Affordable Care Act regulations

[taxea]

https://www.healthcare.gov/small-businesses/

[TaxGuyBill]

I think it is okay.

It is definitely okay with the ACA.

From what I read for the regular discrimination of Highly Compensated Employees under §105, the 'penalty' for that is adding it to the taxable wages of the Highly Compensated Employee. It may or may not fall under that (in my opinion, it would not). However, adding the health insurance to the taxable wages is already done for S-corporation shareholders, so even if would be classified as discrimination, nothing really changes.

[equinecpa]

In one case yes one employee and one shareholder-only shareholder is covered by health insurance.

This one is OK? Perhaps I misled there are two employees (one a more than 2% shareholder, and then another employee)? I thought one couldn't pick and choose who is covered?

[TaxGuyBill]

Both of those situations are okay with ACA. The second one is only okay because the husband is a "constructive" >2% owner. If a regular non-shareholder employee was reimbursed for insurance, it would not work.


The insurance cost can be paid directly by the corporation or the taxpayer can pay it and the corporation reimburses them. That amount is added to box 1 of their W-2 (so the corporation will deduct it as wages).

The shareholder can deduct it as a Self Employed Health Insurance Deduction on Line 29 of the 1040 (assuming they have wages from the corporation besides the health insurance).

If the husband (non-shareholder) has separate insurance from his wife (shareholder) and is paid from the corporation for it, it is still added to box 1 of his W-2 because of constructive ownership. However, the SEHI deduction is a little questionable. A clearer way would be for the corporation to reimburse the wife for her spouse's insurance (the non-shareholder husband), and then it would definitely qualify for the SEHI deduction.

[equinecpa]

Is there anything specific that you want to know?

Are there any employees BESIDES >2% Shareholders?

In one case yes one employee and one shareholder-only shareholder is covered by health insurance.

In another husband and wife, wife is shareholder, husband works for the business and will receive w-2. Would health insurance coverage for husband be deductible?

[TaxGuyBill]

Do you have further info on this? Need to do some tax planning with a couple S Corp clients who are affected by this?

Is there anything specific that you want to know?

Are there any employees BESIDES >2% Shareholders?

[equinecpa]

Can you Elaborate

Not enough information - if the S Corp has a qualified ACA group plan that is the only way you can get a 105 pre-tax plan that qualifies. If you do have group plan how does the extra charge work.

Went to a seminar Friday - for S corp 2% or more stockholders we are back to the 2008 rules for 2015. In other words even if you do not cover employees if you reimburse or pay the stockholder's insurance - put it on the W-2 (not subject to Fica/Medi) you get the deduction above the line. You could reimburse employees individual policies to 6/30/15.

Do you have further info on this? Need to do some tax planning with a couple S Corp clients who are affected by this?

[TAXNJ]

CPA firms

There are 5 employees on payroll of a S-corp, 3 of them are full-time employees. The owner is one of the 3 full-time employees.

The S-Corp has health insurance coverage for the 3 full-time employees only. One of them (not the owner) is of older age, so her premiums are much higher than the other two.

Because of her higher premiums, the S-Corp has an agreement with the older employee that she pays for a portion of the premiums. And her portion of payment is being taken out pre-tax from her paychecks.

Are there any potential violation of the ACA regulations?

You might want to refer to a local CPA firm who may have partners or a department that have dedicated services of the ACA. Some accounting firms have accountants getting insurance licenses and may or may not cover the ACA.

Last resort is to start reading about the ACA. Stay away from comments like " if you like your doctor you can keep your doctor" or "your premiums will go down by $2500".

[kathyc2]

Tell them if they promise not to take tax advice from their insurance agent, you will give them tax advice and not insurance advice!

LOL! I wish I could find an insurance agent that understands APTC to send clients to. Spent over 1/2 hour this morning explaining to an agent how a couple can sometimes both be covered for less net premiums than one can.

[Lion]

There are Navigators especially trained for ACA navigation. And, insurance agents should be able to search both on and off the exchanges/marketplaces.

Tell them if they promise not to take tax advice from their insurance agent, you will give them tax advice and not insurance advice!

[JohnH]

I know I have frustrated several clients by refusing to answer ACA questions. I may have even lost one or two over this issue. If so, I really don't care.

But every time someone asks me a question about ACA, I continue to tell them I'm not an insurance agent. I emphasize that they would be better served to ask their current insurance agent, and if he/she says to ask their accountant they should push back, telling the agent that their accountant handlles taxes, not insurance. They should insist that their insurance agent give them answers or steer them to someone who knows. If the insurance agent isn't capable of either giving them an answer or giving them a good referral, they need another agent.

It's odd that so many clients will let their agent/banker/broker off the hook when he says "Ask your accountant", but they won't accept the same response from us. Maybe some of us need to grow a thicker skin.

[TAXNJ]

AGENTS and

Good advice. But what's next then? I have no problem at all to admit to them that I do not have the expertise to give advice on the insurance issue and the related regulations. But I think I have to tell them where to go to get the answers. Shall I tell them to go to see an attorney? And what kind of attorney should they go to?

As other reply posters suggested. Also, insurance agents, ACA government websites and many local volunteer organizations and government assistance agencies to name a few.

[Questionguy101]

Don't worry.
If beyond your level of expertise - don't advise.

Good advice. But what's next then? I have no problem at all to admit to them that I do not have the expertise to give advice on the insurance issue and the related regulations. But I think I have to tell them where to go to get the answers. Shall I tell them to go to see an attorney? And what kind of attorney should they go to?

[JON]

Problem

Not enough information - if the S Corp has a qualified ACA group plan that is the only way you can get a 105 pre-tax plan that qualifies. If you do have group plan how does the extra charge work.

Went to a seminar Friday - for S corp 2% or more stockholders we are back to the 2008 rules for 2015. In other words even if you do not cover employees if you reimburse or pay the stockholder's insurance - put it on the W-2 (not subject to Fica/Medi) you get the deduction above the line. You could reimburse employees individual policies to 6/30/15.

[Stringbean]

Original Question

QuestionGuy, I don't think your problem is with the ACA - in fact, from the information you gave us, this S-corp is not even subject to ACA.

I do very much believe you have a problem with non-discrimination provisions of s. 125. There are allowable differences which can alter the employees' contribution such as length of service, part-time status, level of coverage, etc. But I don't believe age or medical condition can create an additional withholding.