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Started By
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I.R.S. Bars Employers From Dumping Workers Into Health Exchanges
Posted on 5/26/14 at 10:21 am
Posted on 5/26/14 at 10:21 am
LINK
quote:
WASHINGTON — Many employers had thought they could shift health costs to the government by sending their employees to a health insurance exchange with a tax-free contribution of cash to help pay premiums, but the Obama administration has squelched the idea in a new ruling. Such arrangements do not satisfy the health care law, the administration said, and employers may be subject to a tax penalty of $100 a day — or $36,500 a year — for each employee who goes into the individual marketplace.
The ruling this month, by the Internal Revenue Service, blocks any wholesale move by employers to dump employees into the exchanges.
quote:
Christopher E. Condeluci, a former tax and benefits counsel to the Senate Finance Committee, said the ruling was significant because it made clear that “an employee cannot use tax-free contributions from an employer to purchase an insurance policy sold in the individual health insurance market, inside or outside an exchange.”
If an employer wants to help employees buy insurance on their own, Mr. Condeluci said, it can give them higher pay, in the form of taxable wages. But in such cases, he said, the employer and the employee would owe payroll taxes on those wages, and the change could be viewed by workers as reducing a valuable benefit.
“For decades,” Mr. Biebl said, “employers have been assisting employees by reimbursing them for health insurance premiums and out-of-pocket costs. The new federal ruling eliminates many of those arrangements by imposing an unusually punitive penalty.”
When an employer reimburses employees for premiums, the arrangement is known as an employer payment plan. “These employer payment plans are considered to be group health plans,” the I.R.S. said, but they do not satisfy requirements of the Affordable Care Act.
11
Posted on 5/26/14 at 10:23 am to wickowick
woudln't more people in the the exchange be better for it? especially if they can pay for it?
Posted on 5/26/14 at 10:24 am to wickowick
Yay for freedom of choice!
Posted on 5/26/14 at 10:24 am to wickowick
So is he just all out trying to kill business now?
Posted on 5/26/14 at 10:25 am to SammyTiger
quote:
woudln't more people in the the exchange be better for it? especially if they can pay for it?
the only reason to to go the exchanges is if you need subsidies, so to answer your question: doubtful
Posted on 5/26/14 at 10:28 am to wickowick
Get ready for the age of the 'independent' contractor in the work force.
Posted on 5/26/14 at 10:29 am to Reubaltaich
quote:
Get ready for the age of the 'independent' contractor in the work force.
My business field currently uses it, bring it on, more for me...
Posted on 5/26/14 at 10:40 am to wickowick
If they have less than 50 employees, they can still do this, correct?
Posted on 5/26/14 at 10:44 am to Lsut81
Actual Regulation
Q1. What are the consequences to the employer if the employer does not establish a health insurance plan for its own employees, but reimburses those employees for premiums they pay for health insurance (either through a qualified health plan in the Marketplace or outside the Marketplace)?
Under IRS Notice 2013-54, such arrangements are described as employer payment plans. An employer payment plan, as the term is used in this notice, generally does not include an arrangement under which an employee may have an after-tax amount applied toward health coverage or take that amount in cash compensation. As explained in Notice 2013-54, these employer payment plans are considered to be group health plans subject to the market reforms, including the prohibition on annual limits for essential health benefits and the requirement to provide certain preventive care without cost sharing. Notice 2013-54 clarifies that such arrangements cannot be integrated with individual policies to satisfy the market reforms. Consequently, such an arrangement fails to satisfy the market reforms and may be subject to a $100/day excise tax per applicable employee (which is $36,500 per year, per employee) under section 4980D of the Internal Revenue Code.
Q1. What are the consequences to the employer if the employer does not establish a health insurance plan for its own employees, but reimburses those employees for premiums they pay for health insurance (either through a qualified health plan in the Marketplace or outside the Marketplace)?
Under IRS Notice 2013-54, such arrangements are described as employer payment plans. An employer payment plan, as the term is used in this notice, generally does not include an arrangement under which an employee may have an after-tax amount applied toward health coverage or take that amount in cash compensation. As explained in Notice 2013-54, these employer payment plans are considered to be group health plans subject to the market reforms, including the prohibition on annual limits for essential health benefits and the requirement to provide certain preventive care without cost sharing. Notice 2013-54 clarifies that such arrangements cannot be integrated with individual policies to satisfy the market reforms. Consequently, such an arrangement fails to satisfy the market reforms and may be subject to a $100/day excise tax per applicable employee (which is $36,500 per year, per employee) under section 4980D of the Internal Revenue Code.
Posted on 5/26/14 at 10:47 am to wickowick
But I thought if the business had less than 50 employees, they were not required by the law to provide insurance???
