Health Reform For Employers
The Affordable Care Act, and what Employers Should Know
Change in Premium Rating for Group Health
Prior to the Affordable Care Act, claims experience helped determine small group rates. Today, insurers pool the risk across all of their small group business, commonly known as community rating. Businesses with older and/or less healthy workers now see their premiums moderated by groups with younger and healthier employees. Unfortunately, businesses with younger, healthier employees, may see increases in monthly premiums.
Tax Credits for Small Business
Small businesses with fewer than 25 full-time employees with average annual wages less than $50,000, excluding owners and their families, may qualify for a business tax credit. A full-time employee is an employee who works at least 30 hours or more per week. The employer must pay at least 50% of full-time employees' premium, but does not need to offer coverage to dependents or part-time employees.
With the Affordable Care Act, businesses were required
to purchase a plan on Connect for Health through the SHOP. Beginning in 2018, Connect for Health no longer manages the Tax Credit. However, Connect for Health, offers a special application where the employer can receive the tax credit when purchasing specific carrier health plans and provides a tax calculator to help determine the amount of the tax credit. Ultimately, the tax credit will be and determined and reconciled with your annual business tax return.
Employers may receive a tax credit of up to 50% (up to 35% for non profits) if the amount the employer contributes (at least 50%) toward employee insurance premiums.
The GOP's new tax bill passes Congress
The tax bill states- The individual mandate, requiring most Americans to carry a minimum level of health coverage or face a tax penalty has been eliminated effective in 2019. Individual insurance markets, federal subsidies to help Americans pay monthly insurance premiums, and Medicaid expansion in the dozens of states that implemented, it will all still be in effect barring further Congressional action.
Employer ACA Regulation
Reimbursement - Under the Affordable Care Act, employers are no longer allowed to reimburse employees for purchasing individual policies directly from an insurance carrier. The employer may be subject to a $100 per day excise tax per applicable employee under section 4980D of the Internal Revenue Code.
90 Day Wait Period Limitation - Health Care Reform requires new hires must be enrolled on an employer sponsored health plan "no later" than their 91st day of employment. In general, wait periods will need adjusted to an as of 90 Days or First of the Month Following 60 Days Wait Period in order to ensure new hires have benefit coverage by the 91st day of employment.
30 Hours a Week Minimum Eligibility for Health Coverage - Health Care Reform requires employers with 50 or more FTE employees to consider employees working 30 hours or more per week be considered full time and are eligible for an employer sponsored health plan.
Report the Cost of Coverage on W-2 Forms - Employers are to report the cost of coverage for each employee under employer sponsored coverage in Box 12 on W-2 forms. This is for informational purposes only and does not tax the coverage amount.
Requirement to offer Health Coverage
Small Group-Under 50 Full Time Equivalent Employees - Are not required to provide group health insurance to your employees and will not face a fine or penalty. However, statistically employees are more likely to seek health care and take care of preventative care, reducing illness and increase productivity.
Large Group -50 or more Full Time Equivalent Employees - Are required to provide group coverage to your employees or face an additional penalty.
Employers may face a penalty if:
Minimum essential coverage is not offered OR
Is offered to at least 95% of all FT employees and their child dependents AND One full time employee receives premium tax credits under an exchange OR
Coverage is not "deemed affordable".
Distribution of Health Exchange Notice to Employees - Employers need to comply with the new requirement to provide current employees and each new hire, regardless of enrollment status, part time or full time, a written notice with information about Health Insurance Exchanges. If you would like assistance obtaining this notice please call us at 303.425.4466 or contact us with your request.