1. Affordable Healthcare Act
and Your Business
Doug Dreger, RHU, REBC, CBC
Manager, Employee Benefits
MacLean Agency
(609) 683-9300 x 229
Steve Sciortino, Jr., CPA, Macc
Supervisor
Lear & Pannepacker, LLP
(609) 452-2200

2. Affordable Care Act

5. • Legislative Changes

6. Simple Cafeteria Plans
• ACA established simple cafeteria plans
– Certain small employers (employing 100
or fewer employees) are eligible to
establish a simple cafeteria plan
– Simple cafeteria plans deemed to meet
applicable nondiscrimination rules

7. OTC Medication Reimbursement
• Effective January 1, 2011, OTC
medications no longer qualify as medical
expenses for HRAs and health FSAs
• Distributions from HSAs or Archer MSAs
for OTC medications are nonqualified
distributions
– Subject to income tax and penalty tax

8. Health FSA Contributions
• Effective for plan years beginning after
December 31, 2012, employee pre-tax
salary contributions are limited to
$2,500 per year
• Dollar amount indexed for inflation for
plan years beginning after 2013.

9. Health Coverage on Form W-2
• Beginning with 2012 forms, employers
must report cost of employer-
sponsored health insurance coverage
on employee’s Form W-2
• Certain small employers exempt from
2012 reporting

10. Medical Expense Deduction
• For tax years beginning after
December 31, 2012, itemized
deduction for medical expenses
threshold now 10% of AGI
– Threshold in previous years was 7.5%
• Taxpayers aged 65 and older will not
have increased threshold until tax
years beginning after December 31,
2016

11. Medicare Tax Expanded
• Unearned Income Medicare tax enacted
– 3.8% tax on investment income
– Married Filing Joint taxpayers with AGI over
$250,000 ($200,000 for Single and Head of
Household)
• Additional Medicare tax on wages
exceeding $250,000 for MFJ ($200,000
for Single)
– Additional 0.9% tax withheld on wages over
$200,000
– Self-employed persons subject to 3.8% tax
on the same thresholds

12. Annual Certification of Coverage
• After 2013, employers must provide
plan information regarding health
insurance coverage to the IRS and
covered employees

13. • Small Plan Definition / Credits

14. Small Employer Health Insurance
Tax Credit
• Employer must:
– Employ 25 full-time employees
– Pay average annual wages of less than $50,000
per employee
– Pay a uniform percentage of health insurance
premiums for enrolled employees
• 35% maximum credit (25% for tax-exempt) if:
– 10 or fewer full-time employees with average
wages of $25,000 or less
– Credit decreases as employees or wages
increase

15. Small Employer Health Insurance
Tax Credit (continued)
• Credit offsets regular income taxes and
AMT
– Unused portion can be carried back 1 year
or forward 20 years
• After 2013, maximum credit increases
to 50% (35% for tax-exempt) if
employer purchases health insurance
through small business health options
program (SHOP)

18. • Large Employer Definition / Penalties

19. Penalty for Lack of Health Insurance
• Employers > 50 FTE subject to penalty if:
– Not offering health insurance all full-time
employees > 30 Hr/Wk
(look-back, stability, and seasonal periods)
– Insurance is unaffordable (> 9.5% Wages) or
does not provide certain minimum value
– ‘Wages’ net of 401(k) and health premiums
• Non-deductible penalty ($250 / Mo) if any
employee is (allowed) or paid a premium
assistance credit or cost subsidy

22. • Employee Mandate / Premium Credit

27. • Number Crunching

28. Plan Pricing Options

29. Will staff give up 9.5% of their
wages compared to a $95/yr tax?
Hourly Rate 7.25 10 15 20 25
Hrly Cost Hrs 30 0.63 0.87 1.30 1.73 2.17
Empl Cost $75 $103 $155 $207 $259
Hrly Cost Hrs 35 0.73 1.01 1.52 2.02 2.53
Empl Cost $87 $121 $181 $242 $303
Hrly Cost Hrs 40 0.84 1.15 1.73 2.31 2.89
Empl Cost $100 $138 $207 $277 $346
EMPLOYEE COSTS Based on $400/Month plan, employee pays 9.5%

30. Do employer contributions cost
more than the “affordability” fine?
Hourly Rate 7.25 10 15 20 25
Hrly Cost Hrs 30 2.71 2.47 2.03 1.60 1.17
Emplr Cost $324 $296 $244 $192 140
Hrly Cost Hrs 35 2.94 1.99 1.56 1.13 0.69
Emplr Cost $312 $278 $218 $157 96
Hrly Cost Hrs 40 2.5 1.63 1.20 0.77 .34
Emplr Cost $299 $261 $192 122 53
EMPLOYER COSTS based on $400/Month plan, employee pays 9.5%
** Notice - everyone at/under $10/Hr costs more than the $250 penalty!

31. Family coverage & 401(k) could
increase employer health subsidies …
Filing Status: Effective Income “Affordable” Maximum
Filing Status: Effective Income “Affordable” Maximum

32. Affordable Healthcare Act
and Your Business
Doug Dreger, RHU, REBC, CBC
Manager, Employee Benefits
MacLean Agency
(609) 683-9300 x 229
Steve Sciortino, Jr., CPA, Macc
Supervisor
Lear & Pannepacker, LLP
(609) 452-2200