PPACA: Accounting


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PPACA: Accounting

  1. 1. The  Paent  Protecon  and    Affordable  Care  Act  Bill  Po5er,  Senior  Tax  Director  
  2. 2. •  Businesses organized in multiple formsmay be considered as a single employer•  Controlled groups can be parent-subsidiary, brother-sister, combinations oraffiliated service groupsDetermination of FTE in a Controlled Group
  3. 3. •  Control exists if parent owns 80% of thesubsidiary•  Could involve multiple subsidiariesParent - Subsidiary Controlled Group
  4. 4. •  Where the same five or fewer individualsown 80% of the related entities, AND•  Effectively control more than 50%(identical ownership)•  Attributiono  Family Members – spouse, children, grandchildren,parentso  Partner to Partnero  Estates and Trusts and Beneficiarieso  Corporations and ShareholdersBrother – Sister Controlled Group
  5. 5. ExamplePercentage  of  OwnershipMember A  Corp B  LLC EffecveA 80% 20% 20%B 10% 50% 10%C 5% 15% 5%D 5% 15% 5%Total 100% 100% 40%The four owners have morethan 80% of A and B, so thatrequirement is satisfied. Butidentical ownership is only40% so they fail the 50%test. They are two separateemployees
  6. 6. •  Subjective determination•  Related entities may or may not haveownership relationships•  Performing services to or on behalf of theother entity, and when capital is not amaterial income producing factorAffiliated Service Groups
  7. 7. Expansion of Coverage – Individual Mandate•  Individual Mandateo  With limited exceptions, ALL individuals must maintain“minimum essential coverage”or pay a penalty.§  Government provided coverage§  Employer sponsored coverage§  Exchange coverage.•  Exemption from mandateo  if required contribution to purchase insurance exceeds 8% ofhousehold income.o  Religious objectiono  American Indianso  Incarcerated Individualso  Those with incomes below the tax filing threshold
  8. 8. Expansion of Coverage – Individual Mandate•  Penalty amount is the lesser of a flat dollaramount of percentage of income.o  2014: $95 or 1% of household incomeo  2015: $325 or 2% of household incomeo  2016 and later: $695 or 2.5% of household income
  9. 9. •  Effective in 2014 for employers with at least 50 fulltime employees•  Large employer must offer full time employees(FTE) and their dependents the opportunity toenroll in minimum essential coverage under aneligible employer sponsored plan•  FTE must generally not be asked to pay more than9.5% of their modified household income forcoverage•  Exceptions for new employeesLarge Employer Penalties
  10. 10. •  Employer not offering coverage•  Employer offering coverage whose employeereceives a creditPenalty for Non-Compliance
  11. 11. •  Such employers are subject to a penalty if one ormore FTE is certified to the employer as beingcovered by an Exchange and received a premiumtax credit•  Penalty for any month is an amount equal to thenumber of FTE’s in excess of 30 times 1/12th of$2,000•  Regardless of the number of FTE’s who areenrolled in the Exchange and received a premiumcreditEmployers Not Offering Coverage
  12. 12. •  Some employers who offer healthinsurance coverage to FTE’s may be subjectto a penalty•  Penalty can apply based on the number ofFTE’s who purchase coverage through anExchange and receive a credit or cost-sharing reductionEmployers Offering Coverage
  13. 13. Expansion of Medicare Taxes (2013)•  Employee portion of Medicare tax increased by 0.9%•  Applies to wages or self-employment income in excess of$200,000 ($250,000 in the case of a joint return, $125,000 inthe case of a married taxpayer filing separately).•  The additional Medicare tax increases the employee portionto 2.35% or a total Medicare rate of 3.8%.•  Employer has the obligation to withhold the additional taxon wages (without regard to spouse’s wages) if its employeeearns more than $200,000; Employee is liable to the extentnot withheld by employer.•  Self-employed are not allowed a deduction for ½ of theadditional 0.9% tax.
  14. 14. Expansion of Medicare Taxes (2013)•  Individuals, estates and trusts required to pay 3.8% taxon net investment income such as interest, dividends,annuities, royalties, rents, capital gains and income frompassive activities.•  Applies to the income in excess of $250,000 for jointreturns, $125,000 for married filing separate and$200,000 for all others
  15. 15. Thank YouWilliam C. PotterSenior Tax Directorhealthcarereform@pncpa.comOffice: 225-922-4600