Unknown Variables in the Affordable Care Act Sends Fear Skyrocketing Nationwide

And the list grows. In addition to concerns relating to revenue growth, attracting/retaining skilled workers, and rising material/energy costs, manufacturers nationwide are facing catastrophic levels of uncertainty regarding the Affordable Care Act (ACA). According to the latest National Association of Manufacturing (NAM) IndustryWeek Survey, more than 77% of manufacturers identified rising health care and insurance costs as their most important challenge. Health care costs have topped the list of challenges in every year that the survey has been conducted, and manufacturers’ concerns are unlikely to fade anytime soon.

Regardless of size, manufacturers believe the ACA severely limits their ability to deploy capital and create new jobs. According to the survey, over 90% of manufacturers said their health insurance premiums had increased, and roughly 58% have had to increase employee copays. Over 27% have needed to change existing coverage, and 17.6% had to switch insurance providers to reduce health insurance costs. The survey did point out that only 2.7% of manufacturers dropped employees from their insurance. All of these factors will likely worsen the skills gap concerns already facing the industry as benefits are cut for workers. 

The impact of the uncertainties surrounding the ACA has forced owners to make other tough decisions. Nearly one-third said they reduced their outlook for 2014, and roughly 23% have reduced employment or stopped hiring altogether. Also, approximately 20% of survey respondents have reduced or slowed investment into their business. 

There is no silver bullet solution to the ACA’s potential pitfalls. The manufacturing industry may find it prudent to bite the bullet and cover higher premiums in order to maintain a domestic workforce, which will lead to expanding operations over time. However, if additional costs are passed on to a consumer who is unwilling or unable to pay them, the commitment to onshoring manufacturing could become futile. The key to preserving the health of U.S. manufacturing will lie in the industry’s ability to navigate the new costs.

What can policymakers do in 2014 to support a pro-growth manufacturing environment? According to the survey, 86.3% of manufacturers believe finding a long-term solution to the nation’s budgetary challenges will improve manufacturing conditions. Also, slowing entitlement spending (80.5%), reducing the regulatory burden on businesses (76.9%), controlling rising health care costs (70.8%) and passing comprehensive tax reform (67.5%) were of significance. As we dive into 2014, the implementation of the ACA and the possibility of another budget impasse, it is quite uncertain for many what kind of year it will be.

Tim Murphy is an accountant in Katz, Sapper & Miller's Audit and Assurance Services Department, which is comprised of individuals skilled at evaluating business and control risks for clients.

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Time Is Money

According to RestaurantOwner.com there is a direct correlation between the length of time it takes an operator to get his or her financial reports and a restaurant’s profitability. In this article, RestaurantOwner.com provides six ideas for speeding up the process of creating financial reports. Read more

Jim White is a member of Katz, Sapper & Miller’s Restaurant Services Group. For more information regarding KSM’s restaurant-specific services, contact Jim at 317.452.1908 or jwhite@ksmcpa.com.

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New Method for Raising Capital

New Method for Raising CapitalThe SEC has enacted a new rule that lifts the ban on general solicitations for private offerings. What this means is that private companies can now market their securities to the general public via television, magazines and the Internet. Rule 506(c) will open up a larger pool of potential investors for the growing restaurant – including their own customers. To read more, click here.

Jim White is a member of Katz, Sapper & Miller’s Restaurant Services Group. For more information regarding KSM’s restaurant-specific services, contact Jim at 317.452.1908 or jwhite@ksmcpa.com.

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Workforce Challenges for Indiana Manufacturers

The following is the first in a series of articles on various issues discussed in the 2013 Indiana Manufacturing Survey, conducted by Katz, Sapper & Miller and Indiana University’s Kelly School of Business, in partnership with the Indiana Manufacturers Association and Conexus Indiana. To read subsequent articles, visit Katz, Sapper & Miller’s manufacturing blog.

