Final Slideshow - What Every Hotel Owner Must Know About the ACA

What EVERY Hotel Owner
MUST know about the
Affordable Care Act (ACA)
Presented by the Asian American Hotel Owners Association (AAHOA)
#1 What is the Timeline for the
Affordable Care Act?
2013 information determines
“large” employer status for
January 1st
Employers must report health
coverage cost on W-2s for 2012
October 1st –
Open Enrollment for individuals
in “exchanges”
Employers must notify
employees of “exchange”
coverage options
January 1st
Small Business Access to SHOP
Small Business Health Care Tax
Credit available
90 day maximum wait-period
instituted for new employees to
begin coverage
Penalties assessed for individuals
without health insurance
January 1st
“Large employers” with 50 or more
FTEs penalized for failure to offer
affordable, minimum coverage
Employers must offer dependent
Employers with 200+ FTE must
automatically enroll new employees
into offered plans
Large employers have access to
#2 Is my Business Required to Participate?
• ACA imposes penalties on
“large employers” who fail
to provide insurance to
their employees
• The ACA defines this
employer mandated
coverage as “shared
• A “large employer” is an
employer with 50 or more
“Full-Time Equivalent”
employees (FTE)
• “Small employers” are
employers with fewer than
50 FTE and are exempt from
penalties in the law
Full Time Employees and Equivalents
• A full-time employee is
an employee who
works an average of 30
hours per week or
• Seasonal employees are
not counted towards
• To determine the total
number of FTE, use this
Number of
Sum of the
hours worked by
all part-time
#3 What will the ACA cost me as a hotelier?
• Large employers must provide
coverage options that are “affordable”
and have a “minimum value”
• Affordability
• An employee’s contribution to the
premium cannot exceed 9.5% of
household income for the taxable year
• Minimum Value
• Minimum value must meet specified
levels of generosity based on the plan’s
actuarial value
• An offered plan must pay at least 60% of
the covered health benefits
Can I keep my current plan?
Yes – but offered plans must
meet standards for minimum
value and affordability
#4 What are the Penalties for not
Complying with the ACA?
• Only large employers are subject to ACA penalties (50 or more FTE)
• Penalties
• Strong Penalty
• Employer failure to offer full-time employees the opportunity to enroll in coverage; AND
• At least one full time employee enrolls in an exchange
• $2,000 X the total number of FTE (minus 30)
• Weak Penalty
• Employer offers the opportunity for coverage, but the coverage does not meet the ACA’s
standards for affordability or actuarial value; AND
• At least one full time employee enrolls in an exchange
• $3,000 X (only) the number of employees who enroll in an exchange
#5 What is a Healthcare Exchange?
• Generally, an “exchange” is an online marketplace for the sale and
purchase of health insurance
• Individuals may access these marketplaces where insurance
companies may choose to sell insurance policies
• Coverage offered in exchanges will be comprehensive and meet all
applicable specifications prescribed by the ACA
• Plans offered through the exchanges will be certified as “qualified
health plans” or QHPs
Small Business Health Options Program
(SHOP) Exchanges
• Special exchange designed for small businesses to compare insurance
plans for employees
• 2014 – SHOP open to employers with 50 or fewer FTE
• 2016 – SHOP open to employers with up to 100 FTE
• Employers who use SHOP must provide coverage to all full-time
• Employees may choose to enroll in SHOP plan or opt out and
purchase insurance on their own
• Some states have requirements for number of employees that must
enroll in the SHOP plan
#6 What if I own Multiple Businesses?
• If an employer has multiple
companies, each company may or
may not be considered separate
employers under the ACA
• Determining the total number of
full-time employees requires an
analysis of the “controlled group”
rules established in the Internal
Revenue Code (IRC)
• If a controlled group exists, then
the total number of employees
must be added to determine
“large employer” status under the
Types of Controlled Groups
• Brother-Sister
• Parent-Subsidiary
• Combination
Brother-Sister Controlled Groups
• A group of two or more businesses in which 5 (or fewer) common
owners own a “controlling interest” of the group and have “effective
control” of the businesses
• “Controlling Interest” – 80% or more of the stock of each
corporation (but only if the common owner owns stock in each
• “Effective Control” – More than 50% of the stock of each
corporation counting the least of each owners share
Controlled Groups Example
Controlling Interest (Step 1):
• Is total ownership equal to
80% or greater?
X Corp.
Y Corp.
Z Corp.
Effective Control (Step 2):
• Add the smallest interest each
individual owns in each
overlapping business. If that
combined interest is greater
than 50%, then a brother-sister
controlled group exists
X Corp. 20%
Y Corp.
Z Corp.
Parent-Subsidiary Controlled Group
• One business owns a controlling interest (80% or more) in at least one other
• “Chain Businesses” – same concept applies, a parent owns a subsidiary and the
subsidiary owns 80% or more of a second subsidiary
• Example:
• Corporation A owns:
• 90% of B Corp.
• 85% of C Corp.
• 65% of D Corp.
• A is a common parent of B and C Corporations and thus its employees will be
added together to determine “large employer” status under the ACA
Combination Controlled Group
• Each business is a member of either a parent-subsidiary or brother-sister
group; AND
• At least one corporation is the common parent of a parent-subsidiary and
is ALSO a member of a brother sister group
Combined Controlled Group Example
A owns:
80% of Y Partnership and
90% of Z Corp.
Y Partnership owns 85% of T Corp.
Y Partnership, Z Corp and T Corp are members of the same controlled group under
common control because:
(1) all three are members of a parent-subsidiary or a brother sister group; and
(2) Y Partnership is the common parent of T Corp. and a member of the Y
Partnership – Z Corp. brother-sister group
#7 Do owners and Family Members
Count as Employees?
• An owner is not counted if he/she is a sole proprietor, a partner in a
partnership, a shareholder owning more than 2% of an S corporation
or an owner of more than 5% of other businesses
• Family members are not counted if they are children or
grandchildren; siblings or step-siblings; parents or grandparents; stepparents; nieces or nephews; aunts or uncles; sons- or daughters-inlaw; fathers- or mothers-in-law; or brothers- or sisters-in-law
• Owners and family member hours and wages do not apply to the FTE
#8 What are the Reporting Requirements?
• The Department of Treasury expects to publish proposed rules
describing the reporting requirements for businesses later this
• The complexity of the reporting requirements in these sections
contributed to the delay of the employer mandate to 2015
• Employers are required to provide employees with a standard
“Summary of Benefits and Coverage” form explaining what the
employers plan covers and what it costs
#9 Is my Business Eligible for Tax Credits?
• Businesses may qualify for employer health care tax credits if they have
fewer than 25 FTE employees who earn an average of $50,000 a year or
• To qualify for the Small Business Health Care Tax Credit, a business must
pay at least 50% of its full-time employees’ premium costs. There is no
requirement to offer coverage to part-time employees or to dependents
• Starting in 2014, the Small Business Health Care Tax Creditis worth up to
50% of your contribution toward employees’ premium costs
• The Small Business Health Care Tax Credit is highest for companies with
fewer than 10 employees who earn an average of $25,000 or less. The
smaller the business, the larger the credit
#10 Are there any Other Changes Expected?
• The Treasury Department will issue guidelines for employer reporting
during the summer of 2013
• The House and Senate are currently considering legislation that may
impact the law – stay tuned
• The Obama Administration has stated there will be no additional
delays in implementation of the ACA
What Resources are Available to Me?
• Be sure to consult legal counsel to review your personal situation
before making decisions on healthcare options for your employees

similar documents