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<\/a><\/p>\nSmall employer tax credit
\nIf you employ fewer than 25 full-time equivalent
\nemployees (FTEs) with average annual wages of less
\nthan $50,000, and you contribute at least 50% toward
\nthe cost of your employees’ health insurance that is
\npurchased through a Marketplace, you may qualify for
\na small employer tax credit. The credit is up to 50%
\n(35% for qualified charitable employers) of the lesser
\nof your actual cost for health insurance coverage, or
\nthe amount of contributions you would have made
\nduring the taxable year if each employee had enrolled
\nin coverage based on a benchmark premium.
\nThe full credit is available if you have 10 or fewer
\nFTEs with average annual wages below $25,000. The
\ncredit is reduced if you have more than 10 FTEs (but
\nless than 25 FTEs) and\/or pay average annual wages
\ngreater than $25,000 (but less than $50,000). In any
\ncase, the credit is only available for two consecutive
\nyears.<\/p>\n
Play or pay
\nEmployers are generally not required to offer
\ncoverage, but those that don’t may be subject to a
\npenalty tax. In 2015, the penalty tax applies only to
\nemployers with 100 or more full-time equivalent
\nemployees (FTE) who do not offer qualifying health
\ncoverage to at least 70% of their FTEs. In 2016, in
\norder to avoid the penalty tax, qualifying coverage
\nmust be offered to 95% of FTEs, and extends to
\nemployers with 50 or more FTEs. The penalty is
\nassessed to eligible employers that do not offer
\ncoverage if at least one FTE receives a federal
\npremium subsidy for coverage purchased through a
\nhealth insurance Marketplace. In 2015, the employer
\npenalty is $2,000 per FTE excluding the first 80 FTEs.
\nBeginning in 2016, the same penalty applies but after
\nexcluding the first 30 FTEs.<\/p>\n
In addition, if an eligible employer offers health
\ninsurance that is not considered affordable or does
\nnot provide minimum value, the penalty is the lesser
\nof $3,000 per FTE receiving a federal subsidy, or
\n$2,000 per FTE, minus the first 30 FTEs. Health
\ninsurance provides minimum value if it pays for at
\nleast 60% of covered health care expenses. Health
\ninsurance is affordable when the cost of coverage is
\nno more than 9.5% of an employee’s family income.
\nEmployers with more than 200 full-time employees
\nthat offer health insurance must automatically enroll
\nnew full-time employees, subject to a waiting period
\nof no longer than 90 days.<\/p>\n
Other employer incentives
\nIn an effort to promote wellness and decrease health
\ninsurance costs, employers may offer employees
\nrewards, such as premium discounts and added
\nbenefits, for participating in wellness programs and
\nmeeting certain health-related standards. The value
\nof the rewards can equal as much as 30% of the cost
\nof coverage and may even reach 50% in some cases.<\/p>\n
Group health plan coverage
\nrequirements
\nGroup health plan requirements under the health-care
\nlegislation directly apply to insurers. However, most of
\nthese provisions are incorporated by reference into
\nERISA and the Internal Revenue Code, extending
\ntheir application to employers offering group health
\ninsurance. Beginning in 2010, some important group<\/p>\n
health plan requirements include:
\n\u2022 Group plans that offer coverage for dependent
\nchildren must extend the age for dependent
\ncoverage to age 26. For plans in existence prior to
\nMarch 23, 2010 (the date of legislative enactment),
\nthe extension of dependent coverage applies only
\nif an adult child is not eligible to enroll in any other
\neligible employer-sponsored health plan.
\n\u2022 Coverage for a plan participant cannot be
\nrescinded except for fraud or intentional
\nmisrepresentation, and plans may not impose
\npre-existing condition exclusions on any plan
\nparticipant or beneficiary.
\n\u2022 Plans may not impose lifetime limits on the dollar
\nvalue of essential health benefits for plan
\nparticipants and beneficiaries. Essential health
\nbenefits are intended to include those benefits
\ncustomarily provided under a typical employer
\nhealth plan, as defined by the Secretary of Health
\nand Human Services. Also,plans cannot impose
\nannual coverage limits for essential health
\nbenefits.
\n\u2022 Most preventive care services and immunizations
\nrecommended by the U.S. Preventive Services
\nTask Force will not be subject to deductibles,
\nco-pays, and co-insurance. (Plans in existence on
\nor before March 23, 2010, are exempt from this
\nprovision.)
\n\u2022 Most employers must meet certain reporting and
\ndisclosure requirements, which include providing a
\nsummary of plan benefits and annual reports to
\nparticipants; reporting annual enrollment and
\nclaims practices to the Secretary of Health and
\nHuman Services; and providing premium and
\ncoverage information to the IRS.<\/p>\n
Tax provisions
\nEmployers must include the aggregate cost of group
\nhealth plan benefits (with some exclusions) provided
\nto employees on Form W-2. And, employers are
\nresponsible for collecting and reporting an increase of
\n0.9% in FICA taxes on wages above $200,000. The
\nincrease applies only to the employee-paid portion of
\nFICA taxes.<\/p>\n
Group health plan sponsors may be assessed a tax of
\ntwo dollars or more per average number of insured
\nlives beginning. The tax is intended to finance a
\ncomparative effectiveness research program
\nmeasuring the value of various medical interventions.
\nThe tax is scheduled to sunset after September 30,
\n2019.<\/p>\n
Health-care legislation makes changes to health
\nsavings accounts (HSAs), Archer medical savings
\naccounts (MSAs), flexible spending accounts (FSAs),
\nand health reimbursement accounts (HRAs) that
\naffect both plan participants and employers.
\nOver-the-counter drugs no longer qualify for
\ndistributions\/reimbursements under HSAs, Archer
\nMSAs, health FSAs, and HRAs. In addition, the tax on
\nnonqualified distributions from HSAs or Archer MSAs
\nis 20%. Also, contributions to health FSAs are limited
\nto $2,500 per year.<\/p>\n
In 2018, a 40% excise tax is imposed on certain
\ngroup health plans (excluding long-term care, vision,
\nand dental plans) if the annual cost exceeds $10,200
\nfor single coverage and $27,500 for family coverage,
\nindexed for inflation.<\/p>\n
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