{"id":99,"date":"2013-05-02T16:28:59","date_gmt":"2013-05-02T20:28:59","guid":{"rendered":"http:\/\/www.hnetalk.com\/hcr\/?p=99"},"modified":"2013-05-02T16:28:59","modified_gmt":"2013-05-02T20:28:59","slug":"play-or-pay-mandate-under-the-patient-protection-and-affordable-care-act-ppaca","status":"publish","type":"post","link":"https:\/\/hnetalk.com\/broker\/2013\/05\/02\/play-or-pay-mandate-under-the-patient-protection-and-affordable-care-act-ppaca\/","title":{"rendered":"\u201cPlay or Pay\u201d Mandate Under the Patient Protection and Affordable Care Act (PPACA)"},"content":{"rendered":"<p><a href=\"http:\/\/hnetalk.com\/broker\/wp-content\/uploads\/2013\/04\/Play-or-Pay-Mandate.pdf\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-57\" alt=\"button-print-gry20\" src=\"http:\/\/hnetalk.com\/broker\/wp-content\/uploads\/2013\/04\/button-print-gry20.png\" width=\"62\" height=\"20\" \/><\/a><\/p>\n<p>PPACA added <strong>Employer Shared Responsibility provisions<\/strong>, also called the<br \/>\n<strong>\u201cPlay or Pay\u201d mandate<\/strong>, to the Internal Revenue Code. On January 2, 2013, the Internal<br \/>\nRevenue Service (\u201cIRS\u201d) issued proposed rules to implement the mandate. Though the<br \/>\nproposed rules are not finalized, the IRS has stated that employers may rely on the guidance<br \/>\nfor months after December 31, 2013. The IRS has also stated that if future guidance is more<br \/>\nrestrictive than the proposed rule, the future guidance will not be applied retroactively.<\/p>\n<p>Beginning in 2014, certain large employers may be subject to a penalty if:<\/p>\n<ul>\n<li>They fail to offer substantially all full-time employees (and certain dependents) employer sponsored health coverage that provides \u201cminimum essential coverage\u201d (MEC)<br \/>\nOR<\/li>\n<li>The coverage offered provides MEC but it is unaffordable or does not provide minimum value<br \/>\nAND<\/li>\n<li>At least one of the employer\u2019s full-time employees receives a premium tax credit or cost-sharing reduction through an Exchange<\/li>\n<\/ul>\n<p><strong>Which employers are subject to the Play or Pay Mandate?<\/strong><br \/>\nThe mandate applies to employers that employ, on average, at least 50 full-time and\/or fulltime equivalent (\u201cFTE\u201d) employees during the preceding calendar year.<\/p>\n<p><strong>How do I know which of my employees is a \u201cfull-time employee?\u201d<\/strong><br \/>\nA full-time employee is one who performs an average of 30 hours of service per week. The<br \/>\nfollowing people are generally not \u201cemployees\u201d for purposes of this calculation: sole<br \/>\nproprietors, partners in partnerships, 2% S corporation shareholders, leased employees, and<br \/>\nemployees who work outside the United States.<\/p>\n<p><strong>How do I determine the number of FTE employees my company has in any given <\/strong><br \/>\n<strong>month?<\/strong><br \/>\nFor each month, you must add up the total number of hours of service of all employees who<br \/>\nwere not employed for an average of 30 hours per week and divide that number by 120. This is<br \/>\nthe number of FTE employees for the month.<\/p>\n<p><strong>How do I calculate the average number of full-time and FTE employees?<\/strong><br \/>\nFor each month, you determine the total number of full-time and FTE employees. Then, you<br \/>\nadd together the monthly totals and divide by 12. For any of these calculations, if your answer<br \/>\nis not a whole number, you round down to the next lowest whole number.<\/p>\n<p><strong>What year do I look at to make the calculations?<\/strong><br \/>\nIn making the calculations, you look at the preceding calendar year. This means that you look<br \/>\nat 2013 when determining whether the Play or Pay mandate applies to your company in 2014.<br \/>\n<strong>Note:<\/strong> For 2014 only, the IRS has adopted a transition relief rule. Under the transition relief<br \/>\nrule, you have the option to use a reference period of between 6 and 12 consecutive months.2<\/p>\n<p><strong>Who is a \u201cdependent\u201d that must be eligible to enroll in my company\u2019s health coverage?