This document summarizes key aspects of the Affordable Care Act's employer mandate provisions for large employers with 50 or more full-time equivalent employees. It discusses whether a company must provide health insurance, how to determine if the company qualifies as a large employer subject to penalties, and how to calculate potential penalties for non-compliance. It also addresses special considerations for controlled groups of companies and private investment funds.
Employer Responsibilities Under the Affordable Care ActPatton Boggs LLP
This document summarizes an employer alert from the law firm PattonBoggs regarding employer responsibilities under the Affordable Care Act (ACA). It outlines key ACA implementation timelines for employers, explains how to determine if a company qualifies as a "large employer" subject to penalties, and describes how to calculate penalties for employers that do not offer affordable health insurance coverage. It also discusses how these rules apply to private investment funds and their portfolio companies.
Employer Responsibilities Under the Affordable Care ActPatton Boggs LLP
This document summarizes key responsibilities and considerations for employers under the Affordable Care Act (ACA) set to take effect in January 2014. It outlines questions around whether an employer should provide health insurance, how to determine if they are subject to penalties for not doing so, and how to calculate full-time equivalent employees, including accounting for employees of related entities under IRS "controlled group" rules. These rules examine ownership and cross-ownership between companies to determine if their employees must be aggregated for assessing penalties. The document cautions that controlled group analysis requires careful research and legal counsel, especially regarding private investment funds and portfolio companies.
Affordable Care Act and Employer Shared ResponsibilityJenny Villier
The document discusses the Employer Shared Responsibility provision under the Affordable Care Act that requires applicable employers to either offer affordable health insurance to employees or pay a penalty. It applies to employers with 50 or more full-time equivalent employees as of 2016, or 100 or more in 2015. Employers must offer coverage to 70% of employees in 2015 or 95% in 2016. If an employer does not comply and an employee receives a premium tax credit, the employer must pay $2,084-$3,126 per full-time employee beyond the thresholds. The penalties are meant to incentivize employers to provide coverage and lower insurance costs.
This document provides information for small employers on key aspects of the Affordable Care Act. It notes that companies with less than 50 full-time employees are not required to offer health insurance. It also details that companies with under 25 full-time employees may qualify for tax incentives for offering insurance. Additionally, it states that in some cases individual market coverage may be more affordable for employees than employer-sponsored plans, especially with subsidies. The document advises that employers cannot make pre-tax or contingent post-tax contributions towards employees' individual health insurance premiums.
It's an understandable response to the Affordable Care Act to simply throw in the towel and give your employees some cash to buy health coverage on their own. Unfortunately, it's not as simple as that. The U.S. Department of Labor has just tackled that topic in its most recent round of "frequently asked questions," surrounding the implementation of the health care law. Here are some highlights of the latest guidance.
The document discusses issues around joint employer liability for contingent or temporary employees. It provides statistics showing that 2.5-5.7 million US workers are contingent, with many being young or educated. It defines different types of contingent workers and discusses the legal definition of a joint employer relationship. The document summarizes several court cases where joint employer status was found. It concludes by providing recommendations for companies to avoid being deemed joint employers, such as maintaining arms-length relationships with contractors and making clear which company is the legal employer.
Medicare & Employer Health Coverage - a Coordination Conversationbenefitexpress
Let's talk about Medicare and Employer Health Coverage. The rules on coordinating Medicare and employer coverage can be complex. How it complements other programs (such as COBRA, HSAs and the ACA) are also areas of question for both employees and their employers.
Employer Responsibilities Under the Affordable Care ActPatton Boggs LLP
This document summarizes an employer alert from the law firm PattonBoggs regarding employer responsibilities under the Affordable Care Act (ACA). It outlines key ACA implementation timelines for employers, explains how to determine if a company qualifies as a "large employer" subject to penalties, and describes how to calculate penalties for employers that do not offer affordable health insurance coverage. It also discusses how these rules apply to private investment funds and their portfolio companies.
Employer Responsibilities Under the Affordable Care ActPatton Boggs LLP
This document summarizes key responsibilities and considerations for employers under the Affordable Care Act (ACA) set to take effect in January 2014. It outlines questions around whether an employer should provide health insurance, how to determine if they are subject to penalties for not doing so, and how to calculate full-time equivalent employees, including accounting for employees of related entities under IRS "controlled group" rules. These rules examine ownership and cross-ownership between companies to determine if their employees must be aggregated for assessing penalties. The document cautions that controlled group analysis requires careful research and legal counsel, especially regarding private investment funds and portfolio companies.
Affordable Care Act and Employer Shared ResponsibilityJenny Villier
The document discusses the Employer Shared Responsibility provision under the Affordable Care Act that requires applicable employers to either offer affordable health insurance to employees or pay a penalty. It applies to employers with 50 or more full-time equivalent employees as of 2016, or 100 or more in 2015. Employers must offer coverage to 70% of employees in 2015 or 95% in 2016. If an employer does not comply and an employee receives a premium tax credit, the employer must pay $2,084-$3,126 per full-time employee beyond the thresholds. The penalties are meant to incentivize employers to provide coverage and lower insurance costs.
This document provides information for small employers on key aspects of the Affordable Care Act. It notes that companies with less than 50 full-time employees are not required to offer health insurance. It also details that companies with under 25 full-time employees may qualify for tax incentives for offering insurance. Additionally, it states that in some cases individual market coverage may be more affordable for employees than employer-sponsored plans, especially with subsidies. The document advises that employers cannot make pre-tax or contingent post-tax contributions towards employees' individual health insurance premiums.
It's an understandable response to the Affordable Care Act to simply throw in the towel and give your employees some cash to buy health coverage on their own. Unfortunately, it's not as simple as that. The U.S. Department of Labor has just tackled that topic in its most recent round of "frequently asked questions," surrounding the implementation of the health care law. Here are some highlights of the latest guidance.
The document discusses issues around joint employer liability for contingent or temporary employees. It provides statistics showing that 2.5-5.7 million US workers are contingent, with many being young or educated. It defines different types of contingent workers and discusses the legal definition of a joint employer relationship. The document summarizes several court cases where joint employer status was found. It concludes by providing recommendations for companies to avoid being deemed joint employers, such as maintaining arms-length relationships with contractors and making clear which company is the legal employer.
Medicare & Employer Health Coverage - a Coordination Conversationbenefitexpress
Let's talk about Medicare and Employer Health Coverage. The rules on coordinating Medicare and employer coverage can be complex. How it complements other programs (such as COBRA, HSAs and the ACA) are also areas of question for both employees and their employers.
White Paper: Complying With Regulations Regarding Temporary Workersss
The use of temporary workers is growing in the United States, now representing 22% of the total workforce. Temporary workers are referred to as freelancers, non-employees, indirect workers, agency contractors, consultants, interns, independent contractors, and many other terms.
Recruitment consultant for united statesAman Singh
The document provides information on various topics related to recruitment and hiring processes. It discusses tiers of vendors, types of contracts (e.g. 1099, W-2), visa categories (e.g. H1B, L1, TN), and other concepts like full-time equivalent employees, green cards, and the software development life cycle. It provides definitions, comparisons, and details on requirements and processes for different employment scenarios in the United States.
COVID-19 Health & Welfare: Compliance for Employersbenefitexpress
As part of our continuing ERISA Compliance series, we covered such compliance topics and more in our April 9th webinar discussing COVID-19 and updates from the IRS and DOL concerning the Families First Coronavirus Response Act.
Health Reform Bulletin: Small Business Health Options Program (SHOP) UpdatesCBIZ MHM, LLC
The document summarizes updates to the Small Business Health Options Program (SHOP) from the Centers for Medicare and Medicaid Services (CMS). It discusses which states are utilizing federally-run SHOP exchanges versus state-run exchanges. It also summarizes CMS guidance on eligible employers and employees, coverage options, enrollment periods, premium calculations, and the interaction between SHOP and the small business tax credit.
Webinar: Mid-Year Election Changes for Cafeteria Plansbenefitexpress
Let's talk about cafeteria plans. When can participants make election changes?
While cafeteria plans can be a great option for employees wishing to pick and choose benefits based on cost, when and how to facilitate election changes outside of open enrollment can be tricky to navigate for employers. As the use of cafeteria plans continue to grow, we take a deeper look at the rules and regulations of these plans, particularly as they pertain to mid-year election changes.
This presentation addresses employee benefit plan exposure arising from employer use of a contingent workforce. Included is a discussion of employer liability arising from use of independent contractors to avoid or minimize ACA's "play or pay" coverage requirements.
Part of our ERISA Compliance Series, this webinar is hosted by ERISA Attorney Larry Grudzien and moderated by chief marketing officer Julia Goebel. This webinar will discuss the top wage and hour issues that may be unknowingly lurking within your company.
This document discusses the differences between classifying workers as employees versus independent contractors. Classifying workers incorrectly can result in IRS penalties and fines. The IRS uses several factors to determine proper classification, focusing on behavioral control, financial control, and the relationship between the parties. Intentionally misclassifying workers as independent contractors when they are really employees carries greater risks of penalties than unintentional misclassification. It is safest to classify ambiguous workers as employees or seek professional advice.
