Obamacare for Nonprofits

Posted on Wednesday, December 17, 2014

Although Obamacare (Affordable Care Act or ACA) was signed into law over three years ago, there is still much confusion over its requirements.  Here’s a brief look at the current requirements effecting nonprofit organizations.

Health Insurance Reimbursements

Prior to 2014, organizations could reimburse employees on a pre-tax basis for personal health insurance premiums purchased by the employee.

However, TAM-1701 issued November 6, 2014 states that any reimbursement by an employer (taxable or nontaxable) to an employee for health insurance violates health care reform and carries possible penalties of $100 per day per individual penalty. 

These new rules do not apply to a group health insurance plan with less than two employees.

Required Health Insurance

Beginning January 1, 2015, organizations with 100 or more full-time employees are required to provide health insurance or pay a penalty.  Effective January 1, 2016, the requirement is lowered to 50 or more full-time employees.  There are specific calculations to determine full-time employees.  The insurance provided must also be both adequate and affordable, which have their own definitions.

Reporting Requirements

There is no required reporting for calendar year 2014.  Beginning in January 2016, there will be required reporting for calendar year 2015 by insurers, self-insured employers and large employers (those with 100 or more employees in 2015).

Small Business Health Care Tax Credit

The small business health care tax credit that helps small businesses and tax-exempt organizations afford the cost of insurance for their employees was changed in 2014.  Beginning in 2014 health insurance must be purchased from the Small Business Health Options Program (SHOP) Exchange in order to qualify for the credit.  In addition the credit can only be claimed for two consecutive years by the employer.  For example, if an organization is eligible for the credit in 2014 and 2015, the organization can take the credit in both years but not again after 2015.  If an organization is eligible in 2014 but not in 2015, the organization can only take the credit in 2014 but not again after 2014.  If an organization is not eligible in 2014 but is eligible in 2015 and 2016, the organization can take the credit in both 2015 and 2016 but not again after 2016.  Organizations still must have less than 25 full-time employees, pay 50% of the health insurance premiums for its employees and pay less than $50,800 (for 2014) in average annual wages to be eligible.

Now is the time to start planning for 2015 by tracking your employees' hours to determine if your organization will be subject to the additional requirements next year.

Posted by: Carrie Minnich, CPA

Posted in Mission Minded Nonprofits

Disclaimer: The information contained in Dulin, Ward & DeWald’s blog is provided for general educational purposes only and should not be construed as financial or legal advice on any subject matter. Before taking any action based on this information, we strongly encourage you to consult competent legal, accounting or other professional advice about your specific situation. Questions on blog posts may be submitted to your DWD representative.

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