Healthcare Reform: The Affordable Care Act Tax Provisions (Course Id 664)

Taxes - Taxes for Course Id 664

The landmark legislation known as the Patient Protection and Affordable Care Act (PPACA), signed into law in 2010, affects a wide range of institutions in the United States in some way. It imposes healthcare-related requirements on health plans, health insurers and employers.  

In addition to imposing various tax increases to increase revenue, the PPACA uses a carrot and stick approach to ensure compliance with its provisions, offering tax credits for compliance and imposing tax penalties for non-compliance. This course will review the principal provisions of the law and will examine its tax impact on individuals and businesses.

In so doing, it will consider the:

• Coverage-related provisions of the PPACA addressing –
  • Plan grandfathering pursuant to which health coverage in force at the time of the law's passage may be continued,
  • The prohibition of pre-existing condition exclusions,
  • The proscription of lifetime and annual benefit limits,
  • The limitation of health coverage rescissions,
  • The requirement for certain patient protections, and
  • The requirement that plans covering children extend child coverage until age 26;
• Tax credits available to small businesses to encourage them to sponsor employee health plans;
• Shared responsibility for certain large employers to provide employee health coverage and the tax penalties imposed for noncompliance;
• Various personal income tax changes affecting taxpayers; and
• Tax credits authorized to help individuals maintain minimum essential coverage.

NASBA QAS - Text - NASBA Registry - IRS Enrolled Agents - Registered Tax Return Preparers - 664

Course Learning Objectives

• List the principal healthcare provisions of the PPACA;
• Identify the tax credits for which small businesses may be eligible when sponsoring employee health plans;
• Recognize the shared responsibility requirements for applicable large employers regarding employee health coverage;
• Compute the tax penalties imposed under the PPACA for a large employer’s failure to meet the applicable shared responsibility requirements; and
• Calculate the tax credits designed to help ensure that individuals are able to maintain minimum essential coverage.

Chapter 1
Overview of PPACA Provisions

• Identify the rules applicable to –
  o grandfathered health plans,
  o the use of pre-existing condition exclusions, and
  o annual and lifetime benefit limits;
• List the conditions that would permit an insurer to rescind health insurance coverage and the applicable notice requirements; and
  
• Recognize the requirements imposed by healthcare reform legislation with respect to –
  o patient protection provisions, and
  o dependent coverage to young adults.

Chapter 2
Personal Tax Changes

• Identify the changes made by the PPACA related to –
  o the treatment of costs for over-the-counter drugs and medical expense FSA contributions,
  o the tax penalty for nonqualified Archer MSA and HSA distributions,
  o medical expense deductions,
  o the additional taxation on the earnings of high-income taxpayers,
  o the additional tax on high-income taxpayers’ net investment income, and
  o the additional tax on estate’s and non-grantor trust’s undistributed net investment income; and
• Calculate the amount of the premium assistance tax credit available to taxpayers whose household income is less than 400% of the federal poverty line.

Chapter 3
Employer Tax Changes

• Identify the –
  o W-2 reporting requirements imposed on employers providing employer-sponsored health coverage, and
  o transition relief provided applicable to W-2 reporting;
• Define “full-time employee” and “full-time equivalent employee” for purposes of employer tax credits and penalties under the PPACA;
• Recognize the –
  o rules that apply to a small employer’s eligibility for a health insurance premium credit, and
  o nature of a “qualifying arrangement” under which an employer pays premiums for employee health insurance coverage;
• Identify the types of coverage that meet the PPACA definition of health insurance coverage for purposes of the small employer health insurance premium credit;
  
• Apply the various limitations that may reduce the amount of health insurance premium credit available to an otherwise eligible small employer;
  
• Calculate the potential penalties applicable to large employers under the PPACA; and
  
• Identify the –
  o transition relief available to applicable large employers, and
  o annual return and notification requirements imposed by the PPACA on applicable large employers.