Concerns over a skilled workforce and related skills gaps in today’s manufacturing industry are all over the national news. But does this impact manufacturing in Indiana, a state with an abundance of workers with manufacturing backgrounds? As a manufacturer in Indiana, do you need to worry?

The results of the 2013 Indiana Manufacturing Survey  would suggest that you do. In fact, the survey found that long-term workforce planning was the second-highest concern for manufacturing companies when setting the corporate strategy (second only to labor costs). The majority of this concern is over the middle management and skilled labor market. There seems to be little concern over the ability to fill senior management positions, which reinforces the need for skilled laborers in manufacturing.

What is the real impact of this shortage of skilled workers? 

First, the cost to produce a company’s product increases. When a company doesn’t have enough skilled workers they tend to rely heavily on the skilled workers that are available. This will likely lead to a significant amount of overtime for these workers as the company attempts to fill its orders. This overtime can lead to burnout since the skilled workers must put in extra hours to make up for the shortage. The skilled workers are then likely to leave the company due to burnout. Now the company is not only shorthanded, it also has to cover the costs of training a new employee … if they are able to find one.

In addition to increased production costs, the survey found that an insufficiently skilled workforce directly impacted a company’s ability to implement new technologies. As a company has to focus solely on getting its product made with a constrained workforce, it does not have the time or ability to focus on new technologies that could actually improve the production process. This creates a downward efficiency spiral. In the same vein, the survey found that achieving productivity targets and implementing quality improvement processes are also being impacted by the lack of skilled workers.

The survey also found an interesting correlation between the Indiana manufacturing workforce and onshoring, another topic widely discussed in current manufacturing news. When asked how important various factors where in making a decision to onshore production (for production that was currently offshored), the U.S. labor market (skilled workforce) did not receive any votes for “very important.” Yet when respondents were asked what their reasons were for offshoring, an overseas skilled labor force was noted as very important. This shows that if Indiana manufacturers are bringing production back to the United States, it is not because of a skilled workforce. If it is returning to the U.S., it is due to other factors  such as reduced total “landed” costs –  i.e., customs/duties, transportation and warehousing.

In all the doom and gloom related to the skilled workforce shortage, there are efforts being made across the country to improve the labor market. Many companies are now providing their own training programs, versus relying on the traditional vocational programs that are state-funded. And Indiana is now looking abroad to see how other countries are filling the skills gap. These efforts should yield positive results, but the true burden will lay on the manufacturers themselves to support these efforts.

Justin Hayes is a manager in Katz, Sapper & Miller's Audit and Assurance Services Department, which is comprised of individuals skilled at evaluating business and control risks for clients.

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Manufacturers Wait as Talk of Key Tax Law Changes Prolong

Chairman of the Senate Finance Committee, Max Baucus (D), and head of the House Committee on Ways and Means, Representative Dave Camp (R), recently concluded a summer-long tour of America discussing tax law changes with individuals and businesses. Included in the discussions were several tax items vital to the manufacturing industry, such as LIFO inventory accounting, the domestic activities production deduction, and accelerated depreciation methods, among others. The consensus of many politicians is that in order to offset proposed cuts in corporate tax laws, a number of the aforementioned tax deductions will be cut or limited.

While details regarding specific changes have yet to be proposed, several clean energy-related tax perks are scheduled to expire by the end of 2013. The list includes:

  • The production tax credit for renewable energy (including wind power)
  • Credits for two- or three-wheeled plug in electric vehicles
  • Iincome tax credits for biodiesel, renewable diesel, and other qualified fuel mixtures; and
  • Credits for personal construction of energy-efficient residences and appliances. 

If history is any indication, Congress may extend several of these benefits at the last minute.

Baucus and Camp aim to enact tax reform legislation by the end of 2014. For more information regarding potential tax changes, and taking advantage of current benefits, please consult your KSM tax advisor.

Trent Gerbers is a staff accountant in Katz, Sapper & Miller’s Business Advisory Group. For more information, contact Trent at tgerbers@ksmcpa.com.

