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Keeping up with changes under the Affordable Care Act (ACA) is a challenge for all employers. Here are the top five issues you should specifically pay attention to as healthcare reform rolls out.
The Employer Mandate
Under the ACA, large employers will be required to provide affordable healthcare insurance that meets minimum value to all full-time employees beginning in 2015. Final regulations issued in February clarify most aspects of how the mandate will be implemented.
The Individual Mandate
Beginning January 1, 2014, all individuals are required to carry qualified health insurance known as “minimum essential coverage” or face penalties when they file taxes in the spring of 2015. In 2014, the penalty for noncompliance will be the greater of $95 per uninsured person or 1% of household income over the filing threshold. This penalty will rise in 2015 and again in 2016.
Wellness Programs
As health insurance costs rise, wellness programs are gaining popularity, however be cautious when designing and maintaining a wellness program because they must conform to new ACA requirements and existing HIPAA nondiscrimination requirements.
Reporting Requirements
Beginning in the spring of 2016, large employers will face a new reporting requirement for the 2015 calendar year. The Form 6056 will ask for information including:
Automatic Enrollment And Nondiscrimination Regulations
Though enforcement of the automatic enrollment and nondiscrimination provisions of the ACA has not started, keep an eye out for regulations that will trigger compliance obligations. Employers with over 100 employees should anticipate that in the next few years, they will be required to automatically enroll all full-time employees for health insurance coverage.
In addition, employers who offer varying levels of coverage or employer-provided subsidies based on classes of employees need to watch for nondiscrimination regulations.
Please contact our office if you have any questions on how Healthcare Reform will affect you or your business.
The Obama administration is giving certain employers extra time before they must offer health insurance to almost all of their full time workers.
Under new rules announced Monday by Treasury Department officials, employers with 50 to 99 workers will be given until 2016 (two years longer than originally envisioned under the Affordable Care Act) before they risk a federal penalty for not complying.
Companies with 100+ workers or more are getting a different kind of one-year grace period. Instead of being required in 2015 to offer coverage to 95% of full time workers, these bigger employers can now avoid a fine by offering insurance to at least 70% of workers next year.
Administration officials had already announced in July 2013 that the employer requirements would be postponed until 2015 and this recent announcement has caught officials by surprise.
Obama administration officials said the Treasury Department decided to allow medium-size businesses more latitude because “they need a little more time to adjust to providing coverage”.
The Affordable Care Act (ACA) states that anyone who works 30 hours or more is a full time employee, and it compels many employers to offer affordable insurance to those workers and their dependents. (Please note that Florida law currently defines a full time worker as anyone who works 25 or more hours). It also defines affordable as premiums of no more than 9.5% of an employee’s income, and employers must pay for the equivalent of 60% of the actuarial value of a worker’s coverage. Businesses that fail to do so will eventually face a fine of up to $2000 for each employee not offered coverage, though workers are not required to sign up for the benefits.
For questions on how these recent changes will affect your business or for help complying with the ever-changing ACA requirements, please contact our office.
As a business owner, it is important to understand how the Affordable Care Act may affect your business. However, with so many misconceptions about about Health Care Reform works, this can be difficult.
A common myth is that business owners will be fined if they do not provide notification to their employees about the new Health Insurance Marketplace.
If your company is covered by the Fair Labor Standards Act (FLSA), you must provide a written notice to your employees about the Health Insurance Marketplace (aka Exchange) by October 1, 2013, however the Department of Labor has announced is no fine or penalty currently under the law for failing to provide this notice.
For more information on the Exchange notice, please contact our office or review a previous post on this topic.
With the open enrollment period for the Exchange beginning October 1, 2013, many questions are beginning to surface regarding how premium subsidies will work as individuals start to evaluate all of their options available to them.
Q1: It sounds like individuals who choose to buy health insurance on the Exchange will have to pay the full monthly premium for the coverage they choose and subsidies will be paid through tax credit that are received annual as a tax refund. How can a low income person who is living paycheck to paycheck afford this?
A: When consumers apply for a plan on the Exchange (aka marketplace), you will be asked to provide income information to determine if you are eligible for a premium tax credit (aka subsidy). A subsidy will be available to people with incomes up to 400% of the federal poverty level ($45,960 for an individual in 2013 or $94,200 for a family of four).
If you qualify for the subsidy, consumers can opt to receive their tax credits in advance, and the exchange will send the money directly to the insurer every month. This subsidy will reduce the amount you owe up front on your medical premium. You can also choose, instead, to receive your credit when you file your taxes the following year.
It is important to estimate your income as accurately as possible and to contact the Exchange during the year if you find out that you are making more or less than expected. When completing your 2014 taxes, your estimate will be reconciles with what you actually earned. If you have received more than you were due, you could have to repay those amounts.
Q2: What happens if I do not pay my premium in a timely manner after I have purchased insurance on the Exchange? If I am terminated from the policy, will I be able to have it re-instated?