IHRIM - Executive Interview Government Compliance - Gary Bagwill - VPHR - 2011Gary Bagwill
This interview summarizes the key areas of HR compliance for government contractors, including affirmative action plans, record keeping, business conduct policies, service contract act requirements, prevailing wage laws, and audit processes. The VP discusses how their company uses an HCM system to help manage compliance with requirements around qualifications, pay scales, and recruiting to support proposals and business development. HR technology helps validate compliance and qualify talent for contracts.
Learn about how your SEC registered company can address key aspects of the Affordable Care Act and about upcoming deadlines for 2014 and beyond - Peterson Sullivan - Seattle CPA Firm.
This document discusses various types of contingent worker arrangements and the legal standards for determining employment relationships. It notes that misclassifying employees as independent contractors can result in back taxes, penalties, and litigation costs. The key tests for determining employee status include the economic realities test, IRS 20-factor test, and common law agency test. Joint employment can occur when multiple entities exercise control over a worker's conditions.
The document summarizes new federal and New York state leave laws relating to coronavirus. It discusses the Families First Coronavirus Response Act which provides 80 hours of paid sick leave for COVID-19 related reasons and expands the FMLA. It also covers New York's COVID-19 emergency sick leave law which provides additional paid leave for those under mandatory quarantine. The document provides details on eligibility, reasons for leave, wage rates and employer reimbursement under the new laws.
Healthcare Reform Questions - Not Offering Coverage Rea & Associates
Questions from a recent healthcare reform webinar and corresponding answers about what happens when a company decides not to offer healthcare coverage to employees - Rea Associates - Ohio Accounting Firm.
The Cadillac tax is a tax on expensive employer-sponsored health insurance plans enacted as part of the Affordable Care Act. It is intended to raise revenue, incentivize employers to offer more cost-effective plans, and reduce healthcare utilization. The tax applies to plans where the aggregate cost of insurance and benefits exceeds thresholds of $10,200 for individuals or $27,500 for families, and it is paid by the contributing entities in proportion to their contributions. The thresholds are adjusted for demographic factors, high-risk professions, and inflation.
Plan Sponsor Webinar: Navigating COVID-19 for Employersbenefitexpress
In this webinar, we take a deeper look into how the novel coronavirus is not only affecting the way we live, but changing the way we work. From remote work environments, FMLA, contract agreements and more, we discuss how to navigate the changing workforce during this time of uncertainty, and answer questions to help you make the best decisions for the health and safety of your employees.
Employers need to be aware that decisions they are making now about the size and make-up of their workforce will affect whether they exceed the 50 employee threshold that triggers the "pay or play" penalty in the Affordable Care Act. This presentation will focus on strategies for avoiding or minimizing exposure to the penalties under the Act.
On May 18, 2016, the U.S. Department of Labor (DOL) announced a final rule regarding overtime wage payment qualifications for the “white collar exemptions” under the Fair Labor Standards Act (FLSA).
The final rule increases the salary an employee must be paid in order to qualify for a white collar exemption. The required salary level is increased to $47,476 per year and will be automatically updated every three years. The final rule does not modify the duties test employees must meet to qualify for a white collar exemption.
The Payroll and HR Technology Toolkit for Managing the ACAAPS
Since the signing of the Affordable Care Act (ACA) in 2010, employers have seen many changes occur. The most significant mandates will be rolling out in 2015 and will affect all employers one way or another. While many employers may know what steps need to be taken to prepare, they may not understand how these mandates will change their business policies on a granular level.
Chatswood Pty Ltd is liable to pay Fringe Benefits Tax (FBT) for benefits provided to their employee Paul in the 2011-2012 financial year. Paul received a company car worth $22,500 that he used 20,000 km for private purposes without paying, an entertainment allowance of $2,000, and an $8,000 interest-free loan. Based on the taxable value of these benefits, Chatswood Pty Ltd's FBT liability is calculated to be $5,807.85.
Peter borrowed $520,000 to purchase an investment property but has been unable to find tenants. He is entitled to deduct interest payments on the loan from his taxable income for
FTC Releases Report Outlining Mobile Payment ConcernsPatton Boggs LLP
The FTC released a report outlining concerns about mobile payments, focusing on dispute resolution, data security, and privacy. Regarding dispute resolution, protections vary based on payment method and additional protections may be needed. Mobile carrier billing is a particular concern, and carriers should enable blocking of third-party charges and establish dispute processes. For data security, strong security measures are needed but not all companies are using available technology. Regarding privacy, the growing number of companies involved raises concerns, and companies should implement privacy by design, simplified choices, and transparency.
CAPITAL MARKETS ALERT: How Dodd-Frank and Other New U.S. Laws May Affect Non-...Patton Boggs LLP
The document discusses how new U.S. laws like the Dodd-Frank Act may affect non-U.S. financial institutions. Key points include:
1) The Dodd-Frank Act allows the U.S. to more aggressively assert jurisdiction over foreign financial firms' activities outside the U.S. if they impact the U.S. financial system.
2) Foreign firms deemed "systemically significant" by a new council could be placed under Federal Reserve supervision and new capital rules.
3) The act expands the SEC's authority over foreign firms in fraud cases involving significant U.S. conduct or effects.
4) Foreign subsidiaries of financial firms may be subject to the act
White Paper: Complying With Regulations Regarding Temporary Workersss
The use of temporary workers is growing in the United States, now representing 22% of the total workforce. Temporary workers are referred to as freelancers, non-employees, indirect workers, agency contractors, consultants, interns, independent contractors, and many other terms.
Recruitment consultant for united statesAman Singh
The document provides information on various topics related to recruitment and hiring processes. It discusses tiers of vendors, types of contracts (e.g. 1099, W-2), visa categories (e.g. H1B, L1, TN), and other concepts like full-time equivalent employees, green cards, and the software development life cycle. It provides definitions, comparisons, and details on requirements and processes for different employment scenarios in the United States.
COVID-19 Health & Welfare: Compliance for Employersbenefitexpress
As part of our continuing ERISA Compliance series, we covered such compliance topics and more in our April 9th webinar discussing COVID-19 and updates from the IRS and DOL concerning the Families First Coronavirus Response Act.
Health Reform Bulletin: Small Business Health Options Program (SHOP) UpdatesCBIZ MHM, LLC
The document summarizes updates to the Small Business Health Options Program (SHOP) from the Centers for Medicare and Medicaid Services (CMS). It discusses which states are utilizing federally-run SHOP exchanges versus state-run exchanges. It also summarizes CMS guidance on eligible employers and employees, coverage options, enrollment periods, premium calculations, and the interaction between SHOP and the small business tax credit.
Webinar: Mid-Year Election Changes for Cafeteria Plansbenefitexpress
Let's talk about cafeteria plans. When can participants make election changes?
While cafeteria plans can be a great option for employees wishing to pick and choose benefits based on cost, when and how to facilitate election changes outside of open enrollment can be tricky to navigate for employers. As the use of cafeteria plans continue to grow, we take a deeper look at the rules and regulations of these plans, particularly as they pertain to mid-year election changes.
This presentation addresses employee benefit plan exposure arising from employer use of a contingent workforce. Included is a discussion of employer liability arising from use of independent contractors to avoid or minimize ACA's "play or pay" coverage requirements.
Part of our ERISA Compliance Series, this webinar is hosted by ERISA Attorney Larry Grudzien and moderated by chief marketing officer Julia Goebel. This webinar will discuss the top wage and hour issues that may be unknowingly lurking within your company.
This document discusses the differences between classifying workers as employees versus independent contractors. Classifying workers incorrectly can result in IRS penalties and fines. The IRS uses several factors to determine proper classification, focusing on behavioral control, financial control, and the relationship between the parties. Intentionally misclassifying workers as independent contractors when they are really employees carries greater risks of penalties than unintentional misclassification. It is safest to classify ambiguous workers as employees or seek professional advice.
IHRIM - Executive Interview Government Compliance - Gary Bagwill - VPHR - 2011Gary Bagwill
This interview summarizes the key areas of HR compliance for government contractors, including affirmative action plans, record keeping, business conduct policies, service contract act requirements, prevailing wage laws, and audit processes. The VP discusses how their company uses an HCM system to help manage compliance with requirements around qualifications, pay scales, and recruiting to support proposals and business development. HR technology helps validate compliance and qualify talent for contracts.
Learn about how your SEC registered company can address key aspects of the Affordable Care Act and about upcoming deadlines for 2014 and beyond - Peterson Sullivan - Seattle CPA Firm.
This document discusses various types of contingent worker arrangements and the legal standards for determining employment relationships. It notes that misclassifying employees as independent contractors can result in back taxes, penalties, and litigation costs. The key tests for determining employee status include the economic realities test, IRS 20-factor test, and common law agency test. Joint employment can occur when multiple entities exercise control over a worker's conditions.