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Latest Economic News Release Does Not Bring Confidence to the Healthcare Industry

Latest Economic News Release Does Not Bring Confidence to the Healthcare IndustryThe economic state of the healthcare industry is under higher scrutiny since the recent announcements of mass layoffs from Indiana’s largest health networks. In September, the Indiana University Health network announced the layoff of 800 employees, which followed St. Vincent Health’s June announcement of 850 employees. Unfortunately, the recent jobs report released by the U.S. Bureau of Labor Statistics did not provide much confidence for the industry.

According to the Bureau’s industry detail report, only 6,800 jobs were added in September in the healthcare industry. This is down significantly from the 42,800 jobs added the month before. Overall in 2013, the monthly average of healthcare jobs added to the economy is 19,000. This compares to an average of 27,000 jobs added each month in 2012.

Some healthcare services have fared better than others. Ambulatory health care services added the most jobs to the industry, with 8,100 employees added in September. Hospitals remained constant, with only 300 jobs added. Nursing care facilities had the bleakest results, with a decrease of 4,300 jobs.

With the upcoming changes to the healthcare world, it is impossible to know exactly how the economy of the healthcare industry is going to react. This recent economic data, however, does not seem to set a positive benchmark.  

For more details related the results of the recent jobs report, visit the Bureau of Labor Statistics web site at http://www.bls.gov/.

Lesley Freeman is a staff accountant in Katz, Sapper & Miller’s Healthcare Resources Group. For more information, contact Lesley at lfreeman@ksmcpa.com.

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Is Accepting Medicare Losing Money for Your Practice?

In the healthcare world today, as reimbursements decline, overhead expenses continue to increase, and it is becoming more and more difficult for independent practices to stay afloat. Physician practices have to put on their business hats and assess the viability of their organization based on their current business model. For physicians that accept public insurance, a cost-benefit analysis of their Medicare business may be a beneficial exercise. 

As the Medicare population increases, doctors, in a lot of cases, end up with more complicated and time consuming patients. Spending more time to care for a patient and getting reimbursed less for that care, does not add up to a profitable bottom line. 

Deciding to stop accepting Medicare patients obviously involves more than just reviewing a cost-benefit analysis and making a cut. Physicians will wrestle with ethical and moral decisions as well. This is not a decision to take lightly, therefore physicians should undergo a thorough financial and market analysis in order to make an informed decision.

A few questions to consider are:

  • Am I losing money on Medicare patients or just not making as much money as in the past?
  • If I drop Medicare, is there an opportunity in my region to grow other areas of my business? Do I practice in a high Medicare population?
  • What if I continue to treat my current Medicare patients, but stop accepting new Medicare patients?
  • Could I lose other business (family members of my Medicare patients)?
  • What would happen to my referrals from other physicians?

Some may view dropping public insurance as an extreme measure, but in an ever changing healthcare world, where a profitable practice is becoming harder and harder to maintain, all areas of a physician's business should be analyzed for potential opportunities to change.

Lisa Curry is a director in Katz, Sapper & Miller's Healthcare Resources Group. For more information, contact Lisa at 317.580.2033 or lcurry@ksmcpa.com

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Year-End Tax Planning: 10 Ideas for the Restaurant Owner/Operator

Year-End Tax Planning: 10 Ideas for the Restaurant Owner/OperatorAs a restaurant owner/operator you work hard to generate a profit each and every year. Unfortunately, as profits grow so does your potential tax liability. While a profitable operation will always incur tax at some level, year-end tax planning is an effective way to minimize your total tax bill.  

