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  • Full Name Full Name Comment goes here.
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  • Sure thing, Satish. You should know, though, that the employer penalty for not offering coverage has been delayed until 2015 and we're still waiting for new guidlines to be written!
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    I liked your presentation. Can you please share a copy with me ? my e-mail address is satish.kalpathy@gmail.com. thanks

    Satish Kalpathy
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    Pay or play 2014 Pay or play 2014 Presentation Transcript

    • Pay or Play 2014Minimizing healthcare reform tax penaltiesDFA BenefitsHealthcare Reform Impact Strategistswww.dfabenefits.com1
    • Large employer groups: 50+ employees(Total hrs worked for all employees)/1560 = Totalemployee equivalentsEx: (124,800 hrs worked)/1560 = 80 employees“Full Time” = 30+ hours a weekExpanded employer responsibilityMedical coverage to all full time employees9.5% rule2Business Impacts ofHealthcare ReformDFA BenefitsHealthcare Reform Impact Strategistswww.dfabenefits.com
    • 3What do benefits cost?DFA BenefitsHealthcare Reform Impact Strategistswww.dfabenefits.com
    • 4Business Taxes and PenaltiesDFA BenefitsHealthcare Reform Impact Strategistswww.dfabenefits.com
    • 5DFA BenefitsHealthcare Reform Impact Strategistswww.dfabenefits.com
    • Pay or Play:Where is the business currently?What if we do nothing?What are the options?Increase benefitsRemove benefitsChange wagesReduce hours/increase personnel6The Goal: Minimize PenaltiesDFA BenefitsHealthcare Reform Impact Strategistswww.dfabenefits.com
    • 7Health Care Reform Calculator Completed Sample BPresented by: David Frazier & Associates, Inc.This group offers relatively inexpensive coverage ($78/month) to most of its employees, but not all full timeemployees. This practice (of offering coverage to some, but not all employees) is common in the retail, agricultureand logistics fields. Because of the low expense of the plan, all employees would be paying less than 9.5% of theirannual wages towards single coverage. However, the government penalizes employers who do not provide healthcare to substantially all of their full time employees very steeply. The possible options you can model here include:1. Maintain the status quo, but incur the $642,000 in new penalties assessed by the federal government(increasing costs by almost 60 percent).2. Extend health care coverage to the 18 employees not currently receiving it, increasing total plan costs by about$42,487 for single coverage, but removing $642,000 in fines. The $42,487 bump could be offset by a modestincrease in employee contributions as well.3. Cut coverage completely, which would incur $642,000 in fines and eliminate a great retention and recruitingtool. This is a great place for brokers to drive home why keeping coverage is a vital strategic choice for employers inthe medium and long-terms.BeginDFA BenefitsHealthcare Reform Impact Strategistswww.dfabenefits.com
    • 8Minimum Value (as determined by the MV Calculator): 68.00%Does this plan provide minimum value? YESBack NextDFA BenefitsHealthcare Reform Impact Strategistswww.dfabenefits.com
    • Rate & Census Information9Plan InformationGroup Name Sample Group BEffective Date 3/1/13Employers Marginal TaxRate30.0%Tier CountMonthly TotalRateMonthlyEmployeeContributionMonthlyEmployerNet CostSingle 191 359.00 78.00 281.00Ee/Sp 44 682.00 342.00 340.00Ee/Ch 21 787.00 427.00 360.00Ee/Ch(ren) 0 0.00 0.00 0.00Ee+1 0 0.00 0.00 0.00Family 77 1092.00 677.00 415.00Waivers 0 0.00 0.00 0.00DFA BenefitsHealthcare Reform Impact Strategistswww.dfabenefits.com
    • 10Employee InformationCoverage Eligibility KeyEmployee and Children OfferedCoverageEmployee and Children NotOffered Coverage1 0EmployeeIdentifierEmployee Monthly Rateof Pay (x 12) or AnnualW2 IncomeCoverageEligible1 15926 12 79644 13 75468 14 75069 15 61320 16 68694 17 88288 18 17154 19 34643 110 69858 111 62407 112 70140 113 41523 114 29814 115 29572 1DFA BenefitsHealthcare Reform Impact Strategistswww.dfabenefits.com
    • Results11Summary of Results: Pay or Play AnalysisPotential PenaltiesFull-time employees 351Potential Penalty (Cost) for not offering coverage to substantially all full-timeemployees $642,000Employees paying more than 9.5% of income for single coverage0Does the plan pay for at least 60% of covered expenses for a typicalpopulation? (See Benefit Plan Value page for percentage)YESMaximum penalty for providing unaffordable coverage or not offeringcoverage to all full-time employees $0Total Potential Penalties Accrued $642,000Cost of Providing CoverageAnnual cost of current plan $2,390,256Employee contributions -$1,092,504Value of Federal Tax Deduction -$389,326Employers net cost of current plan $908,426DFA BenefitsHealthcare Reform Impact Strategistswww.dfabenefits.com
    • 12Sample Group B2014 Health Care Reform Penalty ProjectionsPresented by:David Frazier & Associates, Inc.Module 1: Current Penalty ProjectionsThese are projected maximum penalties based on the information entered in the previous sections. Actual penalty amounts will depend onwhether one or more full-time employees that receive the subsidized coverage through an exchange and may be determined by the numberof full-time employees that receive the subsidized exchange coverage.Does the plan provide minumum value (cover at least 60% ofcosts):YESWill employer incur penalties for not providing a minimumvalue plan (if any full-time employee enrolls in subsidizedexchange coverage):NOPenalty for not providing coverage to all full-time employees: $642,000.00Projected maximum penalty for providing unaffordablecoverage or not offering coverage to substantially all full-timeemployees:$0.00Number of employees paying more than 9.5% of income: 0Total penalties projected under current plan structure: $642,000.00DFA BenefitsHealthcare Reform Impact Strategistswww.dfabenefits.com
    • 13Module 2: Potential Penalties and CostsThe following are penalties or costs that may be incurred if changes to the plan or payroll are made,including eliminating coverage. Penalties will only be triggered if coverage is not offered to substantiallyall employees (and children) and one or more employees receives subsidized health coverage through anexchange.Penalty amount for eliminating coverage for all full-timeemployees:$642,000.00Annual income below which plan is consideredunaffordable:$9,852.63Increase in payroll needed to make plan affordable to allemployees:$0.00Monthly employee contribution for single coverageallowable to avoid unaffordability penalty: $95.40DFA BenefitsHealthcare Reform Impact Strategistswww.dfabenefits.com
    • 14Sample Group BModule 3: Current and Projected Plan CostsStated here are current plan costs, as well as projected costs if changes are made to avoid penalties. New contributions reflect increasingemployer contribution to make employee contribution for single coverage less than 9.5% of income.Total annual cost of current plan:$2,390,256.00Total employee contributions (annually):-$1,092,504.00Tax deduction for offering coverage:-$389,325.60Total net cost of current plan :$908,426.40Net cost if employers single tier contribution increased:$908,426.40Net cost if all full-time employees made eligible for coverage:$950,913.60Total plan cost with changes needed to avoid penalties:$950,913.60Current full-time payroll:$17,522,761.00Total full-time payroll if wages are increased to avoid penalty: $17,522,761.00DFA BenefitsHealthcare Reform Impact Strategistswww.dfabenefits.com