Nasbo ppaca update 2015

4/16/2015

NASBO PPACA UPDATE

Bobby Truhe KSB School Law (402) 804-8000 bobby@ksbschoollaw.com KSB School Law @btruhe

The Agenda  Where do things stand?  The Rules and Goals •

Who’s a “full time” individual?

•

Creating the Impact List

•

Understanding the tax penalties: apply to IL

•

Which type of method should you use to determine potential tax penalties?

 Employer reporting requirements  Timeline Summary

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Where do things stand?  Transition relief has begun!  100+ “Large Employers” may be subject to “unaffordable” tax penalties  KEEP COLLECTING DATA  The Goal: start planning now for 9/1/16 implementation using “lookback” and/or “monthly” method and create “impact list”

PPACA: The Rules

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“Large Employer” vs. Individual  “Large Employer” counting done yearly on a calendar-year basis • 2014 numbers dictate transition relief • Will report annually to IRS

 Individual counting is done in 12-month increments to determine individuals’ “full time” status • •

Employer chooses the “lookback” window Will report on each FT employee annually to the IRS

Goal #1: Determine Who May Be Individual Full-time Employees “The term full-time employee means, with respect to a calendar month, an employee who is employed at least 30 hours of service per week, or 130 hours of service in a calendar month.”

30 x 52 = 1560 / 12 = 130 Employment break period: 4 weeks or more Hours of Service (numerator) / Weeks (denominator) Create your “Impact List”

   

Goal #2: Create Your “Impact Lists”  Legal Impact List: any employee who 1. Is “full time” using the numerator/denom. approach 2. Does not receive affordable insurance

 Practical Impact List: excludes • • • •

those receiving insurance elsewhere, high household income, Medicaid/Medicare/Chip eligible families, and employees who refuse to use the exchange

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Goal #3: Learn the “Shared Responsibility Taxes” A. “Death Penalty” Fail to offer insurance to 95% or all but 5 FT employees: (FT – 30) x $2,000/year, which is $166.66 per month, per employee

B. “Individual Employee Penalty” Offer “unaffordable” insurance to any FT employees

Affordable v. Unaffordable  Employee can’t pay more than 9.5% of household income on the cheapest single only plan offered  Monthly Tax is 1/12th of $3,000 ($250) for each EE 1. Who receives “unaffordable” insurance; 2. Who buys insurance in marketplace/exchange; and 3. Who obtains a “premium credit”

 You don’t know their household income, so you have W2, Poverty Level, and ROP safe harbors

Premium Credits  Qualifications

• AGI less than 400% of poverty • No federal insurance eligibility

 400%

• 1: $47,080 • 2: $63,720 • 4: $97,000

 If the employee doesn’t qualify for a premium credit, take them off the “Practical Impact List”

PERSONS IN HOUSEHOLD

2015 POVERTY GUIDELINE

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$11,770

2

15,930

3

20,090

4

24,250

5

28,410

6

32,570

7

36,730

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40,890

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Goal #4: Understand Tax/Penalty Options for “Full-time” Employees “Lookback Method”

 • • • • • •

12-months worth of data (June 8, 2015 to June 7, 2016) Use the hours/weeks approach If FT during “lookback” you count as FT for the next 12-month period (aka “stability period”) If not FT, they remain not full-time for the “stability period” Only pay the tax penalty on those who are FT May fully eliminate as “full-time” some who would be “full-time” in certain months

Monthly Measurement Method

 • • •

You pay the tax penalty only in those months where the employee works 130 hours Allows calculation of penalties monthly based on hours for that month Individuals who may not be FT during the “lookback” may have some FT months

The Overlapping Lookback “Lookback” aka “Standard Measurement Period”

6/8/15

Admin.

Period

6/7/16

“Stability Period”

9/1/16

8/31/17

“Lookback” aka “Standard Measurement Period” 6/8/16

Admin.

Period

6/7/17

“Stability Period…”

6/7/16

Monthly vs. Lookback Paras Para #1 Aug: 80 Feb: 140 Sept: 155 Mar: 150 Oct: 150 Apr: 135 Nov: 110 May: 100 Dec: 80 Jun: 0 Jan: 115 Jul: 0 • •

Lookback: 1215/40=30.38, so you pay $3,000 Monthly: 5 months of >130, so you pay $1,250

Para #2 Aug: 80 Feb: 140 Sept: 140 Mar: 130 Oct: 140 Apr: 135 Nov: 100 May: 100 Dec: 80 Jun: 0 Jan: 115 Jul: 0 • •

Lookback: 1160/40=29, so you pay $0 Monthly: 5 months of >130, so you pay $1,250

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Goal #5: Weigh the Options  Establish your Practical Impact List  Calculate the costs 1. Affordable insurance: full single vs. 90.5% 2. Unaffordable: lookback vs. monthly

 Keep a few things in mind • •

EHA requires 50% single premium contribution Affordability is more “affordable” than you think…

Affordability of Current EHA Plans Offering only 50% of Single  $4,000 deductible

• $4,739.76 x 50% = $2,369.88 • Insurance is “affordable” with a household income of $24,946.11

 $750 deductible

• $6,319.68 x 50% = $3,159.84 x 15 = $47,397.60 • Insurance is “affordable” with a household income of $33,261.47

Reporting Requirements

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Reporting Requirements  The IRS assumes you know the rules!  For “Large Employers” to the IRS • • • • •

Collect employee data (TIN, dependent info)!!!

Certify “Large Employer” number Reprieve from reporting penalties for 2016 2 Forms: 1094-C and 1095-C Must be filed with the IRS on Feb. 29, 2016 (paper) or March 31, 2016 (electronically)

Reporting Requirements: Large Employer—1094-C

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Reporting Requirements  For “Large Employers” to all “full-time” employees •

• •

This assumes you have properly calculated “fulltime” status for each employee—miscalculation penalties in 2017 Provide “statement” to “full-time” employees by Jan. 31, 2016, which can be form 1095-C May be done electronically with “consent” (remember those Oct. 31 forms from 2013!?)

Reporting Requirements: Eligible Employees—1095-C

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PPACA Moving Forward • • • • • • • • • • • •

1/1/15: begin transition relief 4/16/15: TODAY—start planning 6/1/15: reduce hours/amend contracts 6/8/15: track hours if using lookback method 10/1/15: new EHA plan info 10/1/15: PPACA impacts bargaining 2/1/16: survey staff re PPACA 3/1/16: form subgroups if needed 6/7/16: end of 12-month hours tracking 6/10/16: make new offers 7/1/16: EHA application deadline 9/1/16: begin penalties & stability period

NASBO PPACA UPDATE Bobby Truhe KSB School Law (402) 804-8000 bobby@ksbschoollaw.com KSB School Law @btruhe

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