Below you will find 10 strategies for minimizing your 2013 year tax liability:   

  1. Impact of changing depreciation rules: There are several depreciation incentives set to expire on Dec. 31, 2013. Most notable is the loss of bonus depreciation (50% bonus) for certain capital purchases made after Jan. 1, 2014, If you are planning a capital purchase for the first quarter of 2014, you may want to explore the tax benefit of moving the purchase to December 2013 to secure bonus depreciation. Note: It is possible that some or all of these incentives will be extended.
  2. FICA Tip Credit: If your wait staff receives tips and you have not taken advantage of the FICA Tip Credit, you should consider an analysis of the potential impact of this credit in the current tax year. The credit is equal to the employer paid FICA taxes on income above the federal minimum hourly wage and could result in thousands of dollars in tax savings.
  3. Accelerate prepaid expenses: As you approach the end of 2013, you may have the opportunity to pull forward some expenses from the first quarter of 2014. If paid in December 2013, these expenses can then be deducted on your 2013 tax return, therefore reducing your current year tax liability. Potential prepaid expenses include state income tax estimates and insurance payments. Note: A current and future cash flow analysis should be included in this decision process.
  4. Elect the Smallwares Accounting Method: If in prior years the business has chosen to depreciate items in the smallwares category, an accounting method change can be made by submitting Form 3115 to the IRS. The Smallwares Accounting Method allows a restaurant to expense the cost of replacement smallwares in the year the items are consumed and used in the taxpayers business. Smallwares consists of items in the following categories: glassware, flatware, dinnerware, pots and pans, table top items, bar supplies, food preparation utensils and tools, storage supplies, service items and small appliances costing $500 or less. Note: The Smallwares Accounting Method is not available for smallwares purchase as part of a start-up package. These costs are subject to the depreciation rules for start-up cost.
  5. Work Opportunity Tax Credit (WOTC): If you employ any individuals from the following target groups, you may qualify for a WOTC.  
  • Qualified recipients of Temporary Assistance to Needy Families (TANF)
  • Qualified veterans receiving Food Stamps or qualified veterans with a service connected disability who: (a) have a hiring date which is not more than one year after having been discharged or released from active duty, OR (b) have aggregate periods of unemployment during the one-year period ending on the hiring date that equal or exceed six months
  • Ex-felons hired no later than one year after conviction or release from prison
  • Designated Community Resident – an individual who has attained ages 18 but not 40 on the hiring date who reside in an Empowerment Zone, Renewal Community or Rural Renewal County
  • Vocational rehabilitation referrals, including Ticket Holders with an individual work plan developed and implemented by an Employment Network
  • Qualified summer youth ages 16 through 17 who reside in an Empowerment Zone, Enterprise Community or Renewal Community
  • Qualified Food Stamp recipients ages 18 but not 40 on the hiring date
  • Qualified recipients of Supplemental Security Income (SSI)
  • Long-term family assistance recipients

The maximum credit ranges from $1,200 to $9,600 depending on the employee hired. A review of your 2013 workforce is recommended to evaluate the potential impact of the WOTC.

  1. Minimize suspended losses in real estate activities: If you hold real estate in a separate entity from your day-to-day restaurant operations, you should consider conducting a review of the projected year-end profitability of each entity (including all depreciation). Passive losses from real estate activities are subject to additional deduction limitations and may not be available to offset taxable income from regular business activities. There may be an opportunity to minimize the combined taxable income from the real estate entity and operations entity, but any such opportunity must be addressed before year end.
  2. Establish a retirement plan or maximize the contribution into current plan: Retirement plans allow business owners to defer tax on current year profits if they are deposited into a qualified retirement plan. There are several plan designs to choose from. The key factors in choosing the best plan design typically include cost, contribution limits for key employees/owners and current year tax savings. Consider having an annual review of the potential tax implications of making or not making a contribution to a qualified retirement plan.
  3. Property tax assessment: The property taxes paid on your equipment and buildings are based on assessed values. Consider conducting an annual review of the assessed values to ensure that you are not overpaying on your property taxes.
  4. Review investment transactions for losses and/or gains:  As you approach year end, create an estimate of the net gain or loss for the current year’s capital transactions. Next, you will want to review your current investment holdings to see if there are any unrealized gains or losses that could be used to offset the gain/loss from the capital transactions executed earlier in the current year.
  5. Manage charitable contributions: If you plan to make charitable contributions in the first few months of 2014, consider evaluating the impact of pulling these contributions into December 2013. It should be noted that the deduction of cash contributions is limited to 50%. Note:  A current and future cash flow analysis should be included in this decision process.

