April 20, 2013

Healthcare Law Deadlines in Place, Coming Up — and Delayed

By now, most people have heard about the provision in the Affordable Care Act (ACA) that may impose a penalty on employers who don’t provide health insurance to their employees, beginning January 1, 2014. But the ACA has numerous other health plan provisions and deadlines that employers must be concerned about. Below are just three, along with the deadlines attached to them.

Kicked in January 1, 2013:  New $2,500 Cap on Healthcare FSA Contributions

Before 2013, there was no tax-law limit on salary-reduction contributions to an employer healthcare FSA (although many plans imposed their own annual limits).

Starting in 2013, the maximum annual FSA contribution by an employee is capped at $2,500. After that, the cap will be indexed for inflation.

Coming January 1, 2014:  Group Health Plan Waiting Period Cannot Be More than 90 Days

Under the ACA, beginning January 1, 2014, a group health plan or health insurance issuer offering group health coverage cannot apply any waiting period that exceeds 90 days. A waiting period is defined as the period that must pass before an individual is eligible to be covered for benefits under the plan. The U.S. Health and Human Services Department, the IRS and the Employee Benefits Security Administration recently published proposed guidance on how to administer the rules.

The guidance states that all calendar days are counted beginning on the enrollment date, including weekends and holidays. If the 91st day is a weekend or holiday, the plan or issuer may choose to permit coverage to become effective earlier than the 91st day, for administrative convenience.

An example from the guidance: A group health plan provides that full-time employees are eligible for coverage under the plan. An individual begins work as a full-time employee on January 19. In this case, any waiting period for the employee would begin on January 19 and could not exceed 90 days. Coverage under the plan must become effective no later than April 19 (assuming February lasts 28 days).

Delayed until January 1, 2015:  The Small Business Health Options Program

The Small Business Health Options Program, (SHOP) was originally scheduled to provide small employers (defined as fewer than 100 employees) with a marketplace that offers them a variety of health plans beginning on January 1, 2014. Now, the U.S. Department of Health and Human Resources has stated the program will be delayed until 2015. During 2014, employers in most states will be limited to one plan.

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April 16, 2013

The Domestic Production Activities Deduction Updated

The Domestic Production Activities Deduction (DPAD) isn’t new, it’s been available since 2005, but it has tripled in value since congress introduced it and many taxpayers don’t take full advantage of it.  Internal Revenue Code Section 199 allows qualified taxpayers a deduction equal to 9% of the lesser of their:

  • Qualified production activities income (QPAI) or
  • Taxable income

The deduction is only eligible for work done in the United States (domestic) and there are some limits, but it is a permanent tax benefit (not a timing difference) and it does not reduce any other deduction or credit item.

The name of the deduction alone suggests this deduction is only available to manufacturers, but that’s misleading.  Eligible activities include:

  • Film production,
  • Production of electricity, natural gas or potable water,
  • Construction or substantial renovation of real property, and
  • Engineering and architectural services

If your business operations are multifaceted, it’s possible to take the deduction for only the portion of your net income which is derived from qualified production activities.  It’s also important to know that a de-minimus rule applies which allows businesses to treat all of their income as QPAI if less than 5% of income in non-QPAI.

The DPAD is a powerful deduction, but to maximize its benefit may require a detailed review of your cost accounting structure.  Please contact your Anders advisor if you’d like learn more about how this deduction can improve your bottom line.

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April 5, 2013

How Would the Firm Help me Advance my Career?

Anders goes above and beyond helping everyone at the firm develop to their full potential by providing a large and growing assortment of classes, forum groups and presentation. Whether you want to focus on learning a niche industry, improve your public speaking skills, brush up on your formal dinner etiquette or get a refresher on the skills you already have, Anders will help you meet your goals.

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April 3, 2013

Saved $240,000 Through Cost Segregation

Our client purchased commercial buildings for $6.5 million. Through a cost segregation study, we uncovered a net present value savings of $240,000.

Learn more about our Tax Planning and Compliance services and Real Estate expertise.

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