The Impact of the US Affordable Care Act on Canadian Employers with Cross-Border Employees
By Lawrence Bell , CPA , CA
Lawrence Bell , CPA , CA , is a senior manager with the personal advisory services – global mobility and rewards practice of Ernst & Young LLP in Vancouver .
Canadian employers who have employees working in the US face a complicated and challenging regulatory environment — one that became more complex on March 23 , 2010 , when the Patient Protection and Affordable Care Act , or Affordable Care Act ( ACA ), became law in the United States and imposed a requirement to maintain health-care coverage . Through this legislation , President Barack Obama sought to realize his objective of ensuring that all Americans receive affordable health care . While the new law included phased-in effective dates for many of its provisions , the most important employer-related provisions became effective on January 1 , 2015 . The 2010 law not only affects US employers — it also applies to foreign employers and their employees who have relocated to the US . There are both individual and employer mandates to consider .
Individual mandate The individual mandate requires that individuals maintain health-care coverage — referred to as minimum essential coverage ( MEC )— for each month throughout the year for themselves and their dependants , or face penalties 1 that are paid with and reported on their US federal income tax return for the year ( referred to as a “ shared responsibility ” payment ). This mandate applies to all US citizens , green card holders , and tax residents , but does not apply to individuals who are non-resident aliens throughout the entire taxable year . Therefore , the individual mandate applies to US citizens and green card holders who are employed by a non-US company while working outside the US ; however , for any month in which an individual is eligible for the foreign-earned income exclusion , that individual is deemed to have MEC for the given month .
1
For 2016 , the annual penalty is $ 695 per
• US citizens in Canada
• Cross-border business
• Investing in the US
• US tax return preparation
US AND CROSS-BORDER TAX IS OUR BUSINESS .
LET US HELP YOU WITH YOURS .
Sidhartha Rao JD , LLM Warren Dueck FCPA , FCA , CPA ( WA ) Lori Lui CPA , CGA Steven Flynn CPA , CA , CPA ( WA ) Candace Doig CPA , CA , CPA ( IL ) adult and $ 347.50 per child , up to a maximum of $ 2,085 per family or 2.5 % of the family income , whichever is greater .
2
( Page 35 ) Defined as an employer with an average of 50 or more full-time employees ( i . e ., someone who works at least 30 hours per week ) during the previous calendar year ( or the equivalent combination of full-time and part-time employees ). The deadline for this requirement was delayed by one year to January 1 , 2016 , for employers with fewer than 100 full-time employees .
VANCOUVER • RICHMOND • CALGARY • EDMONTON
T : 604.448.0200 • Toll Free : 1.855.448.0200 • wldtax . com
34 CPABC in Focus • Sept / Oct 2016