As tax credits, the WOTC and the FICA Tip Credit are taken (dollar for dollar) directly against your tax liability.    

This is not a comprehensive list of tax deductions or credits. The facts surrounding each business will vary; consequently, be sure to review your particular business details with a tax advisor.

Jim White is a member of Katz, Sapper & Miller’s Restaurant Services Group. For more information regarding KSM’s restaurant-specific services, contact Jim at 317.468.1908 or jwhite@ksmcpa.com.    

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New Bill Introduced to Limit Stark Law’s In-office Ancillary Services Exception

New Bill Introduced to Limit Stark Law’s In-office Ancillary Services ExceptionA massive increase in referring physicians’ offerings of ancillary services in recent years has prompted some lawmakers to take action. On Aug. 1, 2013, H.R 2914 was introduced by Rep. Jackie Speier (D-CA) stating that “specified non-ancillary services” are not available for the exception, which include advanced diagnostic imaging services, anatomic pathology services, radiation therapy services and supplies, and physical therapy services. This bill comes on the heels of a new study published in the New England Journal of Medicine that examined the use of intensity-modulated radiation therapy (IMRT) equipment and whether or not the equipment was owned by the physician utilizing it. If the bill were to pass, it would deal a major blow to physicians currently providing the specified services.

For a detailed look at this bill and how it could affect you, please click here.

Bryce Woodyard is a staff accountant in Katz, Sapper & Miller’s Healthcare Resources Group. For more information contact Bryce at bwoodyard@ksmcpa.com

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Sales Tax Treatment of Take-and-Bake Pizzas

Sales Tax Treatment of Take-and-Bake PizzasIn her Oct. 14, 2013 article, Cara Griffith of Forbes magazine provides an update on the debate regarding the sales tax treatment of take-and-bake pizzas. Griffith reports that the Sales Tax Governing Board Compliance Review and Interpretations Committee has been asked to provide an opinion on the question of whether a take-and-bake pizza meets the definition of prepared food.       

Read more on the sales tax treatment of take-and-bake pizzas.

Jim White is a member of Katz, Sapper & Miller’s Restaurant Services Group. For more information regarding KSM’s restaurant-specific services, contact Jim at 317.452.1908 or jwhite@ksmcpa.com.

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Survey Sees Hoosier Manufacturers Investing in Growth, Despite Workforce, Regulatory Concerns

The results from Katz, Sapper & Miller's 2013 Indiana Manufacturing Survey: Manufacturing's Renaissance, reveal an often unnoticed but growing renaissance is underway in Hoosier (and American) manufacturing. Nearly 80% of respondents over the last two annual surveys describe their businesses as 'healthy' or 'stable' – a strong rebound from the dismal days of 2009-2010, when nearly half used the term 'challenged' to characterize their operations.

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Key findings of the survey reveal:

  • More than 70% of Hoosier manufacturers are actively investing in capital and labor again, while less than 5% are continuing to cut costs across the board. These results suggest that even in today's still turbulent economic times, companies are stepping up investment in their own employees and facilities, along with products and services, out of a recognition that failure to do so will hinder their ability to compete in the future.
  • The pro-investment attitude of Indiana manufacturers comes in the face of worries about the federal regulatory climate (notably the implementation of healthcare reform), concerns over global competition and a pragmatic outlook about the potential for market growth.
  • Despite these headwinds, manufacturers realize that cost containment alone is not a sustainable business strategy, and are willing to spend on superior product design, logistics and customer service to compete even in an uncertain economy.
  • Human capital continues to be a major obstacle confronting Indiana manufacturers. Survey respondents identified skilled production workers as the most significant labor shortage facing their companies. Fortunately, there is significant momentum among industry leaders, policymakers and academic institutions to focus on the middle-skill challenge, align curricula with employer needs and re-energize vocational and technical education.