<\/strong><br \/>\nFor purposes of the Play or Pay Mandate, a \u201cdependent\u201d is your full-time employee\u2019s son,<br \/>\ndaughter, stepson, stepdaughter, or eligible foster child who has not reached the age of 26.<br \/>\nYour full-time employee\u2019s spouse is not a dependent for purposes of the mandate, nor is any<br \/>\nother individual who may be a dependent for tax purposes. <strong>Note:<\/strong> The IRS has provided<br \/>\ntransitional relief for employers who currently do not make coverage available to their<br \/>\nemployees\u2019 dependents. Any employer that \u201ctakes steps\u201d toward offering coverage to<br \/>\nemployees\u2019 dependents during its plan year that begins in 2014 will not be penalized solely for<br \/>\nfailing to make coverage available to dependents.<\/p>\n<p><strong>What percentage of full-time employees is \u201csubstantially all?\u201d<\/strong><br \/>\nThe IRS has concluded that 95 percent is an \u201cadministrable and appropriate interpretation\u201d of<br \/>\nthe requirement in the ACA to make coverage available to \u201csubstantially all\u201d full-time<br \/>\nemployees and their dependents.<\/p>\n<p><strong>How do I know if the plan offered to my employees provides MEC?<\/strong><br \/>\nMost commercially available health plans, including plans offered in the large or small group<br \/>\nmarket within a state, are deemed to provide MEC. Other examples of plans that provide MEC<br \/>\ninclude self-funded student health plans, Medicare Advantage plans, and any plan treated as<br \/>\ngrandfathered under PPACA.<\/p>\n<p><strong>What is considered \u201cminimum value?\u201d<\/strong><br \/>\nMinimum value is coverage of at least 60% of the total allowed cost of benefits provided under<br \/>\na plan. This is a measure of the benefits provided, not the premiums paid.<\/p>\n<p><strong>How do I know if my company\u2019s plan is \u201caffordable?\u201d<\/strong><br \/>\nIn general, coverage is considered affordable if the employee\u2019s self-only premium for the<br \/>\nlowest cost health coverage that provides MEC and minimum value is no more than 9.5<br \/>\npercent of the employee\u2019s household income.<\/p>\n<p><strong>How can my company be sure that the self-only premium paid by an employee is no<\/strong><br \/>\nmore than 9.5 percent of the employee\u2019s income?<br \/>\nThe IRS has provided three affordability \u201csafe harbors.\u201d They are:<\/p>\n<ul>\n<li><strong>Form W-2 Safe Harbor:<\/strong> If the employee\u2019s annual contribution to the self-only premium is no more than 9.5 percent of the employee\u2019s wages, as reported in Box 1 of the employee\u2019s Form W-2. This safe harbor is applied after the end of the calendar year and on an employee-by-employee basis.<\/li>\n<li><strong>Rate of Pay Safe Harbor:<\/strong> If the employee\u2019s monthly contribution to the self-only premium is no more than 9.5 percent of the employee\u2019s monthly wages. To determine an hourly worker\u2019s monthly wages, multiply either the employer\u2019s lowest rate of pay or the hourly rate of pay for each individual employee by 130.<\/li>\n<li><strong>Federal Poverty Line Safe Harbor:<\/strong> If the employee\u2019s monthly contribution for the self-only premium is no more than 9.5 percent of 1\/12 of the Federal Poverty Line for the state in which\u00a0 the employee is employed.<\/li>\n<\/ul>\n<p><strong>Note:<\/strong> For any of the safe harbors, use the self-only premium of the lowest cost health<br \/>\ncoverage that provides <strong>both<\/strong> MEC and minimum value. The affordability safe harbors are<br \/>\nnot available for plans that do not provide MEC and minimum value.<\/p>\n<p><strong>How much is the penalty that can be imposed for not complying with the Play or Pay <\/strong><br \/>\n<strong>Mandate?