Obamacare 101 Karen Haase Bobby Truhe (402) 434-3000 H & S School Law @KarenHaase @btruhe schoollaw@hslegalfirm.com
Class Syllabus Transition Relief Tax Penalties: the basics Timeline for Implementation Your Questions
The Bottom Line If you have a “large employer” number of less than 50 after 2016, the PPACA penalties do not apply to you—but it’s a yearly calculation If you are a “large employer,” you have to offer affordable insurance or pay tax penalties after the end of “transition relief”
Transition Relief Essentials “Large Employer” number for 2014 calendar year determines transition relief With transition relief, most Nebraska schools won’t be taxed until 9/1/16 You should: • Determine your “large employer” number • Update your entire board
Large Employer Counting Full-Time Employees ‒ 120 hours in the month ‒ Count as “1” no matter how many hours over 120
Full-Time Equivalent Employees ‒ Fewer than 120 hours in the month ‒ Add up all hours of the month and divide by 120
“Hour of service” means paid or entitled to payment (vacation, holiday) Calculated every month (summer months)
Large Employer Calculation MONTHLY computation Each month will have a “FT” and a different “FTE” 12 FT #s + 12 FTE #s Divide by 12
Special 2014 Rule All employers may use any period of 6 consecutive months This can be April through August THIS ONLY APPLIES FOR THE 2014 CALENDAR YEAR For calendar 2015, you must use all 12 calendar months Being below 50 for 2014 does not matter
3 Types of Transition Relief 1. Schools with less than 50 employees 2. Schools with between 50-99 employees 3. Schools with more than 100 employees
Calculating Your Large Employer Number Full-Time Employees ‒ 120 hours in the month ‒ Count as “1” no matter how many hours over 120
• Full-Time Equivalent Employees ‒ Fewer than 120 hours in the month ‒ Add up all hours of the month and divide by 120
“Hour of service” means paid or entitled to payment (vacation, holiday) All calculated by the calendar month
1) Less than 50 employees
The Bottom Line If less than 50 FT+FTE employees, your district does not have to comply with the employer mandate Will have recordkeeping and filing requirements even if you’re a “Small Employer” Will have to make the “Large Employer” calculation every year
2) 50-99 employees
No Mandate until 9/1/16 if: 50-99 employees • Use counting rules above • Can use 6 month period for 2014-15*
Don’t cut hours to get to 99 Don’t eliminate or reduce insurance coverage already offered* File yearly forms with IRS beginning in 2015
3) 100 or more employees
Limited Transition Relief If coverage offered to at least 70% of full-time (30 hours per/week) employees, district will only have to pay Penalty B ($3k per individual) if any of the plans are “unaffordable” Penalty B calculated by total employees less 80 (not 30) for 2015 Which leads us to…
Tax Penalties under PPACA
Tax Penalties under PPACA To understand the options available for compliance, you must understand the tax penalties They ONLY apply to full-time employees, meaning those employees who work 30 hours per week on average For more on individual full-time employees and districts’ options, attend Obamacare 201
Tax Penalties under PPACA Penalty A (“death penalty”) • Offer no insurance • Pay $2000 times total FT EE’s, minus 30
Penalty B (“unaffordable penalty”) • Offer insurance, but it isn’t affordable to everyone • 9.5% = affordable* • Pay $3,000 for each staff member who ‒ Doesn’t take school’s insurance ‒ Obtains insurance on the exchange ‒ Receives a subsidy
Tax Penalty A 95% rule: must offer insurance to all but 5% of FT EEs Takes one FT EE to obtain premium credit AND insurance on exchange Tax is (FT – 30) x $2,000 • Example: 137 FT – 30 = 107 x $2,000 = $214,000 • (-80 for 2015)
Premium Credit Qualifications: • AGI less than 400% of poverty • No Medicaid or CHIP • Non-complying employer plan
Persons in household
2014 Poverty guideline
1
$11,670
2
15,730
3
19,790
4
23,850
5
27,910
6
31,970
7
36,030
8
40,090
Tax Penalty B 95% rule applies EE can’t pay more than 9.5% of household income on single only plan • W2 and hourly rate safe harbors
Tax is $3,000 x each EE who gets • (1) insurance on exchange, AND • (2) a premium credit
What you NEED to do NOW If you’re not tracking hours, START • Consider having all staff track, at least in specific months
Make your PPACA database Do NOT make major changes now.
Obamacare 101 Karen Haase Bobby Truhe (402) 434-3000 H & S School Law @KarenHaase @btruhe schoollaw@hslegalfirm.com