This seventh annual statewide study of employers in Indiana's largest industry was commissioned by Katz, Sapper & Miller and developed in partnership with the IU Kelley School of Business - Indianapolis, Conexus Indiana and the Indiana Manufacturers Association.

To view the complete results of the 2013 Indiana Manufacturing Survey: Manufacturing’s Renaissance, visit ksmcpa.com/2013-indiana-manufacturing-survey.

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Seven Percent Off Your Next Purchase: Indiana’s Sales Tax Exemption for Restaurants

Seven Percent Off Your Next Purchase: Indiana’s Sales Tax Exemption for RestaurantsAre you paying more sales tax than you need to be paying? Unlike a majority of states, Indiana treats restaurants as manufacturers for purposes of the sales tax exemption for production. This can mean real savings of seven percent on purchases of equipment and utilities. In the competitive world of restaurant management, it is crucial to recognize where savings can be realized and how to go about claiming those savings.

The purchase of equipment that is “directly used in the direct production” of food is exempted under Indiana law. In order to qualify for the exemption, the equipment should act directly on the production of food (think fryers and ovens, not refrigerators or exhaust fans). This exemption can most easily be claimed by presenting your vendor with a completed exemption certificate (Form ST-105), although a refund claim can be submitted if you have previously paid sales tax on exempt equipment in error.

The utilities used in the direct production of food are also exempt. Using the above examples, the portion of the electricity used to power the fryers and ovens would be exempt but the portion used for the refrigerators and exhaust fans would be taxable. Typically a utility study is performed to determine what percentage of utilities are consumed in exempt production activities. This exemption is claimed by completing a special exemption application for utilities (Form ST-200). Generally, you should expect to receive an exemption equal to the pro rata percentage of exempt usage. However, if your exempt usage exceeds 50%, the utilities are deemed to be “predominantly used” in production and the exemption will extend to your entire utility bill.

Restaurants that are not currently benefiting from this exemption should consider performing a utility study. Filing a refund claim can result in an audit. Therefore, taxpayers need to be mindful of the actions they take in initiating a refund claim and ensure that adequate records are kept.

Tim Conrad is a member of Katz, Sapper & Miller’s State and Local Tax Practice.  For more information, contact Tim at 317.452.1388 or tconrad@ksmcpa.com.

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U.S. Manufacturing Is Expanding!

U.S. Manufacturing ExpandingA recent report from the Institute for Supply Management (ISM) shows that its index, which measures national factory activity levels, rose from 55.7 in August 2013 to 56.2 in September 2013. Note that any reading above 50 is considered to be expansion of the manufacturing industry. This is the fastest pace of growth in the past 2½ years. The report also shows that manufacturers added workers in September at the highest level of the past 15 months. Both items reported continue to support the sentiment that manufacturers are getting their feet back under them and are starting to build momentum.

Justin Hayes is a manager in Katz, Sapper & Miller's Audit and Assurance Services Department, which is comprised of individuals skilled at evaluating business and control risks for clients.

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Manufacturing Jobs Move Back Home: Are You Part of the Trend?

More and more jobs are moving back to the U.S. as the margin of cost benefit of outsourcing those jobs continues to minimize. A CNN article summarizing the results from a survey published this week by the Boston Consulting Group showed the number of firms that have moved production back to the U.S. or plan to do so in the next two years has doubled over the past 18 months. Most large, U.S. companies have already moved some manufacturing back to America or are actively considering it. Companies such as General Electric Co., Whirlpool Corp., Caterpillar Inc., and Apple have helped this trend gain momentum.

 The key factors attributable to the shift from “Made in China” to “Made in America” are as follows:

• Declining labor costs in America
• Rising labor rates in China
• Lower energy costs: natural gas and electricity
• Proximity to customers
• Availability of skilled laborers
• Shipping costs

According to a recent article by CNN, companies choosing to move production back home are expected to create 2.5 million to five million factory and service jobs in the U.S. over the next seven years. Manufacturing jobs account for only 8.8% of the total American jobs compared to 22% “back in the day” when manufacturing was at its peak. 

