What is the purpose of the Federal Insurance Contributions Act (FICA)?
To provide workers and their dependents with benefits in case of death, disability, or retirement.
True / False: An employer chooses to pay an employee’s FICA portion. The employer must then add that amount to the employee’s wages earned.
True
What income is subject to FICA withholding for (1) an employee, (2) an independent contractor?
(1) All wages earned -- gifts, interest and dividends are not included
(2) The net profits (earnings – expenses)
True / False: Employees may opt out of Social Security.
False, even if covered by another pension or 401(k) plan
What is the purpose of the Federal Unemployment Tax Act (FUTA)? Who administers this program?
To provide income to workers who have lost their jobs.
The states administer the program under the federal guidelines.
Who must participate in the FUTA system?
All employers who have quarterly payrolls of at least $1,500 OR
Who employ at least one person for 20 weeks in a year
True / False: Self-employed persons must participate in the FUTA system.
False
What is the FUTA tax rate? Who pays the FUTA tax?
6.0% on the first $7,000 of compensation per employee per year
The employer
True / False: The employer may deduct the FUTA tax as an ordinary business expense.
True
True / False: The employee’s benefits under FUTA are limited to the contributions made on his behalf.
False
What is the purpose of Workers’ Compensation? Who administers this program?
To enable employees to recover for injuries incurred while acting in the scope of employment.
This is a state-run program.
True / False: An employee can collect workers’ compensation even if the employee was negligent, grossly negligent, or voluntarily assumed the risk.
True
True / False: The employee injured on the job can receive Workers’ Compensation benefits and sue the employer for lost wages.
False
The employee cannot sue the employer when covered under workers’ compensation
The employee could sue 3rd parties that contributed to the injury (poor worksite, etc)
Xcompany has employees in a state where workers’ compensation is not compulsory. One of their employees becomes injured on the job due to not following the company’s policies and procedures. The company refuses to pay for medical care and EmployeeA sues. True / False: In this situation Xcompany is not liable because the employee did not following the procedures.
False
Because Xcompany is not using workers’ compensation coverage, damage awards are not limited to that level of coverage.
True / False: The employee’s benefits under Workers’ Compensation are limited to the contributions made on his behalf.
False
Which employers are required to provide full-time employees the opportunity to purchase affordable minimum essential health care coverage for themselves and their dependents? What is considered a full-time employee?
Employers, including the government, with 50 or more full-time employees or that equivalent
Full-time employee: 30 hours per week OR 130 hours per month.
Under the ACA, when is coverage considered “affordable?”
If the employee’s contribution to the plan does not exceed 9.5% of the employee’s household income for the taxable year.
True / False: A low-income individual can receive a tax rebate to supplement the individual mandate even if the individual paid no income taxes.
True
What is the penalty to the employee who fails to comply with ACA coverage? How is the penalty collected?
THE GREATER OF
++ 2.5% of household income to a maximum equal to the national average price of a Bronze plan OR
++ $695 per adult plus $347.50 per child under 18, with a family maximum of $2,085.
THE PENALTY IS DEDUCTED FROM FUTURE TAX REFUNDS
What are the two types of penalties to the ALE (Applicable Large Employer) employer who fails to provide an ACA approved plan? Is the ALE subject to one or both of these penalties?
Penalty 1: If the ALE doesn’t offer min. coverage to at least 95% of its full-time employees, the penalty is $2,000 per FT employee, with the first 30 employees excluded from the calculation.
Penalty 2: Lots of rules but generally related to supplementing the employee’s pmt to ensure the health insurance is affordable, but the penalty is $3,000 for each FT employee who receives the premium tax credit, but cannot exceed the amt the employer would have owed had the employer not offered min. essential coverage to at least 95% of its FT employees (and dependents).
SUBJECT TO ONLY ONE PENALTY
True / False: The employer may deduct the shared responsibility payment as a business expense.