A:Consumers who are receiving premium tax credit for coverage on the Exchange will have a 90 day grace period to catch up on late premiums. Other consumers who do not receive a subsidy may get more or less time, depending on the Exchange rules. Once the grace period has passed, consumers will generally have to wait until the next annual open enrollment period in the fall to re-enroll in coverage. Please note though, if an individual goes uninsured for more than 3 months, they could be assess a penalty for not having insurance coverage of up to $95, or 1% of income in 2014, whichever is greater.
Please contact our office for assistance with evalutating your options and obtaining coverage through the Exchange.
You may have heard a lot about how the Affordable Care Act (ACA) is going to change health insurance in the next year, but does it all apply to you? If you get your insurance from your employer, there may be a chance that you may be enrolled in a “grandfathered plan” and some of these changes may not affect you – yet.
Some health plans were allowed to be exempt from some of the ACA’s rules and protections in the interest of a smooth transition and to allow employers and individuals to keep their current policies in force without having to make substantial changes. Almost half of all Americans who get insurance through their jobs are enrolled in such plans, however that number is expected to continue to decline every year.
Consumers should know the status of their plans since that may determine whether they are eligible for certain protections and benefits created by ACA. For example, an employee at a large company may wonder why his employer provided coverage does not included the free preventative services that he has heard about on the news. In order to understand this, you must understand the status of your current medical plan and how grandfathering works.
What is a grandfathered plan?
Most health insurance plans that existed on March 23, 2013 are eligible for grandfathered status and therefore do not have to meet all of the requirements of the health care law. But if an insurer or employer makes significant changes to a plan’s benefits or how much members pay through premiums, copays, or deductibles, then the plan loses that status.
Both individual and group plans can be grandfathered. If you get coverage through an employer and they currently offer employees a grandfathered plan as part of their benefits package, you can enroll in this plan even if you were not enrolled on March 23, 2010.
What Rules Does a Grandfathered Plan Have to Follow?
A grandfathered plan has to follow some of the same rules other plans so under the ACA. For example, the plans can not impose lifetime limits on how much health care coverage an individual can receive, and they must offer dependent coverage for young adults until age 26.
There are many rules, however, that grandfather plans do not have to follow. For example, they are not required to provide preventative care without cost-sharing. In addition, they do not have to offer a package of “essential health benefits” that individual and small group plans must offer beginning 2014. Grandfathered individual plans can still impose annual dollar limits (such as capping key benefits at $750,000 in a given year) and they can deny coverage for children under age 19 if they have pre-existing conditions.
How Many People Are Enrolled in Grandfathered Plans?
In 2013, 36% of those who get coverage through their employer are enrolled in a grandfathered health plan. This number is down from 48% in 2012 and 56% in 2011, according to the Kaiser Family Foundation Employer Health Benefits Survey. Most plans are expected to lose grandfather status over time though.
How Do I Find Out If I’m Enrolled in a Grandfathered Plan?
If you want to know more about your coverage, it is best ask your insurance company or your employer’s human resource department about the status of your plan. If your employer is currently offering a grandfather plan, they are required to release a notice to you annually if they are offering benefits through a grandfathered medical plan.
Please contact our office for more information regarding if your current plan is considered “grandfathered” or for more information on ACA.
If your company offered either a Health Reimbursement Account (HRA) or Medical Expense Reimbursement Plan (MERP) as part of your employee benefits package in 2012, you must report and pay the PCORI fee for your 2012 plan year no later than July 31, 2013. Please note that the penalty for not filing can be as high as $10,000 per month.
You must use the IRS Form 720 to report and pay the PCORI fee.
If you used a third party administrator to handle the administration of your HRA or MERP plan, they should have provided you with the necessary information to complete Form 720 as they are not permitted to file this with the IRS on your behalf.
Please let us know if you have any questions.
The U.S. Administration announced on July 2, 2013, that it will not require employers to provide health insurance for full time workers under the Health Care Reform Employer Mandate (also known as Pay or Play) until 2015. This move will cause a delay in a key provision of Health Care Reform that was scheduled to go into effect in 2014. The delay represents the administration’s response to widespread complaints about the reporting requirements for employers who are subject to the mandate.
The Affordable Care Act requires all employers with more than 50 full time workers to provide affordable health insurance or face a fine as much as $3000 per employee. The policy has raised concerns that companies would downsize their workforce or cut workers’ hours in order to dodge the new mandate.
The Obama Administration has announced that this provision was delayed so officials could simplify reporting requirements and give employers ample time to adjust their health care coverage.
The postponement does not affect other central provisions of the law, including the individual mandate or the establishment of the health insurance marketplaces, known as Exchanges, which are both still set to go into effect in January 2014.
Formal guidance is expected to be released this week. The Obama Administration has said that once the formal guidance is release they will work with employers to encourage them to voluntarily implement this information in 2014 to allow for a smoother transition into 2015.
If you currently have an individual health insurance plan, you will be in for a big change when you sign up for your coverage in 2014.
Approximately 50% of the individual health plans that are currently being sold in the marketplace do not meet the standards of Obamacare to be sold in 2014. The reason for this is because the Affordable Care Act (ACA) sets new minimums for the basic coverage every individual health care plan must provide effective on renewals on or after January 1, 2014.