The document summarizes new federal and New York state leave laws relating to coronavirus. It discusses the Families First Coronavirus Response Act which provides 80 hours of paid sick leave for COVID-19 related reasons and expands the FMLA. It also covers New York's COVID-19 emergency sick leave law which provides additional paid leave for those under mandatory quarantine. The document provides details on eligibility, reasons for leave, wage rates and employer reimbursement under the new laws.
Healthcare Reform Questions - Not Offering Coverage Rea & Associates
Questions from a recent healthcare reform webinar and corresponding answers about what happens when a company decides not to offer healthcare coverage to employees - Rea Associates - Ohio Accounting Firm.
The Cadillac tax is a tax on expensive employer-sponsored health insurance plans enacted as part of the Affordable Care Act. It is intended to raise revenue, incentivize employers to offer more cost-effective plans, and reduce healthcare utilization. The tax applies to plans where the aggregate cost of insurance and benefits exceeds thresholds of $10,200 for individuals or $27,500 for families, and it is paid by the contributing entities in proportion to their contributions. The thresholds are adjusted for demographic factors, high-risk professions, and inflation.
Plan Sponsor Webinar: Navigating COVID-19 for Employersbenefitexpress
In this webinar, we take a deeper look into how the novel coronavirus is not only affecting the way we live, but changing the way we work. From remote work environments, FMLA, contract agreements and more, we discuss how to navigate the changing workforce during this time of uncertainty, and answer questions to help you make the best decisions for the health and safety of your employees.
Employers need to be aware that decisions they are making now about the size and make-up of their workforce will affect whether they exceed the 50 employee threshold that triggers the "pay or play" penalty in the Affordable Care Act. This presentation will focus on strategies for avoiding or minimizing exposure to the penalties under the Act.
On May 18, 2016, the U.S. Department of Labor (DOL) announced a final rule regarding overtime wage payment qualifications for the “white collar exemptions” under the Fair Labor Standards Act (FLSA).
The final rule increases the salary an employee must be paid in order to qualify for a white collar exemption. The required salary level is increased to $47,476 per year and will be automatically updated every three years. The final rule does not modify the duties test employees must meet to qualify for a white collar exemption.
The Payroll and HR Technology Toolkit for Managing the ACAAPS
Since the signing of the Affordable Care Act (ACA) in 2010, employers have seen many changes occur. The most significant mandates will be rolling out in 2015 and will affect all employers one way or another. While many employers may know what steps need to be taken to prepare, they may not understand how these mandates will change their business policies on a granular level.
Chatswood Pty Ltd is liable to pay Fringe Benefits Tax (FBT) for benefits provided to their employee Paul in the 2011-2012 financial year. Paul received a company car worth $22,500 that he used 20,000 km for private purposes without paying, an entertainment allowance of $2,000, and an $8,000 interest-free loan. Based on the taxable value of these benefits, Chatswood Pty Ltd's FBT liability is calculated to be $5,807.85.
Peter borrowed $520,000 to purchase an investment property but has been unable to find tenants. He is entitled to deduct interest payments on the loan from his taxable income for
FTC Releases Report Outlining Mobile Payment ConcernsPatton Boggs LLP
The FTC released a report outlining concerns about mobile payments, focusing on dispute resolution, data security, and privacy. Regarding dispute resolution, protections vary based on payment method and additional protections may be needed. Mobile carrier billing is a particular concern, and carriers should enable blocking of third-party charges and establish dispute processes. For data security, strong security measures are needed but not all companies are using available technology. Regarding privacy, the growing number of companies involved raises concerns, and companies should implement privacy by design, simplified choices, and transparency.
CAPITAL MARKETS ALERT: How Dodd-Frank and Other New U.S. Laws May Affect Non-...Patton Boggs LLP
The document discusses how new U.S. laws like the Dodd-Frank Act may affect non-U.S. financial institutions. Key points include:
1) The Dodd-Frank Act allows the U.S. to more aggressively assert jurisdiction over foreign financial firms' activities outside the U.S. if they impact the U.S. financial system.
2) Foreign firms deemed "systemically significant" by a new council could be placed under Federal Reserve supervision and new capital rules.
3) The act expands the SEC's authority over foreign firms in fraud cases involving significant U.S. conduct or effects.
4) Foreign subsidiaries of financial firms may be subject to the act
President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act on July 21, 2010. This legislation aims to modernize financial regulation and reduce systemic risk. It establishes new regulatory bodies like the Financial Stability Oversight Council and the Consumer Financial Protection Bureau. The Act also directs several federal agencies to undertake rulemakings to implement the new financial reforms. Stakeholders are encouraged to participate in the regulatory process as these new rules are developed.
U.S. Securities and Exchange Commission Proposes New Rule on Pay DisclosurePatton Boggs LLP
The SEC proposed a new rule that would require public companies to disclose the ratio of the compensation of its principal executive officer to the median compensation of all employees. The rule is meant to provide transparency on pay disparity and rein in bloated executive pay. It allows companies flexibility in calculating median pay and identifying employees. Companies can use statistical sampling or other reasonable methods. They can make reasonable estimates and do not need to include contractors. The ratio must be expressed as a ratio or narrative multiple. Companies must disclose their methodology and assumptions. The rule applies to companies already providing executive pay disclosure but provides exemptions for smaller companies.
With increasing demand on limited public resources, national and local governments are recognizing the need for a new approach to social services that emphasizes the identification of effective, innovative ideas. However, a lack of available funding and the reluctance to take on the risk that a promising, but unproven, idea might fail have created obstacles to this new approach. The social impact bond model is designed to eliminate these obstacles.
2010 Post-Election Analysis: President Barack Obama and the Closely Divided 1...Patton Boggs LLP
With Republican candidates having made significant gains in the mid-term elections by capturing the House and increasing their share of the Senate, President Barack Obama faces a starkly different legislative environment as he seeks to advance the balance of his policy agenda and as he runs for reelection in 2012. The President has already accomplished two of his most ambitious legislative goals on which he campaigned—health care reform and financial services reform, but two remain unfulfilled—energy/climate change legislation and immigration reform. And now, notwithstanding the need to create jobs and further stimulate the economy, he will likely add deficit reduction as a third one. Will he go for comprehensive bills or will he try for incremental reform? Will he choose confrontation or compromise at the outset? Will he give up on Congress and try to accomplish as much as possible through regulatory action? And how will action in the courts and international events, including the war in Afghanistan, the situation in Iraq, ongoing developments in Iran, and terrorist threats, limit his domestic agenda?
The Top 10 Things You Need To Know About The OIG's Revised Self-Disclosure Pr...Patton Boggs LLP
The document summarizes the key changes made in the Office of Inspector General's (OIG) revised Self-Disclosure Protocol (SDP). Some notable changes include specifying a minimum 1.5x damages multiplier, requiring acknowledgement of potential Anti-Kickback Statute or Stark Law violations, completing internal investigations within 90 days, and providing more details in disclosures involving excluded persons. The revised SDP clarifies existing practices and announces new policies to guide health care providers considering voluntary disclosures through the SDP process.
Update: Employer Responsibilities Under the Affordable Care ActPatton Boggs LLP
This document summarizes employer responsibilities under the Affordable Care Act that take effect in January 2015. It outlines key timelines employers should be aware of, including penalties for employers with 50 or more full-time employees in 2016. It provides guidance on determining if a company qualifies as a large employer based on number of full-time equivalent employees. It also discusses options for employers who are subject to penalties, such as providing affordable health insurance or paying penalties.
This document provides a comprehensive guide to the government-mandated benefits that U.S. employers are required to provide in 2020. It outlines the key benefits such as Social Security, Medicare, workers' compensation, disability insurance, family and medical leave, and health insurance. For example, it notes that all employers must contribute to Social Security and Medicare based on payroll taxes deducted from employee earnings. It also explains that five states and Puerto Rico require employers to provide short-term disability insurance to cover non-work injuries and illnesses. The guide stresses that requirements may vary based on company size and location.
Accountable Care Act Employer Compliance.sharedoc.Roberta Winter
This document provides a roadmap for employers to comply with the employer shared responsibility provisions of the Affordable Care Act (ACA). It explains that employers with 50 or more full-time equivalent employees must offer affordable health insurance that provides minimum value to full-time employees and their dependents or pay a penalty. It outlines the process for determining the number of eligible employees and calculating any penalties owed based on two tests: a W-2 wage test or look-back measurement method. The document also provides guidance on the criteria a health plan must meet to avoid penalties, including coverage and benefit thresholds.
- Employers must consider new options for offering health insurance under the Affordable Care Act, including offering a plan, not offering but paying penalties, or sending employees to the insurance exchanges.
- For small employers, tax credits may help offset plan costs but expire after two years. Larger employers not offering a qualified plan may pay fines of $2000 per employee if any employees receive subsidies.
- Plans offered must meet requirements like essential benefits to exempt employees from penalties, but some employees may still qualify for exchange subsidies. Costs of offering a plan versus penalties must be weighed.
