Employee Health Coverage

[AccTaxMan]

Can an employer set his own rule for the employee's health premium coverage?

Suppose employer wants to set a rule that he will cover only 80% of the employee's health premium up to $700 per month. Is he allowed to do that?

[mactoolsix]

Minimum Essential Coverage. Once an employer determines that it is an Applicable Large Employer (50 or more full-time employees during the previous calendar year), it becomes potentially subject to the excise tax in two different situations. If the Applicable Large Employer fails to offer minimum essential coverage to its full-time employees and their dependents, and any full-time employee is certified as having enrolled in health insurance through a State Health Insurance Exchange where a premium tax credit or cost-sharing reduction is granted, the employer may be subject to a penalty. Additionally, even if an Applicable Large Employer does offer full-time employees minimum essential coverage and one or more full-time employees is certified to receive premium tax credit, a penalty may still be levied against the employer. Such an assessment will typically occur where the coverage was not “affordable” or does not provide “minimum value.”

Affordability. Under the IRS rule, coverage is considered “affordable” if the employee’s contribution for employee-only coverage does not exceed 9.5 percent of the employee’s household income. The IRS rule contains three safe harbors for employers to use in meeting this standard: the Form W-2 Safe Harbor, the Rate of Pay Safe Harbor and the Federal Poverty Line Safe Harbor.

Minimum Value. The IRS rule provides that a health insurance plan fails to have “minimum value” if the plan’s share of the total allowed costs of benefits is less than 60 percent of total cost. The IRS rule outlines three methods of calculating minimum value and the Department of Health and Human Services is expected to issue regulations specifying actuarial procedures for making this determination.

Source: http://www.lexology.com/library/deta...5-d0f4037c06f1

Mike

[AccTaxMan]

Minimum Essential Coverage......

Source: http://www.lexology.com/library/deta...5-d0f4037c06f1

Mike

Thank you mactoolsix. Do these rules only apply to the employers who have more than 50 employees? If the taxpayer that I am talking about only have 5 employees, he is excluded from these rules. Is it correct?

[mactoolsix]

Come 2014 Small Businesses with over 50 employees that choose not to provide insurance (employers must pay at least 60% of covered health care costs), provide insurance that is too expensive, or insurance that doesn't meet the minium standards set forth by ObamaCare (must provide the minimum benefits of a "bronze" plan bought on the ObamaCare health insurance exchange) and cannot exceed 9.5% of family income for the employee will have to pay an "employer responsibility requirement" penalty.

Mike

[LCP]

Come 2014 Small Businesses with over 50 employees that choose not to provide insurance (employers must pay at least 60% of covered health care costs), provide insurance that is too expensive, or insurance that doesn't meet the minium standards set forth by ObamaCare (must provide the minimum benefits of a "bronze" plan bought on the ObamaCare health insurance exchange) and cannot exceed 9.5% of family income for the employee will have to pay an "employer responsibility requirement" penalty.

Mike

"50 employees" - full-time, full-time equivalents or something else?

"bronze plan, etc." when will that be established? As of 12/31/13?

"9.5% of family income" ... I thought it was 9.5% of gross wages for that particular member of the family.

[mactoolsix]

"50 employees" - full-time, full-time equivalents or something else?

Generally speaking, to be considered a large employer, the employer must average at least 50 full-time equivalents during the preceding calendar year.

http://www.shrm.org/templatestools/hrqa/pages/healthcarereformeligibilitywillseasonalfull-timeemployeeshavetobeprovidedhealthcarecoveragebeginningin2014toavoidthepenalti.aspx

"bronze plan, etc." when will that be established? As of 12/31/13?

Supposed to be available for purchase on Oct 1, 2013 - effective date Jan 1, 2014 - Insurance exchanges will be handled by individual states.

http://obamacarefacts.com/obamacare-health-insurance-exchange.php

"9.5% of family income" ... I thought it was 9.5% of gross wages for that particular member of the family.

Robert Pear reported in The Times recently, the law considers a worker’s share of the insurance premium unaffordable when it exceeds 9.5 percent of the worker’s household income. But that calculation is based on individual coverage for the worker alone, not family coverage, which is much more expensive. That is how the wording of the law has been interpreted by the Internal Revenue Service and the Congressional Joint Committee on Taxation.

http://www.nytimes.com/2012/08/26/opinion/sunday/a-glitch-in-health-care-reform.html?_r=0

Mike