<\/strong><br \/>\nThe penalty, also known as the Employer Shared Responsibility Payment, differs depending<br \/>\non the type of noncompliance:<\/p>\n<ul>\n<li>If, for any calendar month, your company fails to offer substantially all of its full-time employees and their dependents health coverage that provides MEC and any of your full-time employees is certified to receive a premium tax credit or cost-sharing reduction for purchasing health coverage through an exchange, the Employer Shared Responsibility Payment is calculated as follows:\n<ul>\n<li>For each calendar month, ($2,000\/12) x (Number of full-time employees \u2013 30)<\/li>\n<li><strong>Note:<\/strong> The penalty is calculated on a monthly basis but paid annually<\/li>\n<li><strong>Note:<\/strong> The $2,000 annual amount will be adjusted for inflation in future years<\/li>\n<\/ul>\n<\/li>\n<li>If, for any calendar month, your company offers all of its employees and their dependents health coverage that provides MEC but such coverage is either a) not affordable, or b) does not provide minimum value and any of your full-time employees is certified to receive a premium tax credit or cost-sharing reduction for purchasing health coverage through an exchange, the Employer Shared Responsibility Payment is calculated as follows:\n<ul>\n<li>For each calendar month, ($3,000\/12) x the number of full-time employees certified to receive a premium tax credit or cost-sharing reduction<\/li>\n<li><strong>Note:<\/strong> The penalty is calculated on a monthly basis but paid annually<\/li>\n<li><strong>Note:<\/strong> The $3,000 annual amount will be adjusted for inflation in future years<\/li>\n<li><strong>Note:<\/strong> The maximum amount of this penalty is the amount your company would pay if it were subject to the first penalty<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p>The proposed rule contains more specific guidance regarding variable hour employees,<br \/>\nemployees compensated on a commission basis, employees hired into high-turnover positions,<br \/>\nand temporary staffing agencies. For the complete text of the proposed rules, go to<br \/>\n<a href=\"https:\/\/www.federalregister.gov\/articles\/2013\/01\/02\/2012-31269\/shared-responsibility-foremployers-regarding-health-coverage\" target=\"_blank\">https:\/\/www.federalregister.gov\/articles\/2013\/01\/02\/2012-31269\/shared-responsibility-foremployers-regarding-health-coverage<\/a>.<\/p>\n<p>This summary is provided for informational purposes only and is not intended to be either legal<br \/>\nor tax advice. HNE strongly urges any employers who might be affected by these provisions of<br \/>\nPPACA to consult with their own legal and tax advisors.<\/p>\n<p style=\"text-align: center;\"><a href=\"http:\/\/hnetalk.com\/broker\/wp-content\/uploads\/2013\/04\/Play-or-Pay-Mandate.pdf\"><img loading=\"lazy\" decoding=\"async\" alt=\"button-print-gry20\" src=\"http:\/\/hnetalk.com\/broker\/wp-content\/uploads\/2013\/04\/button-print-gry20.png\" width=\"62\" height=\"20\" \/><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>PPACA added Employer Shared Responsibility provisions, also called the \u201cPlay or Pay\u201d mandate, to the Internal Revenue Code. On January 2, 2013, the Internal Revenue Service (\u201cIRS\u201d) issued proposed rules to implement the mandate. Though the proposed rules are not finalized, the IRS has stated that employers may rely on the guidance for months after [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[33,35],"tags":[],"class_list":["post-99","post","type-post","status-publish","format-standard","hentry","category-affordable-care-act","category-hcr"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/p6ZZOS-1B","_links":{"self":[{"href":"https:\/\/hnetalk.com\/broker\/wp-json\/wp\/v2\/posts\/99","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/hnetalk.com\/broker\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/hnetalk.com\/broker\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/hnetalk.com\/broker\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/hnetalk.com\/broker\/wp-json\/wp\/v2\/comments?post=99"}],"version-history":[{"count":0,"href":"https:\/\/hnetalk.com\/broker\/wp-json\/wp\/v2\/posts\/99\/revisions"}],"wp:attachment":[{"href":"https:\/\/hnetalk.com\/broker\/wp-json\/wp\/v2\/media?parent=99"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/hnetalk.com\/broker\/wp-json\/wp\/v2\/categories?post=99"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/hnetalk.com\/broker\/wp-json\/wp\/v2\/tags?post=99"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}