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Here is the checklist -- NOT yet edited for ACA requirements or 2014 tax year. Uploading as a word document; edit it as you will; cut, paste, amend, draw smiley faces -- just remember to put in your own contact info! 2013 Checklist - short organizer.doc

I think I'm going to go whimper for a while, now...

"Under the ACA, the IRS issued Notice 2013-54 that said this could no longer be done on a pre-tax basis (whether the employer was reimbursing the employee’s own private insurance or insurance purchased the exchange), even if the employer is otherwise exempt from the ACA due to having fewer than 50 full-time employees." grmy2h Key words here are "PRE TAX." A business with under 50 employees does not have to offer health insurance but is free to give employees extra money to help them buy their own. The payment goes in Box 1 of the W2, just like any other wages or bonus. The kink here is that the extra money can't be conditioned on the employee using it for health insurance. "Note that taxable reimbursements conditioned on the purchase of individual coverage also create a group health plan with dollar limits in violation of the ACA." ILLMAS So I guess a small employer can give employees $300 a month extra pay, report it on their W2 and deduct it on the employer return as wages, just so long as s/he doesn't insist it be used for health insurance. Are we getting this yet? Will we ever get it? Does the IRS get it?

I try to send them about the time they will start receiving their official tax documents. For the late filers whose 'current year' info is received by the time the tax organizer is available it is printed and given to them in a separate envelope along with their current year tax return. Some complete it, others do not. But they all sign the engagement letter - if it is not signed and dated when I receive their materials it is scanned and sent to them. No work is done until the signed and dated engagement letter is received back in my office. I use the tax organizer as a worksheet, no matter what the client uses it for.

I cannot fathom having an employee whom I could not/would not trust. We deal every day with super-confidential information that could ruin peoples' lives -- having folks around who cannot be trusted to deal safely with that information (from stealing it themselves to "just" not shredding papers that need it, or - in a larger office - leaving things out for the night cleaners to glean) is unfathomable. That said, sounds like your (now-ex) client is a good loss. NO password can be guaranteed to keep out someone who is on-site, has access to the computers, knows your patterns for password-protection, and has the time to tinker until they can figure it out. The client who asks for that guarantee is looking for someone to BLAME when their own wimpy password is breached. There are spyware programs people use to track employees' actions. (Heck, some folks use those programs to track their kids!) Works in arrears (catching not preventative), unlikely to be accepted as evidence in court, doesn't protect the firm's reputation, and tend to be memory hogs, and doesn't solve the essential problem of untrustworthy employees. If that is SUCH a danger to these folks, best to do payroll on a standalone computer at home that no employee has access too -- or farm it out to one of the service specialists. And keep the company checks under lock and key, as well. Still sounds, to me, like he's looking for someone to blame, though.

Thanks for the links.......In the Q & A on the Evergreen site, the author says..."... whether or not an S corp needs a group plan to get the SEHI deduction, the answer is no… you don’t need that. You should be able to do the whole Box 14 deal… Note however that I’m not sure we’ve got good guidance from IRS about how to handle the self-employed health insurance amouunts inside Box 3 and Box 5 of the W-2." I had already read the Iowa State site and it seems to imply that until more guidance is given, we do not know the correct answer.. "Given the breadth of the definition, it is arguable that employer reimbursement of shareholder premiums establishes a group health plan subject to the ACA market reforms. Again, neither the DOL nor IRS has set forth guidance relating to S corporations and their reimbursements of health insurance premiums for more-than-two percent shareholders. Arguments can be made to support the continued reimbursement of premiums to S corporation more-than-two percent shareholders so that they can receive their section 162(l) deduction. Nonethess, the stakes are high. Thus, we believe that the best guidance in the wake of this Q & A is to avoid all employer reimbursements of health care premiums outside of an employer-provided group health care plan, including those to more-than-two percent shareholders, until further guidance is issued by the Departments. This latest communication has affirmed the Administration's clear policy to eliminate such benefits."