About 15 million Americans (or about 6% of non-elderly adults) currently have coverage in the individual health market. Beginning in the fall of 2013, they will be able to shop for and enroll in health insurance through state-based exchanges (aka SHOP or The Exchange) with coverage taking effect in January. By 2016, it is projected that around 24 million people will get their insurance through the exchanges, while another 12 million will continue to obtain individual coverage outside of the exchange.
Beginning in 2014, nearly all plans, both group and individual, will be required to cover an array of “essential” services regardless of if they are purchased within the exchange or not. These “essential” services will include medication, maternity, and mental health care. Many individual plans do not currently offer these benefits.
What will happen to the plans that do not meet the new minimum standards? They will more than likely disappear and you will not be allowed to renew your existing coverage on the plan you currently have. A handful of existing plans will be grandfathered in, but the qualifying criteria for a grandfathered plan is hard to meet. In order for your existing individual plan to be considered “grandfathered”, (1) you have to have been enrolled on this plan before the ACA was passed in 2010 and (2) the plan has to have maintained fairly steady co-pay, deductible and coverage rates until now.
Many insurers in the individual marketplace have already acknowledged that the majority of their existing individual plans do not meet Obamacare standards for 2014 and they are currently working to ready new product lineups for 2014.
In the future, consumers buying individual plans will be able to choose between four levels of coverage: platinum, gold, silver, and bronze.
Platinum plans will carry the highest premiums but will offer the lowest out of pocket expenses, with enrollees paying no more than 10%, on average. At the other end of the spectrum are the bronze plans, which will have the lowest monthly premiums but will have higher deductibles and copayments totaling up to 40% of the out of pocket costs on average.
Starting also in 2014, all Americans will be required to carry health care coverage or face fines. Those penalties will start at $95 per adult or 1% of the adjusted family income, whichever is greater, and will escalate in later years.
Individuals will annual incomes of up to 400% of the poverty line (or roughly $45,000 for an individual and about $92,000 for a family of four) will get federal subsidies to help defray the premium costs.
Most individual plans sold next year, even the lowest level bronze plans, are likely to charge higher premiums than today’s most “bare-bones” individual insurance plans. Many consumers feel the costs will be offset by having lower out of pocket costs and more comprehensive coverage than their current “bare-bones” plan offers.
In today’s marketplace, with deductibles of $10,000, an individual can buy a policy and then when they get sick, they may go broke because the policy leaves them with such a high level of out of pocket expenses to pay. Many insurance industry experts feel, however, that consumers may now wind up with more coverage–and higher monthly costs– than they want. As a result, some individuals may just choose to simply pay the fine instead of obtaining health insurance coverage they will not use or can not afford.
Proposed guidance on the 90 day waiting period limit that was set in place by the Affordable Care Act (ACA) was issued on March 21, 2013 by the Department of Labor, Health & Human Services, and the Treasury (the “Departments”). This rule will apply to plan years beginning on or after January 1, 2014.
The 90 day limit set under Health Care Reform prevents an eligible employee or dependent from having to wait more than 90 days before coverage under a group health plan becomes effective. All calendar days (including weekends and holidays) are counted when determining what date the employee has satisfied the 90 day probationary period.
The Departments have confirmed that there is no de minimis exception for the difference between 90 days and 3 months. Therefore, plans with a 3 month waiting period in their group benefit contracts (including the Section 125 plan document) will need to make sure these are amended for the 2014 plan year. In addition, plans with a waiting period in which coverage begins on the first day of the month immediately following 90 days will also need to be amended as coverage can not begin any later than the 90th day. Employers who prefer to use a first day of the month starting date for coverage rather than a date sometime mid-month should consider implementing a 60 day waiting period instead. If an employer runs into an instance where an employee is in the middle of their waiting period when the regulations become effective (on the group’s renewal anniversary date on or following January 1, 2014), the waiting period for the employee may need to be shortened if it would exceed the 90 days.
Caution: Employers sponsoring a group health plan should also be mindful of the rules under the employer “pay or play” mandate. The 90 day limit on waiting periods offers slightly more flexibility than the employer mandate. For instance, if an employer’s health plan provides employees will become eligible for coverage 90 days after obtaining a pilot’s license, that requirement would comply with the 90 day limit on waiting periods. However, the same employer could be liable under the employer mandate for failing to provide coverage to a full time employee within 3 months of their date of hire. So, employers sponsoring a group health plan should confirm that any plan eligibility criteria aligns with both the employer mandate and the 90 day limit on waiting periods.
The Departments have also announced that HIPAA Certificates of Creditable Coverage will be phased out by 2015. Plans will not be permitted to impose any pre-existing condition exclusions effective for plan years beginning on or after January 1, 2014. This provision is also in effect for enrollees who are under age 19. Plan sponsors must continue to provide Certificates through December 31, 2014 since individuals enrolling in plans with plan years beginning later than January 1 may still be subject to pre-existing condition exclusions up through 2014.