the dental practice guide to the healthcare act
DESCRIPTION
The impact of the Healthcare Act on dentists, employees of dentists and dental practices.TRANSCRIPT
The Healthcare Act – Its Impact to You, Your Employees & Your
PracticeBy Adam Decker, CPA, CVA
What We’ll Cover:• Patient Protection and Affordable Care Act (PPACA) aka “Obamacare”
• Background• You & Your Employees: The Impact • Your Practice: The Impact• Tax increases to help pay for the Act• Reporting and compliance
Background• PPACA passed in March 2010• Supreme Court upheld in March 2012• Provisions in effect 2010 until 2018• Requires individuals to have health coverage (the mandate)• Penalizes employers with > 50 employees who don’t provide coverage• Eliminates most ability to discriminate as to who is covered based on compensation
Background: •Contains terms and provisions to: - encourage affordability
- make coverage more accessible and attainable • Imposes new taxes to help pay for the Act
You & Your Employees: The Impact • Mandate to have health coverage – starts 2014• Coverage must include self and dependents• Must be “minimum essential coverage” • Fines for not having coverage:
example of $285 in 2014escalates to $2,085 in 2016
• No fines if cannot afford (share of premiums exceed 8% of household income)
You & Your Employees: The Impact • Fine enforcement assessed through income tax returns• Failure to pay fines:
Not considered criminalCannot be levied to collectCannot place lien to collectCan be collected through tax refunds
You & Your Employees: The Impact Starting in 2014:• You cannot be turned down for coverage for pre-
existing conditions• State exchanges will exist as a new option where
coverage can be purchasedNow: • Children up to age 26 can be covered under
parent’s family plan
You & Your Employees: The Impact • Premium Assistance Credit will begin in 2014• Receive credit when the state exchange is utilized• Credit will usually be paid direct from government to the exchange•Consumer (non-credit) share of premiums will be paid via payroll deductions
You & Your Employees: The Impact
Credit based on
cost of premiums in relation to income on a sliding scale
You & Your Employees: The Impact • Credit then determined based on this scale:
Source: Kaiser Family Foundation calculations
You & Your Employees: The Impact • IF individual is eligible for employer coverage,• AND the coverage is affordable (as defined),•THEN the individual is NOT eligible for this credit,• EVEN if the individual chooses to not participate in the employer’s coverage
Your Practice: The Impact IF < 50 employees = No requirement to provide coverageIF > 50 employees = Penalized $2,000 - $3,000 per employee/year for not providing coverageWhen coverage is provided = subject to non-discrimination rules
Failure to comply with nondiscrimination rules = penaltyPenalty = $100/employee/day of noncomplianceStarts when regulations issuedGrandfather provisions exist
Your Practice: The Impact •By the practice providing coverage that is affordable, it disallows employees from receiving premium assistance credit
•If currently have group plan, but only owner and spouse (and maybe select others), will need to change to comply
Your Practice: The Impact If S-corporation or C-corporation:• The practice currently must pay (or reimburse)
premiums for the premiums to be beneficially deductible
• Thus, to get beneficial deductions for the owner premiums, must provide coverage
• But, will no longer just cover the owner
Your Practice: The Impact If a sole proprietor or partnership:• Currently premiums can be paid individually into an
individual plan and be beneficially deductible• In a partnership, if paid by the company, will have to
comply with nondiscrimination
Your Practice: The Impact Considerations for those currently who do and do not provide coverage:• Detriment or benefit to employees?• Deductibility of owner premiums• Impact for those currently on spouses plans and
changes their employers will make• If > 50 employees offer coverage or pay penalty?
Tax IncreasesMedicare tax increases from 2.9% to 3.8% when income is:
> $250,000 (married)> $200,000 (single)
Investment tax:3.8% for same income ranges above Investment income, capital gains, passive income, interest income, rental incomeUnclear & awaiting regs rent from practice to self for building (appears this is)
Reporting and Compliance• This year, tax filings will have to break out receipts from credit cards• Receive 1099-K
• 1099 rules repealed• Sent to every vendor
• W-2 reporting> 250 employees this year must report value of health insurance provided starting 2012< 250 employees possibly starting 2013
Bonus Taxes!Currently scheduled for 2013• Income tax rates go to 2001 levels• Capital gains go to 20% from 15%• Dividends rate goes to 15% to as high as 39.6%• Phase-outs on itemized deductions and exemptions
come back• FICA tax holiday goes away