It is taxable in boxes 1, 3 & 5. Employee can then deduct premiums on Sched A. Employee could also purchase HDHP insurance and establish an HSA for the tax benefits. Any money paid to the employee in lieu of the company providing insurance must be included on the W-2 as taxable income. This is effective starting Jan. 1, 2014. We are 10 1/2 months into this law change.

I send out my letters the 2nd week of January, with a document checklist. I don't use organizers; I want to see the originals. Nor do I want to pay to print and mail out 8 or 16 pages to every client, to get most of it back blank and annotated "see attached" with the original documents appended.

That is an excellent idea and something that many of us will be doing from time to time. The complications and off-sides of this thing are way more than I ever dreamed. They told us to allow from 30 to 45 minutes extra with each client in order to ask and document all of the questions and answers. It is times like this when I wonder what ever made me think that I was capable of doing this job.

For those with employees, do you trust them? I am asking because you are likely in the tax prep business, and have to have the trust of your clients. With that said, you are likely to need to also trust your employees as they represent you. Just lost a customer because I could not promise them our password protection would keep out their untrustworthy employees (I am not foolish enough to make such a guarantee...). The person was offended when I inquired how they could have employees they do not trust, yet have those same emplyees handle client information. I can see setting up surveillance as a prevention tool (I have them around my home for just such a purpose, good fences and good cameras make good neighbors out of bad ones), but I cannot see how having employees you know you do not trust is beneficial.

Another component of the ACA to keep an eye out for, PPACA: Although employers can be forgiven for focusing on the more pressing elements of the Patient Protection and Affordable Care Act (PPACA) that take effect in January 2014, there is another provision of the law that is not yet getting much attention—and it should. The provision is a short one. Fully insured health plans that have not retained grandfathered status under the PPACA will be subject to the same nondiscrimination rules that have long applied to self-insured plans. The penalties warrant notice, as they are considerable and could cost employers up to $500,000 if they don’t comply with the provision. The new provision also has implications for benefits strategy. “Historically, if an employer wanted to offer [certain employees or owners] medical coverage that was different, richer or received a greater subsidy, the solution was always to offer insured plans because they weren't subject to the same nondiscrimination rules as self-insured plans,” said Andy Anderson, a partner at law firm Morgan, Lewis & Bockius in Chicago. “Now that historic calculus has been changed by the [PPACA].” Expanding Nondiscrimination Like the nondiscrimination rules for self-insured health plans, cafeteria benefit plans and various retirement plans, the PPACA provision is designed to penalize companies that discriminate in favor of highly compensated employees when it comes to offering certain benefits—in this case, fully insured health plans. This discrimination can take the form of favoring highly compensated employees when it comes to eligibility to participate in the plan or in terms of the benefits provided. In general, highly compensated employees meet any of the following criteria: A shareholder who owns more than 10 percent of the company. An individual who is among the five highest-paid employees in the organization. An individual who is among the top 25 percent of employees in terms of compensation. Once the federal government starts enforcing the provision, employers could face an excise tax of $100 for each day the plan is not in compliance for each non-highly compensated employee who is not eligible for the health plan, up to a maximum penalty of $500,000. Anderson noted that the biggest difference between these PPACA nondiscrimination rules and the nondiscrimination rules for other types of benefits lies in the penalty calculation. In short, the penalties for noncompliance under the PPACA are calculated based on the number of people who are discriminated against. For example, a business with 100 employees that offers a discriminatory fully insured health plan for 10 highly compensated employees would pay a penalty based on the 90 employees who are facing discrimination. “That is the exact opposite of how nondiscrimination rules have been historically considered,” Anderson explained. “In a self-insured arrangement the tax consequences are based on discriminatory coverage received by the highly paid individuals.” When to Comply? The key question is, when will the federal government release the guidance necessary for employers to comply with the provision? “Apparently, [issuing this guidance] is not a huge priority in Washington right now,” observed Bonita Hatchett, a partner at law firm Barnes & Thornburg in Chicago. The IRS postponed enforcement of the provision at the end of 2010, noting that employers need guidance on exactly how these rules should apply to fully insured plans. Since then, there has been little indication of when this guidance might arrive. Seeing as there are already nondiscrimination rules for self-insured and cafeteria plans, Anderson speculates that “regulators will attempt not only to make sense of rules in the PPACA, but perhaps they will attempt to synthesize all of those [nondiscrimination] rules so that they begin to operate in a more consistent way.” Whatever the final result, it is unlikely that guidance will be released in the near future, given the flurry of regulations being issued as we move closer to 2014. The IRS has said it will hold off on enforcement until that guidance has been released, which may be in 2014 or even 2015. Preparing for Guidance Although the timing of forthcoming guidance is a question mark, the nature of the issue is not. “Most employers have a pretty good idea whether they have any potential discrimination issues lurking in their health plan structures,” Anderson said. “They might only offer health coverage to a limited number of people. They may offer free health coverage only to executives or owners.” The point of the nondiscrimination provision is to ensure that everyone is eligible for the same benefits. To make sure their organizations are prepared when guidance comes out and enforcement begins, HR and benefit managers should do the following: Take a close look at current plans. The first step is to take an inventory of fully insured health plans that the organization currently offers. In addition, as employers develop and execute their 2014 compliance approach, they should make sure that any new health plan design is not discriminatory. Know who is highly compensated. “Employers should always know who is highly compensated and who is not,” said Hatchett. In fact, businesses may already keep that information for retirement plan testing purposes. Keep nondiscrimination rules in mind when hiring. If the organization is recruiting an executive or any other individual who could meet the highly compensated criteria, employers need to tread carefully when offering or designing any type of special health insurance arrangement for that individual. “If employers want to continue offering special benefits for executives, they should try to do so in a tax-neutral way,” Anderson advised. Be prepared to act when the time comes. Even if employers do not want to change potentially discriminatory plans right now, they should be aware of the issues. If they address these proactively, they can avoid a rush to comply once the guidance is released. More important, they will have time to communicate the issues and any resulting changes to the affected employees. Joanne Sammer is a New Jersey-based business and financial writer. Related External Articles: White House Delays Nondiscrimination Rules Under PPACA (or At Least Said It Would), Fox Rothchild LLP, January 2014 - See more at: http://www.shrm.org/hrdisciplines/benefits/articles/pages/nondiscrimination-rules-health-plans.aspx#sthash.5PUeQSfB.dpuf

