Monthly Archives: June 2015

Small Business Tax Credits

Small-Business-Tax-Credits

Pursuant to the Patient Protection and Affordable Care Act (PPACA), small employers  – those with fewer than 50 full-time employees (including full-time equivalent employees/FTEs) – are not subject to the Employer Shared Responsibility.

However, small employers that have 25 or fewer FTEs may be eligible for incentives from the federal government to provide their employees with health coverage.

Small employers who provide health insurance coverage to their employees may not realize they can claim a federal income tax credit on their annual federal tax returns.

Unfortunately, a very low percentage of qualified business owners are taking advantage of this credit, according to government reports. An employer with fewer than 25 FTEs that offers insurance coverage may be eligible for a tax credit, but must meet specific IRS guidelines to be eligible.

Which Expenses Qualify?

The expenses that an employer may count toward the tax credit include the premiums that he or she pays for each employee enrolled in one of its health insurance plans.  Because this credit only applies to health insurance, contributions to self-insured plans such as Health Reimbursement Arrangements (HRAs), Flexible Spending Accounts (FSAs) and Health Savings Accounts (HSAs) are not eligible for the credit.

What Are the Qualifications?

To qualify for the Small Business Health Care Tax Credit, employers must meet criteria relating to three aspects of their business:

  1. Firm size: First, there are restrictions on the number of employees that an employer may have. A qualifying employer must have less than the equivalent of 25 full-time workers when totaling all individuals’ hours of employment. When all part-time and full-time hours of employment are combined and divided by a full-time, 40-hour week, and if the number of employees needed to cover the total hours is less than 25 employees, the employer will qualify for the credit.
  2. Provide health care coverage: Secondly, the employer must confirm that he or she covers at least 50% of the cost of health care coverage for employees. This is determined using the firm size equivalent number mentioned above. Next, the employer must know the cost required to cover a single full-time employee’s insurance premium.
  3. The employer must then make the following calculation: Equivalent firm size multiplied by (X)=the cost paid for an individual premium and divided by (/) two.The above calculation is the percentage of health care coverage the employer must cover to qualify for the credit. Therefore, they do not have to pay full coverage for each employee. They could reach the required premium with some full coverage and some partial coverage of employees.
  4. Wages paid: Lastly, employers must pay their workers an average of less than $50,000 per year to qualify.

Any employer that satisfies all three of these requirements is eligible for the tax credit; however, the smaller, lower wage employers will receive a larger tax credit than those employers who just barely meet the criteria. Click here to view the IRS instructions for the Small Business Tax Credit.

Calculating the Tax Credit

The Small Business Health Care Tax Credit currently offers a maximum benefit of 50% of an employer’s premium contributions (35% for non-profits) to a health insurance plan. Only the employer contribution is counted toward the credit—not the entire premium cost. In order to qualify for this maximum credit, an employer must have 10 or fewer FTEs who have average wages of $25,000 or less. The benefit becomes slowly less generous as employers reach the $50,000/25 FTE threshold when the credit zeroes out. Employers can utilize a variety of calculators and tools to figure out the exact credit for which they are eligible given their specific workforce.

The credit will be available only to those who purchase insurance through the Small Business Health Options Program (SHOP) Exchanges.

Further, employers will be able to claim this credit for only two years.

Example

One example that the IRS provides is an auto repair shop that has 10 employees whose combined total wages are $250,000 for an average salary of $25,000. This employer is eligible for the maximum tax credit of 50% because of her number of employees and their wages. If the employer contributes $70,000 for health insurance to cover her workers, she would receive a 50% credit in 2014 that results in a $35,000 credit.

Full details from:

Eric Walters

Eric Walters Insurance Services

CELL: 602-616-1660

EMAIL: ewinsurance@gmail.com
Eric’s Insurance WEB SIte: WWW.ewconsultant.biz 

Office: (480)-657-8595/FAX: (480)-657-8591

2015-216 Open Enrollment for new/or renew- health insurance!

  • November 1, 2015: Start of 2016 Open Enrollment period — first day you can enroll in a 2016 Marketplace plan
  • January 1, 2016: First date 2016 coverage can start
  • January 31, 2016: 2016 Open Enrollment ends


If you don’t enroll in a 2016 plan by January 31, 2016, you can’t enroll in a health insurance plan for 2016 unless you qualify for a Special Enrollment Period.

The fee if you don’t have coverage in 2016

If you don’t have coverage in 2016, you may have to pay a fee. The fee is higher in 2016 than it was in 2015. If you don’t have coverage in 2016, you’ll pay the higher of these two amounts:

 

  • 2.5% of your yearly household income
  • $695 per person ($347.50 per child under 18)

In future years, the fee is adjusted for inflation. Here is how you pay the fee

You’ll pay the fee on the federal income tax return you file for the year you don’t have coverage. Most people will file their 2014 returns in early 2015 and their 2015 returns in early 2016.

For quotes and detailed information contact:  Eric Walters

ERIC WALTERS Insurance Services                                          

14482 N 100th Place,

  SCOTTSDALE AZ 85260

                  TEL: (480)-657-8595/FAX:(480)-657-8591

Cell:602-616-1660

Email: ewinsurance@gmail.com:WEB Site:- www.ewconsultant.biz

PCORI fee?

