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ACA Penalties Will Rise in 2024

Recently, the IRS announced 2024 indexing adjustments to the applicable dollar amount used to calculate employer shared responsibility penalties under the Affordable Care Act (ACA).

Although next year might seem a long way off, it’s best to get an early start on determining whether your business is an applicable large employer (ALE) under the ACA. If so, you should also check to see whether the health care coverage you intend to offer next year will meet the criteria that will exempt you from a penalty.

The magic number

For ACA purposes, an employer’s size is determined in any given year by its number of employees in the previous year. Generally, if your company has 50 or more full-time employees or full-time equivalents on average during the previous year, you’ll be considered an ALE for the current calendar year. A full-time employee is someone who provides, on average, at least 30 hours of service per week.

Under the ACA, an ALE may incur a penalty if it doesn’t offer minimum essential coverage that’s affordable and/or fails to provide minimum value to its full-time employees and their dependents. The penalty in question is typically triggered when at least one full-time employee receives […]

By Linkenheimer LLP|2023-03-22T19:14:18+00:00March 22nd, 2023|affordable care act, employer|0 Comments

2022 Deadlines for Reporting Health Care Coverage Information

Ever since the Affordable Care Act was signed into law, business owners have had to keep a close eye on how many employees they’ve had on the payroll. This is because a company with 50 or more full-time employees or full-time equivalents on average during the previous year is considered an applicable large employer (ALE) for the current calendar year. And being an ALE carries added responsibilities under the law.

What must be done

First and foremost, ALEs are subject to Internal Revenue Code Section 4980H — more commonly known as “employer shared responsibility.” That is, if an ALE doesn’t offer minimum essential health care coverage that’s affordable and provides at least “minimum value” to its full-time employees and their dependents, the employer may be subject to a penalty.

However, the penalty is triggered only when at least one of its full-time employees receives a premium tax credit for buying individual coverage through a Health Insurance Marketplace (commonly referred to as an “exchange”).

ALEs must do something else as well. They need to report:

Whether they offered full-time employees and their dependents the opportunity to enroll in minimum essential coverage under an eligible employer-sponsored plan,
Whether […]

By Linkenheimer LLP|2022-02-04T19:35:09+00:00February 4th, 2022|affordable care act, tax deadlines|0 Comments

Protective Refund Claims for ACA-Related Income Taxes

Earlier this year, the U.S. Supreme Court recently announced they would hear a case that challenges whether the individual mandate under the Patient Protection and Affordable Care Act (ACA) is constitutional. It is possible that if the mandate is ruled to be unconstitutional, incomes taxes established under the ACA may effectively be repealed and any ACA-related income taxes paid in prior years may be refundable if a timely claim for a refund is filed. The Supreme Court will hear the case this fall and they are expected to render a decision by early 2021.

Income taxes established under ACA went into effect in 2013. These include the Net Investment Individual Income Tax (NIIT), which has a rate of 3.8% for certain net investment income of individuals, trusts and estates. Taxpayers must have both net investment income and modified adjusted gross income over the following thresholds for the NIIT to apply.

Filing Status	Threshold Amount
Married filing jointly	$250,000
Married filing separately	$125,000
Single	$200,000
Head of household	$200,000
Qualifying widower with dependent	$250,000

In addition, the ACA tax includes a .9% Additional Medicare Tax, which applies to individuals’ […]

By Linkenheimer LLP|2020-09-03T20:02:08+00:00July 31st, 2020|investment, irs, refunds, tax planning, taxable income|0 Comments

New Law Provides a Variety of Tax Breaks to Businesses and Employers

While you were celebrating the holidays, you may not have noticed that Congress passed a law with a grab bag of provisions that provide tax relief to businesses and employers. The “Further Consolidated Appropriations Act, 2020” was signed into law on December 20, 2019. It makes many changes to the tax code, including an extension (generally through 2020) of more than 30 provisions that were set to expire or already expired.

Two other laws were passed as part of the law (The Taxpayer Certainty and Disaster Tax Relief Act of 2019 and the Setting Every Community Up for Retirement Enhancement Act).

Here are five highlights.

Long-term part-timers can participate in 401(k)s.

Under current law, employers generally can exclude part-time employees (those who work less than 1,000 hours per year) when providing a 401(k) plan to their employees. A qualified retirement plan can generally delay participation in the plan based on an employee attaining […]

By Linkenheimer LLP|2020-09-03T20:03:21+00:00January 29th, 2020|401k, affordable care act, business, tax, tax credit|0 Comments

Do You Know the ABCs of HSAs, FSAs and HRAs?

There continues to be much uncertainty about the Affordable Care Act and how such uncertainty will impact health care costs. So it’s critical to leverage all tax-advantaged ways to fund these expenses, including HSAs, FSAs and HRAs. Here’s how to make sense of this alphabet soup of health care accounts.

HSAs

If you’re covered by a qualified high-deductible health plan (HDHP), you can contribute pretax income to an employer-sponsored Health Savings Account — or make deductible contributions to an HSA you set up yourself — up to $3,450 for self-only coverage and $6,900 for family coverage for 2018. Plus, if you’re age 55 or older, you may contribute an additional $1,000.

You own the account, which can bear interest or be invested, growing tax-deferred similar to an IRA. Withdrawals for qualified medical expenses are tax-free, and you can carry over a balance from year to year.

FSAs

Regardless of […]

By Linkenheimer LLP|2018-06-26T17:41:04+00:00June 26th, 2018|affordable care act, Health care, hsa|0 Comments