Pay or Play Rules under Obama Care
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Pay or Play Rules under Obama Care

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Attention employers with 50 plus employees! Do not get caught in this tax trap.

Attention employers with 50 plus employees! Do not get caught in this tax trap.

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    Pay or Play Rules under Obama Care Pay or Play Rules under Obama Care Document Transcript

    • ASSESSABLE PAYMENT RULES (“PAY OR PLAY”)under theAFFORDABLE CARE ACTPenalty© COPYRIGHT 2013 STEVEN BERTINO ALL RIGHTS RESERVED“Applicable LargeEmployer”1/12 of $2,000 per monthper fulltime employeesover 30PenaltyTRIGGER POINTS:1. Employers with 50 or more fulltime employees or fulltime equivalents.2. One or more fulltime employees are certified to by a health benefit exchange asreceiving an applicable premium tax credit or cost sharing reduction.* “Minimum essential coverage” and “minimum value” mean the same, sections 5000A(f)and 36B(c)(2)(C)(ii).** NOT AFFORDABLE – THREE SAFE HARBORS1. W – 2: Employee’s SELF ONLY contribution does not exceed 9.5% of W-2 wages.2. Rate of Pay: Lowest cost SELF ONLY coverage that provides minimum value does notexceed 9.5% of an amount equal to 130 hours multiplied by the employee’s hourly rate ofpay.3. Federal Poverty – Line: Employee’s required contribution for the calendar month forthe lowest cost, SELF ONLY coverage that provides minimum value does not exceed9.5% of the annual amount established as the Federal poverty line for a single individualfor the applicable calendar year divided by 12.Not OfferingMinimumEssentialCoverage*Not AffordableOR does notprovide MinimumValue**Lesser of $2,000 x (# of fulltimeemployees -30) OR $3,000 x (#of fulltime employees receivinga tax credit).Educational purposes only and not tax advice. In all instances consult with an attorney or benefitconsultant to understand your legal obligations under the law.
    • Acme Industries, a small manufacturing firm, does not currently offer coverage to its 35 full-timeemployees and 20 part-time employees. The company’s part-time employees work 24 hours per week.One of Acme’s employees, Dave, is between 100-400% of the federal poverty level. Given the facts,what will the employer mandate mean for Acme?Educational purposes only and not tax advice. In all instances consult with an attorney or benefitconsultant to understand your legal obligations under the law.
    • John’s engineering company, Micro Widgets, has 51 full-time employees. John provides hisemployees one health plan, a health maintenance organization (HMO). The actuarial value of theHMO is 50%, meaning that the plan pays half the cost of covered benefits. Micro Widgets’ plan isbelow the health care law’s 60% actuarial value threshold, and fails to meet the minimum value.What will the penalty be?Educational purposes only and not tax advice. In all instances consult with an attorney or benefitconsultant to understand your legal obligations under the law.
    • Lauren and David are married and employed by different businesses. Together, David and Lauren earn$48,000, slightly less than 350% of the federal poverty level (FPL). David works for Auto Pro, an autosupply manufacturer with 100 full-time employees that offers coverage. However, the portion of thepremium that David would have to pay for individual coverage exceeds 9.5% of his household income,making the coverage “unaffordable” by the health care law’s definition. Of Auto Pro’s 100 full-timeemployees, 68 are in the same situation as David and elect to use the tax credit to purchase healthcare on the exchange. What will Auto Pro’s penalty be?Educational purposes only and not tax advice. In all instances consult with an attorney or benefitconsultant to understand your legal obligations under the law.