 

Patient-Centered Outcomes Research Institute Fee

The Affordable Care Act imposes a fee on issuers of specified health insurance policies and plan sponsors of applicable self-insured health plans to help fund the Patient-Centered Outcomes Research Institute. The fee, required to be reported only once a year on the second quarter Form 720 and paid by its due date, July 31, is based on the average number of lives covered under the policy or plan.

The fee applies to policy or plan years ending on or after Oct. 1, 2012, and before Oct. 1, 2019. The Patient-Centered Outcomes Research Institute fee is filed using Form 720, Quarterly Federal Excise Tax Return. Although Form 720 is a quarterly return, for PCORI, Form 720 is filed annually only, by July 31.

Please refer to the following chart for the filing due date and applicable rate depending upon the month a specified health insurance policy or an applicable self-insured health plan ends.

Specified Health Insurance Policies and Applicable Self-Insured Health Plans

The fee is imposed on an issuer of a specified health insurance policy and a plan sponsor of an applicable self-insured health plan. For more information on whether a type of insurance coverage or arrangement is subject to the fee, see this chart.

Calculating the Fee

Specified Health Insurance Policies

For issuers of specified health insurance policies, the fee for a policy year ending before Oct. 1, 2013, is $1, multiplied by the average number of lives covered under the policy for that policy year. Generally, issuers of specified health insurance policies must use one of the following four alternative methods to determine the average number of lives covered under a policy for the policy year.

  1. Actual Count Method: For policy years that end on or after Oct. 1, 2012, issuers using the actual count method may begin counting lives covered under a policy as May 14, 2012, rather than the first day of the policy year, and divide by the appropriate number of days remaining in the policy year.
  2. Snapshot Method: For policy years that end on or after Oct. 1, 2013, but began before May 14, 2012, issuers using the snapshot method may use counts from the quarters beginning on or after May 14, 2012, to determine the average number of lives covered under the policy.
  3. Member Months Method and 4. State Form Method: The member months data and the data reported on state forms are based on the calendar year. To adjust for 2012, issuers will use a pro rata approach for calculating the average number of lives covered using the member months method or the state form method for 2012. For example, the issuers using the member months number for 2012 will divide the member months number by 12 and multiply the resulting number by one quarter to arrive at the average number of lives covered for October through December 2012.

For more information on these methods to determine the average number of lives covered under a policy for the policy year, please see the final regulations (PDF).

Applicable Self-Insured Health Plans

For plan sponsors of applicable self-insured health plans, the fee for a plan year ending before Oct. 1, 2013, is $1, multiplied by the average number of lives covered under the plan for that plan year. Generally, plan sponsors of applicable self-insured health plans must use one of the following three alternative methods to determine the average number of lives covered under a plan for the plan year.

  1. Actual Count Method: A plan sponsor may determine the average number of lives covered under a plan for a plan year by adding the totals of lives covered for each day of the play year and dividing that total by the total number of days in the plan year.
  2. Snapshot Method: A plan sponsor may determine the average number of lives covered under an applicable self-insured health plan for a plan year based on the total number of lives covered on one date (or more dates if an equal number of dates is used in each quarter) during the first, second or third month of each quarter, and dividing that total by the number of dates on which a count was made.
  3. Form 5500 Method: An eligible plan sponsor may determine the average number of lives covered under a plan for a plan year based on the number of participants reported on the Form 5500, Annual Return/Report of Employee Benefit Plan, or the Form 5500-SF, Short Form Annual Return/Report of Small Employee Benefit Plan.

However, for plan years beginning before July 11, 2012, and ending on or after Oct. 1, 2012, plan sponsors may determine the average number of lives covered under the plan for the plan year using any reasonable method.

For more information on these methods to determine the average number of lives covered under applicable self-insured health plans for the plan year, please see the final regulations (PDF).

Reporting and Paying the Fee

File the second quarter Form 720 annually to report and pay the fee no later than July 31 of the calendar year immediately following the last day of the policy year or plan year to which the fee applies. Issuers and plan sponsors who are required to pay the fee but are not required to report any other liabilities on a Form 720 will be required to file a Form 720 only once a year. They will not be required to file a Form 720 for the first, third or fourth quarters of the year. Deposits are not required for this fee, so issuers and plans sponsors are not required to pay the fee using EFTPS.

Please see the instructions for Form 720 on how to fill out the form and calculate the fee. If for any reason you need to make corrections after filing your annual Form 720 for PCORI, write “Amended PCORI” at the top of the second filing.

The payment, if paid through the Electronic Federal Tax Payment System, should be applied to the second quarter (in EFTPS, select Q2 for the Quarter under Tax Period on the “Business Tax Payment” page).

Related Items:

  • The IRS and the Treasury Department have issued final regulations on this fee.
  • Notice 2014-56 establishes the applicable dollar amount for policy and plan years ending after Sept. 30, 2014, and before Oct. 1, 2015.
  • For information on the fee, see our questions and answers and chart summary.
  • Form 720, Quarterly Federal Excise Tax Return, was revised to provide for the reporting and payment of the patient-centered outcomes research fee.

 

Page Last Reviewed or Updated: 10-Apr-2015

 

Do you think that any of this might apply to you or your company- call:

ERIC WALTERS- Cell- 602-616-1660 or

             ERIC WALTERS Insurance Services

              14482 N 100th Place,

                 SCOTTSDALE AZ 85260

                  TEL: (480)-657-8595/FAX:(480)-657-8591

Email:ewinsurance@gmail.com/

Insurance  WEB Site:- www.ewconsultant.biz