Fed Laws & Reg Flashcards
The federal laws and regulations for qualified health care plans (QHPs) are primarily governed by the Affordable Care Act (ACA).
Here’s a brief summary of some of the key requirements:
- Employer Mandate: The ACA imposes an employer mandate
that requires certain employers to provide health insurance
to their employees. specifically applicable to employers with 50 or more full-time employees or full-time equivalents (FTEs).
An employee is considered full-time if they work 30 or more hours per week. Employers must offer health insurance that is affordable and provides minimum value to 95% of their full-time employees and their children up to age 26. Failure to comply with this mandate can result in penalties
The federal laws and regulations for qualified health care plans (QHPs) are primarily governed by the Affordable Care Act (ACA).
Here’s a brief summary of some of the key requirements:
Minimum Value of Coverage: An employer’s health plan
must provide minimum value, meaning it pays at least 60%
of the cost of covered services (deductibles, copays, and
coinsurance) and provides substantial coverage of inpatient
hospital services and physician services.
● Individual Mandate: Individuals are required to have health insurance that meets MEC requirements, unless they qualify for an exemption, or face a penalty.
What is a Premium Tax Credits (PTC)
The PTC is a refundable credit
assisting eligible individuals and families in covering their
health insurance premiums purchased through the Health
Insurance Marketplace. Eligibility depends on household
income, which must be between 100% and 400% of the
federal poverty line
Requirements to qualify for premium tax credits:
- Marketplace Insurance enrollment
- Premium Payment: Payment of health insurance premiums for the same period, either through advance credit payments, personal payment, or by someone else.
-Income Limits: Household income must fall generally between 100% and 400% of the federal poverty line.
-Filing Status: Generally, you cannot file taxes as married filing separately, with exceptions for victims of domestic abuse or spousal abandonment.
-Independent Status: You cannot be claimed as a dependent by another person.
QHP (Qualified Health Plan) Requirements:
Minimum Essential Coverage: QHPs must provide minimum
essential coverage that meets certain requirements,
including covering certain essential health benefits and
prohibiting lifetime and annual limits.
● Metal Tiers: QHPs are divided into metal tiers (bronze, silver,
gold, and platinum) based on the level of cost-sharing that
the plan requires, with bronze plans having the lowest
premiums but highest cost-sharing, and platinum plans
having the highest premiums but lowest cost-sharing.
● Provider Networks: QHPs must have a provider network that
is sufficient to meet the needs of enrollees in terms of
geography and specialty, and must offer out-of-network
coverage in certain circumstances.
Federal laws and regulations related to employment taxes from an employer’s perspective
encompass a range of responsibilities,primarily
concerning withholding and paying taxes, and reporting
to the Internal Revenue Service (IRS).
Listed:
- Federal Income Tax Withholding
Regulation: Employers are required to withhold federal income tax from their
employees’ wages based on their filing status and withholding allowances claimed on the IRS Form W-4.
Compliance: Employers must use the IRS withholding tables and the information provided on the W-4 form to determine the
amount of federal income tax to withhold.
- Social Security and Medicare Taxes (FICA Taxes)
Regulation: The Federal Insurance Contributions Act (FICA)mandates employers to withhold Social Security and Medicare taxes from employees’ wages and match these contributions.
Rates: The Social Security tax is 6.2% of wages up to the taxable
maximum, and the Medicare tax is 1.45% of all wages.
Compliance: Employers must withhold these taxes from employee wages and contribute an equal amount, for a total of 15.3%.
- Federal Unemployment Tax (FUTA)
Regulation: The Federal Unemployment Tax Act requires
employers to payunemployment taxes, which are not withheld
from employees’ wages.
Rate and Limit: FUTA tax is a percentage of each employee’s firstm$7,000 of wages per year.
Compliance: Employers must pay this tax annually or quarterly, depending on their liability.
- Reporting and Paying Employment Taxes
Form 941: Employers must file IRS Form 941 (Employer’s
Quarterly Federal Tax Return) to report income taxes withheld,
and Social Security and Medicare taxes.
Depositing Taxes: These taxes must be deposited on a regular
schedule (monthly or semi-weekly) and can be paid electronically via the Electronic Federal Tax Payment System (EFTPS).
Form 940: Employers must file IRS Form 940 (Employer’s Annual Federal Unemployment (FUTA) Tax Return) to report and pay FUTA tax.
- Year-End Reporting
Form W-2: Employers must provide employees with Form W-2 (Wage and Tax Statement) annually, which summarizes an
employee’s annual earnings and taxes withheld.
Form W-3: Along with the W-2 forms, employers must file Form
W-3 (Transmittal of Wage and Tax Statements) to the Social
Security Administration.