My understanding is, to avoid the discrimination penalties, they'd have to reimburse the expenses for every employee: http://evergreensmallbusiness.com/s-corporations-health-insurance-and-obamacare/ http://www.calt.iastate.edu/article/updated-aca%E2%80%99s-thorny-impact-more-2-s-corporation-shareholders So, if they are going to pay (as opposed to reimburse tax free) the health insurance of the shareholder, the amount would be in box 1 of shareholders W-2, but not boxes 3 and 5. So, health benefits paid to, or on behalf of, shareholders still not subject to SS and MC. Also, note that they spell "health" incorrectly. http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/S-Corporation-Compensation-and-Medical-Insurance-Issues "Treating Medical Insurance Premiums as Wages Heath and accident insurance premiums paid on behalf of the greater than two percent S corporation shareholder-employee are deductible and reportable by the S corporation as wages for income tax withholding purposes on the shareholder-employee’s Form W-2. These benefits are not subject to Social Security or Medicare (FICA) or Unemployment (FUTA) taxes. The additional compensation is included in Box 1 (Wages) of the Form W-2, Wage and Tax Statement, issued to the shareholder-employee, but would not be included in Boxes 3 and 5 of Form W-2."

We only send out the organizer at the request of the client.

Catherine, is your document checklist customized for each client? Or generic for use with all clients? would you share your letter and checklist? I am looking for other ways to gather client data, instead of sending the organizer. Thanks, Lynn

Yes

So, as the post just above Debbie's said, the employees get the cash and can use it for whatever they want. If they choose to use it to buy health insurance, that's their choice. As long as it isn't tied to insurance cost or made conditional... basically they all get a raise and spend it on whatever. And it goes on the W-2.

Any payment made to an employee in lieu of health insurance must be considered Box 1, 3 & 5 taxable income. The employee may deduct premiums he pays on Sch. A. These payments do NOT nor CANNOT be considered as healthcare insurance provided by the employer.