- Self-insuring allows employers more flexibility but comes with new reporting rules. Sending employees to exchanges is another option starting in
Obamacare and its Effects on Your Small BusinessJulie Edwards
Under the Affordable Care Act (ACA), also known as Obamacare, small businesses will face several new healthcare mandates beginning in 2014. Small businesses must provide employees with government-approved health insurance offering unlimited lifetime and annual coverage. Additionally, coverage must be provided for dependent children up to age 26. These changes are estimated to increase health premiums by 7% and 2% respectively. The ACA also requires businesses to bear the full cost of preventative healthcare services if they switch plans and mandates reporting healthcare costs on W-2 forms starting in 2012. To help offset rising costs, the ACA provides tax credits to small businesses that offer healthcare from 2010-2016. However, the long term costs and impacts
The document provides an overview of key provisions of the Affordable Care Act (ACA) for employers, including requirements for large employers to offer affordable minimum essential health coverage. It defines terms like full-time employees, dependents, minimum essential coverage, affordability, minimum value, and outlines penalties for noncompliance. It advises employers to assess their status as a large employer based on employee headcount, identify which employees must be offered coverage, ensure coverage meets affordability and minimum value standards, and consider actions needed like amending cafeteria plans to prepare for 2014 requirements.
The document discusses key aspects and requirements of the Patient Protection and Affordable Care Act (PPACA), also known as Obamacare. It summarizes that the PPACA will affect everyone through provisions taking effect in 2014 such as health insurance exchanges, essential health benefits, penalties for individuals without coverage, and penalties for large employers not providing affordable coverage. The document also compares fully insured versus self-funded health plans under the PPACA, noting advantages of self-funding including more flexibility and ability to control costs.
This document provides information about the tax consequences of the Affordable Care Act for individuals. It discusses two new taxes enacted by the ACA - the additional 0.9% Medicare tax on wages and self-employment income and the 3.8% Net Investment Income Tax. It explains how to report minimum essential health coverage, exemptions from the coverage requirement, and how to calculate the individual shared responsibility payment for those without qualifying coverage.
U S Supreme Court Upholds The Affordable Care Act1charles_3us
The U.S. Supreme Court upheld the constitutionality of the Affordable Care Act, including the individual mandate requiring Americans to obtain health insurance. The Court ruled the mandate is valid under Congress's taxing authority. However, it placed some limitations on the Medicaid expansion. Employers and health plans must continue complying with ACA provisions such as reporting requirements, limits on flexible spending accounts, and minimum loss ratios for insurers. Additional reforms take effect in 2014, including the employer mandate and health insurance exchanges.
This document provides a guide for small businesses on key provisions of the Affordable Care Act that take effect in 2015 and beyond. It discusses the employer shared responsibility provision, reporting requirements, summary of benefits and coverage, exchange notices, and essential health benefits. It also provides examples of how different sized businesses may be impacted and resources available for small employers.
This document provides an overview of various health insurance concepts and options in the United States, including definitions of common health insurance terms, examples of different health insurance plans (HMO, PPO, HDHP/HSA), and descriptions of public health insurance programs like Medicare and Medicaid. Key types of private health insurance discussed are individual/family plans, employer-sponsored plans, and short-term plans. Eligibility, costs, and regulations associated with these various health insurance options are summarized.
Economic alliance health care reform update march 5-2013Michelle Hundley
The document summarizes upcoming changes to health care reform regulations beginning in 2013, including limits on flexible spending accounts, new reporting requirements for employers, comparative effectiveness research fees, exchange notices for employees, individual mandates, employer pay or play rules, and independent contractor classifications. It also outlines additional reforms taking effect in 2014, such as state health insurance exchanges, premium subsidies, individual and employer mandates, rating limits, and cost sharing limits.
This document provides an overview and summary of key provisions of the Patient Protection and Affordable Care Act (PPACA) and the Health Care and Education Reconciliation Act (HCERA). It discusses fundamentals such as definitions of large employers, full-time employees, and grandfathered plans. It also summarizes requirements for health insurance exchanges, essential health benefits, employer penalties, the small business tax credit, early retiree subsidy, and coverage mandates for grandfathered and non-grandfathered plans. The document is intended to help attendees understand and comply with health care reform regulations.
What Changes to Expect from the new Healthcare Law, presented by The National Federation of Independent Business, the leading small business association.
The document discusses the new reporting requirements under the Affordable Care Act for applicable large employers - those with 50 or more full-time employees. It states that these employers must now track employee health coverage information monthly and report it to the IRS on Forms 1094-C and 1095-C starting in 2015. It provides details on who counts as a full-time employee and outlines the key information needed to complete the new IRS forms, including whether coverage was offered, employees' share of premium costs, and months of enrollment.
The document discusses some key regulations in health care reform for businesses to remember in 2016 as a result of the Affordable Care Act. It outlines the employer shared responsibility requirement for businesses with 50 or more employees to offer affordable health coverage. It also notes that applicable large employers must provide coverage to full-time employees working 30 hours a week and their dependents under 26. Additionally, it mentions IRS reporting requirements for applicable large employers and businesses with self-funded health plans. The document encourages business owners to stay on top of employee status changes, provide proper coverage, and report necessary information to the IRS to remain compliant with health care reform regulations.
While the new health care reform law does not require employers to provide employee health benefits, the law does impose penalties and offers incentives to encourage employer participation. Beginning in 2014, employers with 50 or more full-time employees that do not offer health insurance may have to pay a monthly fee per full-time employee. Employers who do offer coverage may be assessed a fee if any full-time employee receives a premium tax credit. The law also establishes state-run health insurance exchanges and encourages wellness programs.
This document discusses using a Health Savings Account (HSA) to pay for Long Term Care Insurance (LTCI) premiums. It provides an example of a client, Dean Barker, who is eligible to open an HSA and use funds from it to pay $1,430 of his $2,500 in annual LTCI premiums. It reviews the eligibility requirements for opening an HSA, contribution limits, tax considerations of using an HSA to pay LTCI premiums, and IRS age-based limits for deducting LTCI premiums.
Should an Employer Be Self-Funded?
That is quite a question. In the past we cautioned that claims savings was not guaranteed by self-funding. And with a small difference in fixed fees vs. fully insured retention, there was not much incentive for smaller employers to take the risk, given that they were more susceptible to wide fluctuations in claims cost.
Review our research and analysis on self-funding to help determine if the program is the right fit for your business. Contact McGohan-Brabender to discuss self-funding in detail.
https://www.mcgohanbrabender.com/
Similar to Update: Employer Responsibilities Under the Affordable Care Act (20)
Crimea: U.S. Response Intensifies As Congress, President Obama Issue More San...Patton Boggs LLP
The U.S. has intensified its response to Russia's actions in Crimea through additional sanctions passed by Congress and issued by President Obama. The House passed legislation authorizing sanctions on those responsible for corruption or undermining Ukraine. President Obama signed an order allowing sanctions on broad sectors of the Russian economy. The U.S. has also frozen export licenses to Russia and designated more individuals under prior orders. Further sanctions may be imposed if Russia takes additional actions in Ukraine.
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The document summarizes the recent executive actions taken by the United States and European Union imposing sanctions in response to Russia's annexation of Crimea from Ukraine. It provides details on:
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Protecting Patient Information - Feds Find Security Lapses in State and Local...Patton Boggs LLP
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American University International Law Review Annual Symposium: Managing the G...Patton Boggs LLP
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This newsletter provides summaries of recent reinsurance case law and regulatory developments from March 2014. It includes summaries of cases from New York, Tennessee, and California federal courts related to arbitration awards, protected cell reinsurance agreements, preclusion of subsequent arbitrations, and common interest privilege with reinsurers. It also summarizes cases related to tax treatment of retrocessional agreements, dismissal of defenses in a facultative reinsurance dispute, denial of stay in a mortgage reinsurance case, and assumption versus reinsurance.
Supreme Court Agrees to Hear Two Cases on Attorneys' Fees in Patent CasesPatton Boggs LLP
The Supreme Court agreed to hear two cases that deal with awarding attorneys' fees in patent cases. In the first case, Octane Fitness v. ICON Health, the Court will consider whether to lower the standard for determining an "exceptional case" in which fees can be awarded. In the second case, Highmark v. Allcare Health, the Court will determine how much deference appellate courts must give to lower court decisions on awarding fees. These rulings could make it easier for prevailing parties to recoup fees and deter patent holders from filing weak infringement claims.
FTC Announces Study of "Patent Assertion Entities"Patton Boggs LLP
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ALJ Ruling on Heart Attack Reporting Requirements Creates Split of AuthorityPatton Boggs LLP
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2) The regulations require immediate reporting of accidents involving injury with a potential for death; the ALJ found a heart attack was an illness, not an injury.
3) However, the ALJ distinguished cases where CPR was required or the victim was unresponsive, requiring immediate reporting in those scenarios still. The full Commission has yet to address this issue definitively.