Course Learning Objectives

Introduction

Chapter 1 - Overview of PPACA Provisions

Chapter Learning Objectives

Introduction

Grandfathered Health Plans

Losing Grandfathered Status

Disclosure Requirements

Documentation Requirements

Actions Resulting in Loss of Grandfathered Status

Eliminating Benefits

Increasing Participants’ Cost-Sharing Requirement

Increasing a Fixed-Amount Copayment

Reducing Sponsoring Organization Contribution Rates

Violating Anti-Abuse Rules

Pre-Existing Condition Exclusions Prohibited

Two Criteria Present in Pre-Existing Condition Exclusion

Grandfathered Group Health Plans Not Exempt

Benefit Limits Prohibited

Benefit Limit Prohibition Applicable only to Essential Health Benefits

Annual Benefit Limit Prohibition Phased-In

Contract Rescission Limited

Contestable Period Ending not a Barrier to Rescission

Patient Protections

Networks of Healthcare Providers

Emergency Services

Requirement to Maintain Minimum Essential Coverage

Minimum Essential Coverage

Adult Children Coverage

Broad Definition of Child

Certain Plans Required to Extend Dependent Coverage

Plans Not Required to Extend Dependent Coverage

Eligibility for Extended Dependent Coverage

Summary

Chapter Review

Chapter 2 - Personal Tax Changes

Chapter Learning Objectives

Introduction

Tax-Favored Health Plans

Over-the-Counter Drug Costs

Nonqualified Distributions from Archer MSAs and HSAs

FSA Contributions Limited

Unreimbursed Medical Expense Deduction Threshold

Social Security Taxes

HI Component Increased for High Earners

3.8% Additional Tax on Net Investment Income for Higher-Income Taxpayers

Net Investment Income Subject to Additional Tax

Estates and Trusts

Estimated Taxes

Individual Requirement to Maintain Health Coverage

Refundable Tax Credits to Assist in Purchase of Qualified Health Plan

Eligibility for Credit

Premium Tax Credit Expansion

Federal Poverty Level

Qualified Health Plan

Amount of the Credit

Benchmark Plan

Taxpayer’s Expected Contribution

Household Income

Modified Adjusted Gross Income

Calculating the Credit

Adjusted Monthly Premium

Special Rules Applicable to the Tax Credit

Reconciling Advance Premium Tax Credits

Additional Tax Limitation

Summary

Chapter Review

Chapter 3 - Employer Tax Changes

Chapter Learning Objectives

Introduction

Form W-2 Reporting of Employer-Sponsored Health Coverage

Effective Date for W-2 Reporting

Cost of Coverage Transition Relief

Reporting on the Form W-2

Cost of Health Coverage Excluded from Income

Certain Types of Coverage Not Reportable

Small Employer Health Insurance Premium Credit

Eligibility Requirements

Qualifying Arrangements Generally

Qualifying Arrangement Variations

Arrangements with Composite Billing

Arrangements with List Billing

Health Insurance Coverage Defined

Some Benefits Don’t Qualify as Health Insurance Coverage

Employees of the Employer

Employees Possessing Ownership Interests

Leased Employees

Seasonal Employees

Household and Other Nonbusiness Employees

Ministers

Controlled Group

Limitations Affect Health Insurance Premium Credit

Full-Time Equivalent Employee (FTE) Limitation

Average Annual Wage Limitation

Average Premium Limitation

State Premium Subsidy and Tax Credit Limitation

Calculating the Credit

Large Employer Shared Responsibility Regarding Health Coverage

Large Employer Defined

Aggregation Rules Apply

Full-Time Employee

Safe Harbor Method for New Employees

Safe Harbor Method for Ongoing Employees

Penalty for Non-Compliance

Employers Not Offering Coverage

Employer Not Offering Coverage May Not be Liable for Penalties

Employers Offering Coverage

Medicaid Expansion Option may affect Employer Penalties

Large Employer Reporting Requirements

Large Employer Notification Requirements

Summary

Chapter Review

Glossary