Free Choice Vouchers

• Posted on July 6, 2010
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Long Island CPA Firm Offering Tax and Financial Advice

Employers who offer minimum essential coverage through an eligible employer-sponsored plan and are paying a portion of that coverage will be required to offer an equivalent value voucher, allowing a qualified employee the option of purchasing coverage though the insurance exchange.
 
Qualified Employee – A qualified employee is one:

• Who does not participate in the employer-sponsored plan;
  
  
• Whose required contribution to the employer exceeds 8%, but does not exceed 9.5% of household income; and
  
  
• Whose income does not exceed 400% of the poverty line for the family.    

Inflation Adjustments - After 2014, the credit percentage rates will be indexed to reflect the rate of premium growth over income growth between the preceding calendar year and 2013.

Voucher Value – The voucher value will be equal to the monthly cost of the individual’s self-only or family coverage had the employee participated in the employer’s plan.

Taxability of the Voucher – To the extent the voucher exceeds the premium of the health care chosen by the employee, the excess amount is included in the employee’s gross taxable income. Otherwise, there is no taxability.