New TCPA Requirements for "Prior Express Written Consent" Effective October 16Patton Boggs LLP
This document summarizes new requirements under the Telephone Consumer Protection Act (TCPA) for obtaining "prior express written consent" before making telemarketing calls or texts. Beginning October 16, 2013, companies must get written permission that specifically authorizes automated calls or prerecorded messages to wireless or residential lines. The rules also eliminate exceptions for current customers and require consent for each phone number. Violations of the new consent rules could result in substantial damages in consumer lawsuits. Companies are advised to review their practices to ensure compliance.
This newsletter provides summaries of recent reinsurance cases:
1) The US Supreme Court clarified that arbitrators have broad authority to interpret contracts and their decisions should not be overturned even if their interpretation is incorrect, as long as they construed the contract.
2) A California court ordered parties to complete their arbitrator selection process and let the panel decide issues of consolidation and contractual provisions, rather than the court making those decisions.
3) A Connecticut court compelled arbitration in a fronting dispute, finding the reinsurer agreed to arbitrate based on references to underlying reinsurance agreements in an assumption agreement.
The newsletter also provides brief summaries of several other reinsurance court cases.
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The document provides a summary of legislative activities in the United States Congress for the week of July 29, 2013. In the Senate, cloture was filed on several nominations including the nomination of James Comey as FBI Director. The Senate also passed a bill tying student loan interest rates to Treasury rates. In the House, the agenda for the week includes consideration of an appropriations bill and several other pieces of legislation under suspension of the rules. The document also summarizes legislative activities relating to various policy areas such as agriculture, budget, cybersecurity, and defense.
This document provides a summary of legislative activity in Congress for the week of July 22, 2013. It covers developments in various policy areas including the farm bill, appropriations bills, cybersecurity legislation, and hearings scheduled. The Senate is expected to take up the transportation appropriations bill this week but there may be a budget point of order raised. The House will consider the defense appropriations bill but there are disagreements over amendments. In cybersecurity, a Senate committee plans to mark up a bipartisan bill by the end of the month focusing on NIST coordination and workforce issues.
The document is a summary of frequently asked questions from the CFTC's cross-border guidance. It defines key terms like U.S. person, foreign branch, and affiliate conduit. For U.S. person, it provides a broad definition that includes natural persons residing in the U.S., entities organized in the U.S., certain trusts, collective investment vehicles majority-owned by U.S. persons, and entities with unlimited liability that are majority-owned by U.S. persons. It also considers factors like a party's connections to U.S. commerce in determining U.S. person status. For foreign branches, it notes they are considered part of the principal U.S. entity but may
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A toxic combination of 15 years of low growth, and four decades of high inequality, has left Britain poorer and falling behind its peers. Productivity growth is weak and public investment is low, while wages today are no higher than they were before the financial crisis. Britain needs a new economic strategy to lift itself out of stagnation.
Scotland is in many ways a microcosm of this challenge. It has become a hub for creative industries, is home to several world-class universities and a thriving community of businesses – strengths that need to be harness and leveraged. But it also has high levels of deprivation, with homelessness reaching a record high and nearly half a million people living in very deep poverty last year. Scotland won’t be truly thriving unless it finds ways to ensure that all its inhabitants benefit from growth and investment. This is the central challenge facing policy makers both in Holyrood and Westminster.
What should a new national economic strategy for Scotland include? What would the pursuit of stronger economic growth mean for local, national and UK-wide policy makers? How will economic change affect the jobs we do, the places we live and the businesses we work for? And what are the prospects for cities like Glasgow, and nations like Scotland, in rising to these challenges?
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Ponzi schemes, a notorious form of financial fraud, have plagued America’s investment landscape for decades. Named after Charles Ponzi, who orchestrated one of the most infamous schemes in the early 20th century, these fraudulent operations promise high returns with little or no risk, only to collapse and leave investors with significant losses. This article explores the nature of Ponzi schemes, notable cases in American history, their impact on victims, and measures to prevent falling prey to such scams.
Understanding Ponzi Schemes
A Ponzi scheme is an investment scam where returns are paid to earlier investors using the capital from newer investors, rather than from legitimate profit earned. The scheme relies on a constant influx of new investments to continue paying the promised returns. Eventually, when the flow of new money slows down or stops, the scheme collapses, leaving the majority of investors with substantial financial losses.
Historical Context: Charles Ponzi and His Legacy
Charles Ponzi is the namesake of this deceptive practice. In the 1920s, Ponzi promised investors in Boston a 50% return within 45 days or 100% return in 90 days through arbitrage of international reply coupons. Initially, he paid returns as promised, not from profits, but from the investments of new participants. When his scheme unraveled, it resulted in losses exceeding $20 million (equivalent to about $270 million today).
Notable American Ponzi Schemes
1. Bernie Madoff: Perhaps the most notorious Ponzi scheme in recent history, Bernie Madoff’s fraud involved $65 billion. Madoff, a well-respected figure in the financial industry, promised steady, high returns through a secretive investment strategy. His scheme lasted for decades before collapsing in 2008, devastating thousands of investors, including individuals, charities, and institutional clients.
2. Allen Stanford: Through his company, Stanford Financial Group, Allen Stanford orchestrated a $7 billion Ponzi scheme, luring investors with fraudulent certificates of deposit issued by his offshore bank. Stanford promised high returns and lavish lifestyle benefits to his investors, which ultimately led to a 110-year prison sentence for the financier in 2012.
3. Tom Petters: In a scheme that lasted more than a decade, Tom Petters ran a $3.65 billion Ponzi scheme, using his company, Petters Group Worldwide. He claimed to buy and sell consumer electronics, but in reality, he used new investments to pay off old debts and fund his extravagant lifestyle. Petters was convicted in 2009 and sentenced to 50 years in prison.
4. Eric Dalius and Saivian: Eric Dalius, a prominent figure behind Saivian, a cashback program promising high returns, is under scrutiny for allegedly orchestrating a Ponzi scheme. Saivian enticed investors with promises of up to 20% cash back on everyday purchases. However, investigations suggest that the returns were paid using new investments rather than legitimate profits. The collapse of Saivian l
In World Expo 2010 Shanghai – the most visited Expo in the World History
https://www.britannica.com/event/Expo-Shanghai-2010
China’s official organizer of the Expo, CCPIT (China Council for the Promotion of International Trade https://en.ccpit.org/) has chosen Dr. Alyce Su as the Cover Person with Cover Story, in the Expo’s official magazine distributed throughout the Expo, showcasing China’s New Generation of Leaders to the World.
Update: Employer Responsibilities Under the Affordable Care Act
1. PattonBoggs.com Health Care Client Alert 1
JULY 3, 2013
This Alert provides only
general information and
should not be relied upon
as legal advice. This Alert
may also be considered
attorney advertising under
court and bar rules in
certain jurisdictions.
For more information, contact your
Patton Boggs LLP attorney or the
authors listed below.
ROSEMARY BECCHI
rbecchi@pattonboggs.com
202.457.5255
GREGG BUKSBAUM
gbuksbaum@pattonboggs.com
202.457.6153
MICHAEL CURTO
mcurto@pattonboggs.com
202.457.5611
MARTIE KENDRICK
mkendrick@pattonboggs.com
202.457.6520
ERICA KRAUS
ekraus@pattonboggs.com
202.457.4132
LARRY MAKEL
lmakel@pattonboggs.com
214.758.1560
DAVID MCLEAN
dmcclean@pattonboggs.com
214.758.3553
KAREN THIEL
kthiel@pattonboggs.com
202.457.5229
TODD TUTEN
ttuten@pattonboggs.com
202.457.5215
CLIENT ALERT
UPDATE: EMPLOYER RESPONSIBILITIES
UNDER THE AFFORDABLE CARE ACT
ON JULY 2 THE OBAMA ADMINISTRATION ANNOUNCED A ONE YEAR DELAY OF
REQUIREMENTS FOR LARGE EMPLOYERS (50 OR MORE FULL-TIME EMPLOYEES) TO
REPORT THE HEALTH CARE COVERAGE THEY OFFER THEIR EMPLOYEES, AS WELL AS
PENALTIES FOR FAILURE TO OFFER QUALIFIED INSURANCE. THE ADMINISTRATION
ALSO ANNOUNCED A DELAY IN INFORMATION REPORTING REQUIREMENTS
APPLICABLE TO INSURERS, SELF-INSURING EMPLOYERS, AND OTHER PARTIES THAT
PROVIDE HEALTH COVERAGE.
Implementation of the Affordable Care Act (ACA) continues at an accelerated
pace. Some of its most important provisions for employers are scheduled to take
effect in January 2014. With the force of these provisions now less than a year
away, employers need to understand their impact and begin to prepare now to
comply with the new requirements. To assist in this effort, we have outlined some
of the questions employers will face in preparing for January 2014 and how
employers may approach these questions in light of the ACA’s requirements.
Note, however, that employers that self-insure are subject to an additional set of
requirements not addressed here.