- Worker Classification
Regulation: Correctly classifying workers as employees or
independent contractors is critical, as it determines the employer’s tax responsibilities.
Compliance: Misclassification can lead to penalties and back
taxes. Employers should use IRS guidelines and criteria to
determine proper classification.
- New Hire Reporting
Regulation: Employers are required to report new hires to a
designated state agency, which helps in enforcing child support
orders.
- Compliance with ACA (If Applicable)
Regulation: Employers with 50 or more full-time equivalent
employees must offer health insurance that meets Affordable
Care Act standards and report this coverage to the IRS.
Employee Perspective:
From an employee’s perspective, understanding the basics of how federal employment taxes work can be helpful in ensuring their paychecks are correctly processed and to be aware of their rights and obligations.
Federal Income Tax Withholding
Federal Income Tax Withholding
Employee’s Role: When starting a new job, employees typically fill out an IRS Form W-4. This form dictates how much federal
income tax should be withheld from their paycheck, based on
their filing status, income, and any additional withholding they
wish to claim.
Adjustments: Employees can adjust their withholding at any time by submitting a new W-4 form to their employer, which is useful if their financial situation changes (e.g., marriage, birth of a child, additional income).
Social Security and Medicare Taxes (FICA Taxes)
Withholding: These taxes are automatically withheld from an
employee’s paycheck. For Social Security, the tax rate is 6.2% on
income up to a certain limit. For Medicare, the rate is 1.45% on all wages, with an additional surtax for higher-income earners.
Benefits: Contributions to Social Security fund future benefits
such as retirement, disability, and survivors benefits. Medicare
contributions go towards healthcare costs in retirement.
Year-End Tax Documents
Form W-2: At the end of each year, employees receive a W-2
form from their employer. This form shows the total earnings for the year and the amounts withheld for taxes and Social
Security/Medicare.
Tax Filing: Information from the W-2 is used to file annual tax
returns, where employees reconcile the amount of tax withheld with their actual tax liability
FUTA - employee perspective
No Employee Contribution: The Federal Unemployment Tax Act
(FUTA) tax is paid by employers to fund state unemployment
agencies. Employees do not see FUTA deductions on their
paychecks.
In summary, employees are primarily responsible for their portions of Social Security and Medicare taxes, federal income tax, and where applicable, state and local income taxes.
The classification of a worker as an employee or an independent
contractor is determined by several factors, primarily focusing on the degree of control and independence in the relationship.
The IRS, the Department of Labor (DOL), and the Occupational Safety and Health Administration (OSHA) use different tests to evaluate
this classification:
- “Right to Control” Test (Common Law Rules):\
- “Economic Realities” Test:
Used by the DOL and OSHA
“Right to Control” Test (Common Law Rules):
This test, used by the IRS, evaluates three key areas:
● Behavioral Control: whether the company controls or has the right to control what the worker does and how the worker does their job. Factors like setting work hours, providing tools and equipment, offering training,
monitoring performance, and taking disciplinary action are
indicators of an employee relationship.
● Financial Control: This looks at the business aspects of the
worker’s job controlled by the payer, such as how the worker
is paid, whether expenses are reimbursed, and who provides
tools/supplies. Independent contractors typically bear their
own business expenses and own their equipment.
● Type of Relationship: Considerations include whether there are written contracts or employee-type benefits (like a
pension plan, insurance, vacation pay), the permanency of the relationship, and whether the work performed is a key
aspect of the business.
“Economic Realities” Test:
Used by the DOL and OSHA
six-factor test includes:
● Right to Control: Similar to the IRS test, it looks at who
controls how the work is performed.
● Investment: Independent contractors usually pay for their
own equipment and tools.
● Length of Relationship: The relationship should generally be
short-term.
● Skill: Contractors often have advanced or unique skills and
are required to exercise judgment and initiative.
● Level of Risk: Contractors make independent business
decisions and have the potential to make a profit or incur a
loss.
● Integration: If a worker’s services are an integral part of the business’s regular functions, this points to an employee
relationship.
Chapter 7 Bankruptcy
Chapter 7 Bankruptcy
- Known as “liquidation” bankruptcy,
- applicable to both individuals and corporations.
- This type wipes out most unsecured debts, like credit card debt, personal loans, and medical bills, but not debts like back taxes and child support.
- Eligibility criteria
-not having filed Chapter 7 bankruptcy in the past eight
years and
-passing the means test.
Chapter 11 Bankruptcy
Chapter 11 Bankruptcy
- Known as “reorganization” bankruptcy,
- it’s primarily used by
businesses and corporations, and occasionally by individuals. -
- It helps a business continue operating while debts are reorganized and repaid over time.
- Filing criteria include not having had a bankruptcy petition dismissed in the past 180 days.
