of their health plan (value must exceed 60 percent of the total plan coverage) and distributed the “Notice of Exchange” to all employees, covered and non-covered, full time or part time (it should be noted that the Department of Labor decided to waive penalties for non-distribution). Individuals should be aware of the following: ■ For tax years beginning after December 31, 2012, there is a surtax on unearned income of higher-income individuals. This is a Medicare tax imposed on individuals, estates, and trusts. You should consult your tax advisor if you think this might apply to you. ■ On October 1, 2013, the state and federal exchange (Marketplace) opened for business for individuals to enroll for health care coverage. The State of Alaska opted not to run a state exchange so individuals seeking coverage must go to the federal exchange. As we are all painfully aware, this process is not going exactly as planned. The entire process is confusing and far more complex than simple. Depending on income (a function/multiple of the federal poverty level) some Alaskans may qualify for the federal subsidy (tax credit), many will not. Again, good advice would be to seek out a knowledgeable broker or consultant to
guide you through the process. There will be tax consequences for people not having health insurance coverage in 2014. ■ For tax years beginning after December 31, 2012, there is a higher threshold for deducting medical expenses. The new threshold is 10 percent (rather than 7.5 percent) of adjusted gross income for the tax year.
Complex Consequences All of this, and I have only covered the highlights, is only a warm up! January 1, 2014, is when the ride really begins and the largest part of PPACA will impact all Americans, especially employers. For individuals I will make it easy—you should be enrolled in some form of qualified health plan by March 31, 2014, or face tax consequences. For employers, it becomes much more complex! I am sure some employers were relieved when the Obama Administration announced that some of the PPACA mandates would be pushed out to January 1, 2015. The announcement certainly provides some relief to employers so they can get all of the requirements figured out without fear of a penalty consequence for inadvertently not being in total compliance with the overabundance of PPACA requirements. However, employers need to be aware that not all requirements were pushed out to 2015; it was primarily the penalties for non-compliance.
Leading up to 2014 employers, especially employers with more than fift y full time employees, are faced with making huge decisions regarding their benefit plans: ■ Stay the course—Continue to seek solutions that incrementally offset annual national trend cost increases of 8 to-9 percent. This path has become more difficult due to the impact of cost sharing requirements contained in PPACA. Employees may already shoulder a significant portion of healthcare cost increases. PPACA limits the portion of premium that an employee can be charged to 9.5 percent of the employee’s income. If the employee portion exceeds the 9.5 percent (rules do not apply to the cost of dependent coverage) and the employee decides to go to the Exchange and qualifies for a subsidy, the employers will face a $3,000 penalty for that employee if the employer’s plan does not meet the minimum value standard required by PPACA. ■ Pay and Exit—Employers with fifty or more full time employees may consider just paying applicable penalties under federal law, currently set at $2,000 per employee, and no longer sponsoring healthcare benefits. ■ Play Differently—Our research indicates that a majority of employers are ready to play differently to achieve different health
Reputation
Corporate Image Awareness
Market Leadership The reasons to advertise are abundant. Maybe you want to build a stronger corporate identity or establish leadership status. Or perhaps you are more product or service oriented and want to drive traffic to your business or website. Call me or send an email. I will help you reach the business audience in Alaska.
Charles Bell Vice President Sales (907) 230-8213 cbell@akbizmag.com ASK ABOUT PRINT & DIGITAL OPTIONS
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Alaska Business Monthly | January 2014
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