IMPORTANT ACA IMPLEMENTATION TIMELINES FOR EMPLOYERS
January 2013 January 2014January 2012
→ Employers with fewer
than 101 employees may
shop for coverage on
exchanges
→ Prohibition on health
status underwriting
takes effect, with
exception for wellness
programs
→ Employers
must report
health
coverage cost
on W-2s for
2012
→ Information
about 2013
employees
will be used
to determine
large
employer
status in 2014
→ Employers
allowed to
report
health
coverage
cost on
W-2s for
2011
Beyond 2014
→ NEW: January 2015 -
Employers with 50 or more
FTEs penalized for failure
to offer affordable
minimum essential coverage
→ In 2015, employers must
offer dependent coverage
→ Employers with more than
200 full-time employees
must automatically enroll
new employees in health
coverage
→ Larger employers will have
access to exchanges
2. PattonBoggs.com Health Care Client Alert 2
SHOULD MY COMPANY PROVIDE HEALTH INSURANCE COVERAGE TO EMPLOYEES?
In deciding whether to offer health insurance coverage, an employer must determine whether it is subject to the
penalties imposed by ACA’s employer responsibility provisions. If subject to the penalties, the employer should
calculate the penalty it could face if it chooses not to offer coverage. An employer that is subject to penalties must
take into account the potential penalty for not offering coverage, as compared to the cost of offering health coverage
to employees, discounted by the value generated by providing the coverage in the form of its wage effects and its
impact on employee health and satisfaction.
IS MY COMPANY SUBJECT TO PENALTIES?
The ACA imposes penalties only on large employers, defined to include employers with 50 or more full-time
equivalent employees. To calculate full-time equivalent employees, use the following formula:
+
Hours for part-time employees include both hours worked and hours paid while not working, for instance for paid
vacation time. If this sum is equal to 50 or greater, your company will be subject to penalties if you do not offer health
coverage AND any one of your full-time employees receives a federal premium tax credit to purchase coverage on an
exchange. For example, for an employer with 45 full-time employees, and 20 part-time employees, each of whom
works 110 hours per month, the number of full-time equivalent employees would be 45 + (2200/120), or 63.3.
Because the employer’s number of full-time equivalents exceeds 50, the employer would be an applicable large
employer and would face penalties if any of its full-time employees receives a federal premium tax credit, even though
it employs fewer than 50 full-time employees.
Number of full–time employees
Sum of the hours worked by each part-time employee in a
month (up to 120 hours/employee)
120
3. PattonBoggs.com Health Care Client Alert 3
Some employees may be excluded from the calculation of full-time equivalent employees. These include seasonal
employees - defined to include, but not limited to, agricultural workers who move from one seasonal activity to
another - who work for 120 days or less, as well as retail employees who work only during the holidays. Further, an
employer will not be considered a large employer if its number of full-time employees exceeds 50 for 120 days or less
during the year. For instance, a student who works at a grocery store only during her school breaks, such that she
works for the employer for 120 or fewer days during the year, would be excluded from the calculation of full-time
equivalent employees for the purposes of determining large-employer status.
Further, only employees are included in determining large employer status. Self-employed owners, S-corp
shareholders with ownership exceeding 2 percent, and independent contractors are all excluded from the calculation.
Employers should be careful, however, to insure that independent contractors are correctly classified, as improperly
excluding an employee from the large employer calculation adds risk to problems with independent contractor
classification.
Employers that are not subject to penalties based on their number of full-time equivalent employees may still choose
to offer health insurance to their employees. Employers should be aware, however, that their offer of affordable
coverage may disqualify employees from receiving substantial federal subsidies to purchase health insurance on an
Exchange.
In calculating your number of full-time equivalent employees, be aware that the sum must include the employees of all
entities in a “controlled group,” as defined by Internal Revenue Code section 414. Your company may, therefore, be
considered a large employer based on not only your employees but also the employees of your related entities. Section
414 defines controlled groups based on three types of relationships:
→ A controlled group exists based on a parent-subsidiary relationship when a parent organization owns 80
percent or more of the equity in a subsidiary. If your company owns 80 percent or more of the equity in
another company, that company’s employees will count toward your number of full-time equivalent employees
for the purposes of determining large employer status. Further, if that subsidiary owns 80 percent or more of
the equity in another company or companies, those companies’ employees must also be included within your
controlled group.
For example, consider the diagram on the next page. In the first structure, Company A has only 10 full-time
equivalent employees. It owns 80 percent of the equity, however, in Company B, which has 42 full-time
equivalent employees. Because A owns 80 percent of the equity in B, they are members of a controlled group
and their full-time equivalent employees are combined for the purposes of determining whether they are large
employers subject to penalties. Because their combined number of full-time equivalent employees is 52 and
4. PattonBoggs.com Health Care Client Alert 4
therefore exceeds 50, each company may be subject to penalties if it does not provide qualifying health
insurance for its full-time employees.
Similarly, in the second structure, Company A has only 10 full-time equivalent employees. Company B has
only two full-time equivalent employees, so neither A nor B, nor A and B together as a controlled group,
would qualify on their own as large employers. However, Company B owns 80 percent equity in Company C,
which has 40 full-time equivalent employees. Because A owns 80 percent equity in B, which owns 80 percent
equity in C, all three companies are members of a controlled group. Their employees, therefore, are added
together when determining large employer status. Thus, although none of the three companies would qualify
individually as an applicable large employer, each may be subject to a penalty if it does not offer qualifying
health insurance because the controlled group has a combined total of 52 full-time equivalent employees. 26
USC 414(b), (c); 26 USC 1563(a).
→ A controlled group exists based on a brother-sister relationship when the same five or fewer people, who must
be individuals, trusts or estates, together own at least 80 percent of the equity in each of two organizations and
at least 50 percent of the ownership of the organizations is identical. For instance, three individuals, A, B, and
C, might own stock in two companies, Y and Z. Y and Z are members of a controlled group if A, B, and C
collectively own 80 percent of each company and at least 50 percent of the ownership of the companies is
identical. If A owns 20 percent of Y and five percent of Z, B owns 10 percent of Y and 20 percent of Z, and
C owns 50 percent of Y and 60 percent of Z, Y and Z are members of a controlled group. A, B, and C
collectively own 80 percent of Y and 85 percent of Z. Additionally, 65 percent of the ownership of Y and Z
are identical – A’s five percent interest in Z is mirrored in Y, B’s 10 percent interest in Y is mirrored in Z, and
C’s 50 percent interest in Y is mirrored in Z. If, however, B and C’s ownership interests are different, such
5. PattonBoggs.com Health Care Client Alert 5
that B owns 10 percent of Y and 60 percent of Z and C owns 50 percent of Y and 20 percent of Z, Y and Z
would not be members of a controlled group. Though A, B, and C would still collectively own 80 percent of
both Y and Z, there would be only 35 percent identical ownership between the two companies. 26 USC
414(b), (c); 26 USC 1563(a).
Controlled Group No Controlled Group
→ A controlled group also exists in the case of an “affiliated service group,” where several service organizations
regularly collaborate in the services they provide and are linked by at least 10 percent cross-ownership. 26 USC
414(m).
The IRS will offer a safe harbor from penalties to employers that offer coverage to at least 95 percent of their
employees. An employer will still be subject to a penalty of $3,000, however, for each employee who is not offered
coverage and receives a federal premium tax credit to purchase insurance on an exchange.
Given the complexity of the controlled group rules and the unique structure of every entity, including ownership
arrangements, classes of stock and types of investors, fully understanding the implications of these controlled group
rules may require employers to engage in additional research, analysis, and counsel.
HOW DO THE “CONTROLLED GROUP” TESTS IMPACT PRIVATE INVESTMENT FUNDS?
This “controlled group” analysis is especially critical when examining whether private investment funds and their
individual portfolio company investments are subject to the penalties imposed by ACA. Based on the first of the
above described relationship tests – the parent/subsidiary relationship – to the extent that any private investment
fund owns at least 80 percent of the equity in a portfolio company, that private investment fund will technically be
6. PattonBoggs.com Health Care Client Alert 6
aggregated with such portfolio company as part of a controlled group and prospectively subject to the penalties
imposed by ACA. However, private investment funds, themselves (whether formed as limited partnerships, limited
liability companies, offshore corporations or otherwise), generally do not actually have employees since they are only
pools of capital, and those who manage (i.e., “work for”) a private investment fund are employed by the fund’s
sponsor and/or investment manager, which is a separate entity that does not, itself, have an ownership interest in the
portfolio company under normal circumstances. Accordingly, to the extent a portfolio company has 50 or more full-
time employees and a private investment fund with no employees owns at least 80 percent of the equity of that
portfolio company, the private investment fund would be considered a large employer under the parent/subsidiary
relationship test, but is not likely to be subject to penalties under ACA (the result may be different, however, in the
rare case of a private investment fund that actually has employees). Nonetheless, there may be other consequences to
a private investment fund that would impact its bottom line from an economic standpoint. For example, if any of its
portfolio companies acquired other companies, the same controlled group analysis using the parent/subsidiary
relationship test would be applied in connection with those acquisitions. As a result, a private investment fund could
be aggregated with the subsidiaries of its portfolio companies if the 80 percent equity ownership threshold is met in
relation to the acquired subsidiaries. Any penalties imposed on the portfolio companies and their subsidiaries under
ACA could, therefore, have a negative impact on the private investment fund’s returns.
