If you have employees, you know you could be required to provide health insurance for your employees or pay a fine under the affordable care Act (ACA).
Provide health insurance coverage is just one facet of the ACA requirements you may have to answer. As ACA becomes fully implemented, requirements and additional reporting rules come in.
Do not understand exactly what is required of you as an employer in 2015 and 2016 can be a very costly mistake.
as a business owner, make sure that you understand these 12 things about the ACA
# 1 - . If you have employees, you may be required to provide affordable health care options by 2016 at the latest.
If you have more than 50 employees, your business is seen as a major employer applicable (FTA) by the IRS and must provide affordable health care for them by the beginning of 2015 or the beginning of 2016 , depending on the number of employees you have.
If you have fewer than 50 employees, the fines do not apply to you.
If your company employs 50-99 people, you must provide health care to 95 percent of your employees on January 1, 2016 or be penalized. You will not be penalized in 2015 for not providing health care options.
If your company has more than 100 employees, you can be penalized earlier. You must provide health care coverage for at least 70 percent of your full-time employees by 1 January 2015 and 95 percent by January 1, 2016 or pay a penalty
# 2 -. ALE status this year is determined by the number of full-time employees that you had last year.
Your company "status FTA is determined each calendar year using the number of full-time employees in the previous year. For example, your 2015 FTA status is determined by the number full-time employees that you had in 2014, 2016 and your status will be based on 2015 full-time employees
# 3 -. You can have 50 or more full-time employees by the standards of the ACA, even if you have fewer than 50 employees who actually work full time.
According to the ACA, a full-time employee is someone who works 30 hours or more per week. It is more complicated than simply counting full-time heads. Your part-time employees may also affect the number of full time equivalent employees you have.
For example, you might have 40 full-time employees and 20 part-time employees, but the ACA may consider you have 50 employees or more based on the total hours worked.
You would be required to offer health insurance or pay a penalty. You might even have 50 full-time employees compared to ACA standards if you have exactly zero full-time employees, if your part-time employees put in enough hours in total.
Check with your state of the market for the method you should use to determine the number of employees in full-time equivalent. Some states use slightly different methods of calculation.
Here's how the calculation works often. Add up all the hours worked by part-time employees for the year, and divide the total by 2080.
Add the result to your number of full-time employees working on average 30 hours or more per week . This is how many full-time equivalent employees that you have for the ACA.
Always round down to determine the number of equivalent full-time employees you have. For example, if you have 49.7 full-time equivalent employees, around the number of employees to 49.
Because you can not predict that number for the current year, your status is based the number full-time equivalent employees you had the previous year
# 4 -. you, your spouse and other family members do not count as full-time employees
When calculating the number of employees. you have the purpose of the ACA requirements, do not count yourself, your spouse, shareholders or partners who own more than 2 percent of an S corporation or more than 5 percent of a company C, or spouses or family members of those owners.
a family member for this purpose is a child, grandchild, brother or brother, a parent or grandparent, step-family member or law, or nephew niece, aunt or uncle, or the spouse of one of these
# 5 - .. If you offer health insurance, you may qualify for a tax credit
If you have fewer than 50 employees (based on the definition of the ACA of full-time equivalent), you will not be penalized if you do not provide insurance.
There are still motivated to get insurance, however. You may qualify for a special tax credit if you offer health insurance that meets the minimum requirements under the ACA.
For more information, refer to IRS Q & As on the tax credit for health care for small businesses.
# 6 -. "Affordable" coverage you offer must be considered
The first part of determining whether a plan is affordable is simple. The plan must pay for at least 60 percent of covered health care expenses.
The second part is a little more difficult to determine. Your employees can not be required to pay more than 9.5 percent of their annual income for coverage.
But how do you know that "the income of your household employee? You do not do
Fortunately, the IRS provides three safe harbors for determining affordability :.
- W-2 wages - Make sure the employee contribution required to cover the self-only is not more than 9.5 percent of the gross salary of each employee the W-2
- pay rate - .. you can determine affordability based on monthly or hourly rate of the employee
- federal poverty level (FPL) - you are sure if the cost of the employee does not exceed 9.5 percent of the FPL
Unless you have a health plan's grandfathered group, you must answer a third condition -. out-of pocket maximum.
2015, the maximum is $ 6,0 for an individual or $ 13.0 for a family plan. This is the total limit the employee must pay for deductibles, co-insurance, co-payments and similar charges for essential health benefits, combined. The total does not include bonuses or fees excluding network
# 7 - .. You are not required to cover spouses or dependents of employees
The Act affordable care does not require you to provide coverage for spouses and dependents. If you provide such coverage, you must have a plan that allows young adults to stay on their parents plans until age 26.
There is no requirement that coverage dependent is "affordable."
# 8 -. from 2015, employers will be fined if they give money used to buy health insurance
Some employers give their funds designated employees to buy health insurance and tell them to buy their own insurance
This can be called a health Reimbursement arrangement (HRA) or paying employer Plan (EPP). On June 30, 2015, it is prohibited for most small businesses, under penalty of $ 100 per day per employee beautiful
There is still allowed to pay employees more. but the salary can not be provided that the employee purchase insurance. In addition, the employer and the employee must pay the FICA tax amount and the extra income is taxable to the employee
# 9 -. You might be able to find and purchase plans for group employees in the shop market.
As the federal market for individuals, the SHOP market allows companies with less than 100 employees in full time equivalent purchase plans for their employees. You can also find tax relief SHOP (www.healthcare.gov)
# 10 - .. You must provide specific market information to employees
market you'll soon be held to provide information to your employees. This is true if you offer health insurance or not. This declaration began voluntary for coverage providers in 2014 and became mandatory in early 2016.
# 11 -. Be aware of the maximum 0-day period for Medicare coverage pending
If you offer an insurance plan, you must provide all eligible employees within 0 days of their start date
# 12 - .. you might have to retain an additional Medicare tax for high performance employees
from 2013, you must withhold the additional Medicare tax wages you pay an employee more than $ 0,000 in a calendar year.
This is true even if the employee is not liable to pay tax, unless his salary with those of his spouse exceeds $ 250,000 if he files jointly.
When your employees file their tax returns for the year, they may have to the Medicare tax less than they had detained.
for more information on the above, please visit:
- Healthcare.gov - official website of the federal government where individuals and small businesses can apply for coverage , change plans, and get answers
- www.irs .. gov / Affordable-Care-Act - Your IRS resource for all matters of ACA in tax matters. Be sure to consult the ACA Information Centre for Tax Professionals
- HealthcareACT.com, powered by TaxAct -. Information, calculators, and resources to help you make sense of the tax implications of the ACA [
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