While large companies are bringing jobs back to America, wages have dropped in the past few years. Factory workers being able to find a job is obviously good news; however, they will not have the same spending power that they once did. The Boston Consulting Group reports that by 2015, the average labor costs in the U.S. will be approximately 16% lower than in the U.K., 18% lower than in Japan, 34% lower than in Germany, and 35% lower than in France and Italy. Those projections seem hard to believe when you consider the history of manufacturing in the U.S.

Regardless of wages, I believe most Americans would agree that the trend towards “Made in America” is good news for the U.S. manufacturing sector.

Sarah Hammond is a manager in Katz, Sapper & Miller's Business Advisory Group. For more information, contact Sarah at 317.452.1070 or shammond@kscmcpa.com.

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Government Shutdown: Effect on IRS Operations

The Internal Revenue Service (IRS) has announced on its website that its operations have been scaled back due to the government shutdown. However, it emphasized that taxpayers must nonetheless continue to meet their tax obligations as normal.Government Shutdown: Effect on IRS Operations

On Oct. 1, the IRS issued a release on the shutdown's effect on its operations. Highlights are below.

  • Keep filing returns and making deposits on time. Individuals and business should keep filing their tax returns and making deposits with the IRS, as required by law. Individuals who requested a 2012 income tax filing extension should file their returns by Oct. 15, 2013, and all other tax deadlines - including those covering individuals, corporations, partnerships, and employers, as well as payroll taxes - remain in effect. The IRS will accept and process all tax returns with payments, but will be unable to issue refunds during the shutdown.
  • No in-person or live phone assistance available
  • Certain appointments are presumed cancelled. While the government is closed, people with appointments related to examinations, collection, Appeals or Taxpayer Advocate cases should assume their meetings are cancelled.
  • Automated notices will continue. The IRS won't be working any paper correspondence during the shutdown, but automatic notices will continue to be mailed.

Source: CCH

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Three Key Things to Know About the Health Insurance Exchange

The Health Insurance Marketplace is going live today, October 1, 2013.  The exchange is designed to be a single, transparent location for individuals and families that do not currently have health insurance, to review and compare insurance plans provided by commercial health insurers.  Indiana has opted to partner with the federal government to administer and operate the state insurance exchange.  Hoosiers can sign up and compare plans at https://www.healthcare.gov/.

Here are a few key things to know about the exchange:

  1. Who is eligible?

Most everyone living in the United State is eligible to participate and purchase a plan through the Health Insurance Marketplace. The key requirements include that an individual must 1) reside in the United States, 2) be a United States citizen (national or lawfully present within the United States), 3) cannot be currently incarcerated and 4) generally reside in the area the marketplace is servicing (e.g. the state).

Additionally, since lifetime limits and pre-existing condition exclusions have been lifted under the Affordable Care Act, individuals with pre-existing conditions and other high cost ailments will be able to purchase health plans through the exchange at market driven prices.

  1. Premium assistance tax credit and cost sharing subsidy

Individuals and families with household incomes between 100 and 400 percent of the Federal Poverty Level, who do not have access to qualifying coverage, may qualify for a premium assistance tax credit beginning in 2014. These credits are designed to make premiums more affordable and are scaled based on income and the number of individuals within a family.

Some individuals and families will also qualify for a cost-sharing-reduction subsidy to help pay deductibles and co-payments normally required by the insurance coverage. These subsidies may be available to households with income that does not exceed 250 percent of the Federal Poverty Level and enroll in silver-level qualified health plans that normally require 30 percent cost sharing.

  1. Individual mandate

During the initial year of the exchange, there will be a fee for not maintaining minimum essential health insurance coverage.  This fee will be 1 percent of an individual’s yearly income or $95 per person, whichever cost is higher.  The fee will continually increase through the end 2016, up to 2.5 percent of yearly income or $695 per person, as the law currently states.