Another important consideration occurs in the case of many different portfolio companies that are commonly owned
by a single investment fund and whether these different portfolio companies would be aggregated to create a
controlled group. In this case, the brother-sister relationship test may be applicable, depending on the ultimate
ownership of the fund. The requirement for the brother-sister test is that the common owners must be individuals,
trusts or estates and that the same five or fewer people own at least 80 percent of each organization (with at least 50
percent ownership being identical). The only way to trigger this test in the investment fund context would require a
“look through” to the ultimate ownership of the investment fund. The rules are not abundantly clear in describing
circumstances as to when such a look-through would be imposed. To the extent such a look-through were indeed
prescribed, the nature and character of the investment fund’s investors would need to be carefully examined.
Accordingly, a private investment fund having an ownership structure that lines up with the test imposed by the
brother-sister test (i.e., 5 or fewer individuals holding greater than 80 percent of the investment fund with at least 50
percent ownership being identical) should carefully analyze this rule with its legal counsel. Alternatively, the typical
private investment fund that has an investor base consisting of several public and private pensions and other
institutional investors should not be captured by the brother-sister relationship test. Given the critical nature of this
issue, however, it is highly recommended that all private investment funds consult with legal counsel in order to
analyze the application of this rule to their unique circumstances.
7. PattonBoggs.com Health Care Client Alert 7
HOW LARGE IS THE PENALTY MY COMPANY FACES FOR NOT OFFERING COVERAGE?
The penalty for failing to offer health insurance is $167 per month, multiplied by the number of full-time employees
minus 30.
X =
Note that an employer that qualifies as large based on its number of part-time employee hours, but does not have
more than 30 full-time employees, will not be subject to a penalty for failing to offer coverage. Though employees of
all members of a controlled group are counted together for the purpose of determining whether they are subject to
penalties as applicable large employers, the penalty to which each member of a controlled group is subject accrues
only against that member. For the purposes of calculating each member’s penalty, the 30 employee reduction must be
shared ratably across members of a controlled group. For example, consider a controlled group including three
companies, X, Y, and Z. X has 150 employees, Y has 100 employees, and Z has 50 employees. In calculating the
penalties to which each company would be subject, the 30 employee reduction must be divided among the companies
proportionally to the number of employees each retains. In this case, X would apply a 15 employee reduction, because
it employs half of the controlled group’s 300 total employees, so receives half of the 30 employee reduction. X’s
monthly penalty, therefore, would be $167x(150-15), or $22,545. Y would apply a 10 employee reduction,
proportional to its third of the controlled group’s employees, so that Y’s monthly penalty would be $167x(100-10), or
$15,030. Z would apply a five employee reduction because it employs one sixth of the controlled group’s employees,
so that Z’s monthly penalty would be $167x(50-5), or $7,515. The penalty for failure to offer coverage will increase
each year based on the growth of insurance premiums.
HOW MUCH COVERAGE SHOULD MY COMPANY OFFER?
Employers face penalties if the coverage they offer their employees is not affordable or does not meet the standard
for minimum essential coverage.
Coverage is considered affordable for an employee if the cost of his or her least expensive option for self-only
coverage is not greater than 9.5 percent of his or her household income. The IRS has created several affordability safe
harbors. An employee’s coverage will be considered affordable if his or her lowest cost option costs 9.5 percent or
$167 (Number of full-time employees – 30) Monthly Penalty
8. PattonBoggs.com Health Care Client Alert 8
less of his or her W-2 income, his or her hourly rate x 130 hours per month, or the federal poverty line for a single
individual.
Minimum essential coverage is based on a plan’s actuarial value. To qualify as minimum essential coverage, a plan
must pay for at least 60 percent, on average, of covered health benefits. The percentage of health benefits paid for by
a plan, for minimum value purposes, is equal to a plan’s anticipated spending on covered health benefits, computed in
accordance with a plan’s cost-sharing, divided by the anticipated allowed charges for essential health benefits for a
standard population. The standard population is specified by HHS-issued continuance tables.
According to HHS proposed regulations, a plan’s covered spending includes spending on all benefits included in any
essential health benefits benchmark plan, and may be adjusted to account for other benefits based on an actuarial
analysis. In calculating a plan’s anticipated spending, the proposed regulations specify that reduced beneficiary cost-
sharing associated with wellness program compliance cannot be taken into account, with the exception of reduced
cost-sharing associated with programs to prevent or reduce smoking. Employer contributions to health savings
accounts, and employer contributions to health reimbursement accounts that can be used only for cost-sharing, will
be taken into account.
The proposed regulations offer employers three options for determining whether their plans meet minimum value
requirements. Employers may use a calculator provided by HHS, or they may offer a plan that fits into one of several
specified safe harbors. Alternatively, employers who offer plans with non-standard benefits may obtain an actuarial
certification that their plans meet minimum value requirements.
MUST MY COMPANY OFFER COVERAGE TO EMPLOYEES’ DEPENDENTS?
The ACA does require employers to offer dependent coverage to avoid responsibility penalties. Notably, however, the
IRS has not defined dependents to include spouses. Employers, therefore, must offer coverage to the children of their
employees, but not the spouses of their employees. Children of employees are defined to include biological or
adopted children, stepchildren, and foster children. Coverage must be offered to employees’ children up to age 26.
WHAT PENALTY DOES MY COMPANY FACE FOR OFFERING INSUFFICIENT COVERAGE?
The penalty is $3,000 annually for each full-time employee that receives a federal premium tax credit. An employer’s
total penalty is capped at $2,000 times its number of full-time employees reduced by 30. For example, an employer
with 100 employees that offered insufficient coverage would have its penalty for insufficient coverage capped at (100-
30) x $2,000, or $140,000. If one of its employees received a federal premium tax credit, the employer would be
assessed a $3,000 annual penalty; if two of its employees received federal premium tax credits, its penalty would be
$6,000; if three of its employees received federal premium tax credits it would be assessed a $9,000 annual penalty, and
9. PattonBoggs.com Health Care Client Alert 9
so forth, until accrued penalties reached $140,000. The penalty for offering insufficient coverage will increase each
year based on the growth of insurance premiums. Notably, federal premium tax credits are available only to
households under 400 percent of the federal poverty line. Employers will not be penalized, therefore, for offering
insufficient coverage to employees with household incomes exceeding 400 percent of the federal poverty line.
CAN MY COMPANY OFFER DIFFERENT COVERAGE OPTIONS TO DIFFERENT EMPLOYEES?
Employers are prohibited from offering coverage that favors highly compensated employees. Highly compensated
employees are defined as the five highest paid officers in a company or anyone among the highest paid 25 percent of
employees.
To avoid illegally favoring highly compensated employees, an employer’s plan must benefit at least 70 percent of
employees. The plan must also offer the same benefits provided to highly compensated employees to non-highly
compensated participants in the plan. Further, this non-discrimination rule applies across an entire controlled group.
Some plans that were in existence on March 23, 2010, however, may be grandfathered out of complying with these
requirements.
An insured group health plan that fails to comply with these requirements will generally be subject to an excise tax of
$100 per day of non-compliance for each employee who receives less favorable benefits (or an equivalent civil money
penalty in the case of non-federal governmental group health plans), capped at the lesser of 10 percent of the cost of
the group health plan or $500,000.
TO WHOM MUST I OFFER COVERAGE?
To avoid responsibility penalties, an employer must offer coverage to its full-time employees.
HOW DO I DETERMINE WHO IS AN EMPLOYEE?
Whether a worker is considered a company’s employee will be determined based on common law standards. Though
this determination is fact-specific, the IRS has issued guidance on employees hired through temporary employment or
employee leasing agencies. Temporary employees hired through an agency may sometimes be considered employees
of the temporary agency and sometimes employees of the client employer, depending on a 20 point test used by the
IRS to determine the common law employer. Leased employees will be considered employees of the leasing company.
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HOW DO I DETERMINE WHICH OF MY COMPANY’S EMPLOYEES WORK FULL TIME?
The ACA requires employers to offer coverage to their full-time employees, defined as employees who work 30 or
more hours per week. The 30 hours includes both time worked and paid hours when no work is performed, including
vacation, holidays, or paid leave. For employees not paid on an hourly basis, an employer may calculate hours based
on actual hours of service, days worked times eight hours, or weeks worked times 40 hours.
