimum essential” health coverage • Offering “minimum essential” health coverage that is not affordable
Full time employee = 30 hours or more per week
Full time employees may be eligible to purchase coverage through exchange
Full time employee may qualify for premium credit
Who is affected
Businesses with 49 employees or less• Exempt from pay or play mandates
Businesses with 25 employees or less• Exempt from pay or play mandates• Eligible for tax incentives IF currently offering group health benefits
Businesses with 50 or more employees• Required to comply with pay or play mandates
Timelines
Insurance as “usual” until 2014• New discrimination rules• New underwriting requirements
W-2 reporting of 2011 benefits
Small business tax credit 2010 - 2013
Exchanges established by January 1, 2014
Pay or Play begins January 1, 2014
Things to Consider
How much does insurance cost my company today?
How much would I pay in penalties?
Is my benefit plan design compliant? Cost to change benefit design?
Do I have employees a 100% to 400% federal poverty guideline?
Is my contribution affordable for those employees?
How much would penalty be for employees receiving assistance?
How would employees purchase insurance outside employer? Cost?
For Example
Em
ployers Must
Offer Minimum Essential
- 60% actuarial value
- Grandfathered plan
(Tax deductible)
Offer Affordable- 9.5% or less of AGI
- Single coverage
- Lowest plan offered
(Tax deductible)
Offer Voucher- 8% - 9.8% AGI
= to ER contribution
(Not deductible)
Pay Penalty$3,000xFTE receiving
assistance
(Not deductible)
Pay Penalty$2,000xFTE-30
(Not deductible)
8
Employer Notification
Required notifications to employees (Not later than March 1, 2013)• Existence of an Exchange, description of services, how to get assistance• Employer plan’s share of total allowed cost is less than 60%, eligibility for premium tax credit• Purchase of health plan through exchange, outside free choice voucher, may forfeit employer contribution and tax deduction
Required notifications to Secretary of Treasury• Name / Address / TIN # / months enrolled for all FTE• Waiting period• Months during year coverage is available• Monthly premium for lowest cost option• Employer’s share of total allowed cost
Common Considerations
Divisions / Common ownership
Cafeteria plan
1099 employees
Contributions defined as % income