So are they now saying, "If you have less than 50 employees and you're willing to provide them a subsidy rather than completely dropping them, were going to fine you.... So you might as well just go ahead and screw them over"
Thats basically what I am asking
So are they now saying, "If you have less than 50 employees and you're willing to provide them a subsidy rather than completely dropping them, were going to fine you.... So you might as well just go ahead and screw them over"
Thats basically what I am asking
Posted on 5/26/14 at 10:48 am to Lsut81
quote:
So are they now saying, "If you have less than 50 employees and you're willing to provide them a subsidy rather than completely dropping them, were going to fine you.... So you might as well just go ahead and screw them over"
That is what it looks like...
This post was edited on 5/26/14 at 10:49 am
Posted on 5/26/14 at 10:50 am to wickowick
quote:You think so, but you are not considering all the differences between being an employee and being self-employed. The real beneficiaries of independent contractors would be the businesses. The reason there are presumptive conditions for employee status versus contractor status is to prevent businesses from avoiding costs that apply to employees but not contractors, and to ensure the workers get benefits available to employees but not contractors.
more for me...
Posted on 5/26/14 at 10:50 am to wickowick
quote:
That is what it looks like...
fricking government at work
Posted on 5/26/14 at 10:53 am to Lsut81
This may be a good place to ask... I asked this on the Money board in a healthcare thread.
What date determines whether you are compliant with the HC law? Lets say you have a job with insurance until April 15th, two weeks after the deadline, and then you lose it and don't get insurance for the rest of the year... Are you fined?
What date determines whether you are compliant with the HC law? Lets say you have a job with insurance until April 15th, two weeks after the deadline, and then you lose it and don't get insurance for the rest of the year... Are you fined?
Posted on 5/26/14 at 11:30 am to wickowick
quote:
My business field currently uses it, bring it on, more for me...
Probably so...however I would point out that this would kill 10 of thousands of entry level jobs & part time jobs that is so critical to our US economy and to individuals.
I work with one lady who is a single mother who is attending school and working part time pursuing a teachers degree. We need those jobs to not only fill needs of a business but to help people like her to lift herself up.
Heck, several years ago I was a young bronc fresh out of the military needing a job. It was during a recession and jobs were very very scarce. I searched for high and low and couldn't find anything worth paying.
Finally I had to take a min wage job, it didn't pay much but I learned so many skills and gained so much experience to that I can pretty well go to any city in the country and get a good paying job.
That may not have been possible had an 'entry-level' min wage job had not been available to me.
And no, I am not an OT baller, yet
Posted on 5/26/14 at 12:03 pm to wickowick
quote:So employers will dump them. They'll just dump them dry, and pay the tax.
When an employer reimburses employees for premiums, the arrangement is known as an employer payment plan. “These employer payment plans are considered to be group health plans,” the I.R.S. said, but they do not satisfy requirements of the Affordable Care Act.
Posted on 5/26/14 at 12:06 pm to wickowick
It is a cheaper penalty if you don't even offer your employee insurance than to offer them one and they have ro get a subsidy.
Posted on 5/26/14 at 12:08 pm to NbamaTiger90
quote:
“The A-Penalty” – No Coverage Penalty
This penalty applies if the employer does not offer its full-time employees (and their dependent children up to age 26) the opportunity to enroll in Minimum Essential Coverage (MEC) under an eligible employer-sponsored plan.
The A-Penalty: $166.67 per month for each full-time employee (that works 30 or more hours per week).(Transition relief: The A-Penalty is based on the total number of full-time employees reduced by 80 employees, times the monthly penalty of $166.67. (Example: 150 full-time employees = penalty of $11,666.90 per month (150–80 = 70 x $166.67 per month).
1. “The B-Penalty” – Inadequate Coverage Penalty
This penalty applies if the employer offers its full-time employees (and their dependent children up to age 26) the opportunity to enroll in Minimum Essential Coverage under an eligible employer-sponsored plan, but the coverage is Unaffordable to some employees and/or does not provide Minimum Value, and consequently a full-time employee qualifies for a premium tax credit or cost sharing reduction in connection with their purchase of individual coverage through the public Exchange.
The B-Penalty: $250.00 per month for each full-time employee who receives a premium tax credit or cost sharing reduction in connection with their purchase of individual coverage through the public exchange. Unlike the A–Penalty, the B–Penalty applies only to those employees that actually receive a premium tax credit or cost sharing reduction through the public Exchange. The B-Penalty is capped at the maximum potential A-Penalty, including the 80 employee reduction. (Example: Coverage that is unaffordable for 10 out of a total of 150 full-time employees = penalty of $2,500 per month (10 X $250.00 per month).
Posted on 5/26/14 at 12:10 pm to NbamaTiger90
quote:
It is a cheaper penalty if you don't even offer your employee insurance than to offer them one and they have ro get a subsidy.
Wow. The stupidity of government knows no bounds.
I'm still trying to figure out the logic behind the policy in the OP. That's one way of getting people insured which is supposed to be the goal.
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