To determine whether or not an employee works full time, an employer may look back at a standard measurement
period of 3-12 consecutive months. If an employee has worked full time during the standard measurement period, he
or she must then be offered health coverage for a stability period of 6-12 months that is at least as long as the
standard measurement period. If the employee did not work full time during the standard measurement period, he or
she need not be offered health coverage as a full-time employee during the stability period. Employers may use an
administrative period of no more than 90 days after the end of the standard measurement period to identify full-time
employees, but the period must overlap with the prior stability period
The IRS has made special provisions for employers who plan to adopt a 12-month measurement period followed by a
12-month stability period, because of the difficulty involved in establishing the first measurement period. These
employers may use a transition measurement period of 6-12 months, beginning no later than July 1, 2013, and ending
no earlier than January 1, 2014.
IF I HIRE A NEW EMPLOYEE, WHEN MUST I OFFER HIM OR HER COVERAGE?
An eligible employee who is reasonably expected to work full time when hired must generally be offered health
coverage within ninety (90) days of his or her start date. All calendar days beginning on the enrollment date are
counted, including weekends and holidays. If the 91st day is a weekend or holiday, the plan or issuer may choose to
provide coverage earlier than the 91st day, but cannot provide an effective date of coverage later than the 91st day.
Stability Period 2
Measurement Period 2
Administrative Period 1
(90 days or less)
Administrative Period 2
(90 days or less)
Measurement Period 1
3-12 months
Stability Period 1
6-12 months (must be greater than
measurement period)
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Different rules apply to hires who are variable hour or seasonal employees. An employee is considered a variable hour
employee when it cannot be determined at the date of hire whether he or she can reasonably be expected to work an
average of 30 hours per week or more. The term “seasonal employee” has not yet been defined for the purposes of
determining whether an employee can reasonably be expected to work fulltime when he or she is hired. For the
purposes of determining large employer status, the ACA refers to Department of Labor (DOL) regulations defining
‘on a seasonal or other temporary basis’ to describe an agricultural worker who moves from one seasonal activity to
another, and also explicitly includes retail workers employed only during the holiday season. In the context of
determining obligations to new employees, however, the IRS has provided that, at least through 2014, employers may
use a reasonable good faith interpretation of seasonal employee.
For variable hour and seasonal employees, an employer may use an initial measurement period of 3-12 months to
determine if a new employee averages 30 hours of work or more per week. If the employee works full time during the
initial measurement period, he or she must be offered health coverage as a full-time employee for a subsequent
stability period of the same length as or longer than the initial measurement period, but no shorter than six months.
The employer may use an administrative period of no more than 12 months after the end of the measurement period
to determine whether or not the employee has worked full time. The length of the measurement period and the
administrative period combined, however, cannot extend beyond the final day of the first calendar month beginning
on or after the one-year anniversary of the employee’s start date.
BEYOND THE EMPLOYER RESPONSIBILITY PENALTIES, WHAT DOES THE ACA MEAN FOR MY
COMPANY’S TAXES?
EXCHANGE NOTICE
No later than October 1, 2013, employers must provide notice to all employees, both full-time and part-time,
explaining the State Exchanges, tax consequences of purchasing Exchange benefits, eligibility for premium assistance,
and if the employer’s plan is affordable and provides minimum value. The Department of Labor has published model
notices for both employers that do and do not offer health coverage.
W-2 REPORTING
Beginning in January 2012 for the 2011 tax year, employers are allowed to report the cost of an employee’s coverage
under an employer-sponsored group health plan on the employee’s W-2 form. Employers are required to report the
cost of an employee’s coverage under an employer-sponsored group health plan beginning with the W-2s issued in
January 2013 for the 2012 tax year, although transition relief is available for some employers and for certain types of
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coverage. For employers that filed fewer than 250 W-2s in the previous calendar year, employers furnishing W-2s to
employees who terminate before the end of a calendar year and request early W-2s, and for reporting multi-employer
plans, Health Reimbursement Arrangements, certain dental and vision plans, some self-insured plans, and employee
assistance programs, the requirement to report coverage will not apply for the 2012 Forms, or for future calendar
years until the IRS publishes guidance giving at least six months-notice of the change. The coverage cost information
is provided for information purposes only, to help employees be better informed consumers of health coverage.
PAYROLL TAX
Beginning in 2013, an additional Medicare tax of 0.9 percent is being applied to wages for taxpayers with household
incomes exceeding $250,000 for married taxpayers filing jointly, $125,000 for married taxpayers filing separately, and
$200,000 for other taxpayers. Employers must withhold this additional tax from wages paid in excess of $200,000 in a
calendar year. An individual who is expected to owe more should decrease his or her withholding exemptions or pay
estimated taxes. An employee will determine the amount owed (or any refund or credit due) when the employee
completes his or her income tax return. The additional Medicare tax also applies to self-employment income.
CHANGES TO FSAS, HSAS, AND MSAS
Beginning in 2011, the cost of an over-the-counter medicine purchased without a physician’s prescription was
excluded from reimbursement from a Flexible Spending Arrangement, Health Savings Account, or Archer Medical
Savings Account. Additionally, beginning in 2013, salary reduction contributions to health flexible spending
arrangements are limited to $2,500.
SMALL BUSINESS TAX CREDIT
The ACA created a tax credit for employers that have fewer than 25 full-time equivalent employees (calculated as
described in the penalty section above), pay an average wage of less than $50,000 a year, and pay at least half of their
employee health insurance premiums. Multiple entities may be treated as a single employer under the controlled group
rules, as discussed above.
The maximum credit available is 35 percent of the cost of employer-paid health care premiums for small business
employers and 25 percent of the cost of employer-paid health care premiums for tax-exempt employers for 2010
through 2013. These rates will increase to 50 percent and 35 percent on January 1, 2014. The amount of the credit is
on a sliding scale, such that smaller employers and employers with lower average wages will receive a larger credit.
The credit can be carried back or forward to other tax years. Additionally, the credit is refundable, so that employers
with no taxable income may receive the credit as a refund, as long as it does not exceed their income tax withholding
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and Medicare tax liability. Eligible employers may also claim a business expense deduction for premiums paid in
excess of the credit.
Eligible employers can calculate their credit using IRS Form 8941. Employers should evaluate their eligibility for the
credit. If an employer can benefit from the credit for a year but did not claim the credit on its tax return, it may
consider filing an amended return for the year.
SHOULD I CONSIDER OFFERING A WELLNESS PROGRAM?
To encourage employers to offer workplace wellness programs, the ACA creates an exception from its general
prohibition on health underwriting, which will take effect in 2014 and will apply to group health plans and group
health insurance issuers. Group health plans include both insured and self-insured group health plans. This exception
allows employers to adopt “health-contingent wellness programs,” which may allow rewards or surcharges of up to 30
percent of the total cost of plan coverage based on whether an employee satisfies a standard related to a health factor.
Standards may include attaining a certain health outcome or participating in an activity related to a health factor. For
instance, a program might offer a premium discount, reduction in cost-sharing, or waive a surcharge for employees
who have a specified body mass index or refrain from smoking. Such programs may create opportunities for
employers to reduce health care costs by encouraging employees to adopt healthier lifestyles.
Plans must meet five requirements to fall within the exception:
→ Available to all similarly situated individuals, who must be given a chance to qualify at least once annually; and
→ Size of reward is not more than 30 percent of the cost of coverage, including both employer and employee
contributions, but
→ If dependents may participate, the limit is 30 percent of the cost of family coverage, and
→ Programs may be designed to allow a 20 percent additional maximum for smoking cessation or
reduction; and
→ “Reasonable alternative standard” or waiver available for individuals for whom it is unreasonably difficult or
medically inadvisable to meet the health-contingent standard, such that
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→ If the alternative standard is outcome-based, an employer cannot require verification that a health
factor makes it unreasonably difficult to satisfy the otherwise applicable standard; and
→ If the alternative standard is activity-based, an employer may seek verification that it is unreasonably
difficult for the employee to complete the activity; and
→ Notification given to employees of the terms of the program and the opportunity to seek alternative
qualification standards or waiver of the standard; and
→ Reasonably designed to promote health or prevent disease, not overly burdensome, and not a subterfuge for
health status discrimination, such that
→ If a plan’s initial standard for obtaining a reward is based on results of a test or screening related to a
health factor, the plan is not reasonably designed unless it makes a different, reasonable means of
qualifying for the reward available to all individuals who do not meet the initial standards.
Participatory wellness programs, which do not provide a reward or do not include any conditions for obtaining a
Reward that are based on satisfying a standard relating to a health factor, are not required to meet these
requirements, although they must be made available to all similarly situated individuals, regardless of health status.
With the publication of the Final Rule, however, the Departments of Health, Labor and Treasury announced they
recognize that each employer’s wellness program is unique and that employers may have questions regarding the
application of these requirements. The Departments anticipate issuing subregulatory guidance in order to provide
additional clarity, and that they may propose modification to these requirements, as necessary.
****
To ensure compliance with requirements imposed by the IRS, we inform you that any tax information
contained in this communication (including attachments) is not intended or written to be used, and cannot
be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting,
marketing, or recommending to another party any transaction or matter addressed herein.