Note: Under the Affordable Care Act, United States citizens living abroad are not required to have health insurance and will be exempt from the penalty fee.

For more information regarding the launch of the Health Insurance Exchange, visit the Department of Health and Human Services website at https://www.healthcare.gov/.

Neil Giannini is a manager in Katz, Sapper & Miller's Healthcare Resources Group. For more information, contact Neil at ngiannini@ksmcpa.com

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Are Employers Liable for Failing to Provide Marketplace Notice?

As of Sept. 16, 2013, the Department of Labor (DOL) posted a new FAQ clarifying that no fine or penalty will apply to an employer who fails to provide its employees with the notice about the health insurance marketplaces. Read more.

KSM previously wrote on this topic (see Employer Notices Regarding Health Care Exchange Due Oct. 1, 2013), and it was generally assumed the failure to provide said notice would result in a $100 per day penalty for noncompliance. However, the penalty provision had not been made explicit in any previous guidance, nor had the regulators described how the penalty would be implemented and enforced. 

Source: CCH

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Health Insurance Marketplace Premiums for 2014

The Department of Health and Human Services (HHS) released “Health Insurance Marketplace Premiums for 2014.” Indiana plans are expected to cost from just under $100 per month for a single adult (catastrophic plan) to almost $1,000 for a family of four. It is estimated that on average, Americans will pay $328 monthly for a mid-tier health insurance plan (without subsidies which might apply). Read the full text.

While actual costs will not be available until Oct. 1, 2013, HHS has created tools to help estimate premiums.

Learn more about Indiana geographic rating areas.

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The Unique Challenges and Benefits of Multi-Unit Franchising

The Unique Challenges and Benefits of Multi-Unit FranchisingThe challenges of operating multiple restaurant locations are very different than operating a single store. After interviewing multi-unit franchisees across the country, Jason Daley of Entrepreneur magazine, presents six keys for growing and managing a franchise empire:  

  • Assess yourself
  • Have patience
  • Assess your franchisor
  • Find a support system
  • Build a strong team
  • Don’t expand too quickly

Read more on The Unique Challenges and Benefits of Multi-Unit Franchising.

Jim White is a member of Katz, Sapper & Miller’s Restaurant Services Group. For more information regarding KSM’s restaurant-specific services, contact Jim at 317.452.1908 or jwhite@ksmcpa.com.

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Special Event: Release of 2013 Indiana Manufacturing Survey Results

Katz, Sapper & Miller, LLP, in conjunction with the Indiana Manufacturers Association, Conexus Indiana and Indiana University's Kelley School of Business, invites you to attendSpecial Event: Release of 2013 Indiana Manufacturing Survey Results our annual update on the results of the Indiana Manufacturing Survey.

This year's study reveals that Hoosier manufacturers have found a number of different ways to survive and prosper during challenging economic times. Company executives and managers from across Indiana participated in this current edition of the survey -- now in its seventh year.

Attend this special event to learn more about our findings -- including current market trends and best practices affecting Hoosier manufacturing.


    Dr. Mark T. Frohlich
    Associate professor of operations management
    Indiana University's Kelley School of Business 

    Dr. Steven L. Jones
Associate professor of finance
    Indiana University's Kelley School of Business


   Wednesday, Oct. 16, 2013 -- Indianapolis
   Thursday, Oct. 17, 2013 -- Fort Wayne (repeat event)


   7:30 a.m. -- Registration/continental breakfast
   8:00 a.m. -- 9:30 a.m. -- Program      


   Indianapolis Marriott Downtown
   350 W. Maryland St.
   Indianapolis, IN 46225

   Fort Wayne
   Greater Fort Wayne Inc.
   Chamber Building
   826 Ewing St.
   Fort Wayne, IN 46802  


   No fee




Seating is limited, so please register by Friday, Oct. 11  

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