If you’re a top gun at your company, you may have a ticking time bomb in your array of health benefits that could go off with a jolt come January.
That’s because any employer that offers “richer” health benefits to certain employees faces a penalty for doing so if those packages aren’t purged of what’s deemed discriminatory coverage by the time the Patient Protection and Affordable Care Act takes full effect.
Although the provision hasn't drawn as much attention as other parts of the PPACA, the Small Business Coalition for Affordable Healthcare has lobbied against it, telling the IRS the penalties "fall especially hard on the small business population."
The PPACA sets out some guidelines for what will be considered discriminatory health coverage. A “highly compensated” individual, for starters, is described as any shareholder who owns more than 10 percent of a company's shares, someone who is among the top five highest-paid employees in a corporation, or someone whose compensation puts them in the top quarter of employees.
Employers offering high-priced benefit plans to their workers also are subject to the law's “Cadillac” tax.
According to the Medical Plan Trends Report, produced by benefit-management firm HighRoads and the member-advisory firm CEB, about 16 percent of plans are on track to incur the tax, charged on plans with annual premiums exceeding $10,200 for individuals or $27,500 for a family.
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