Under the Patient Protection and Affordable Care Act (PPACA), beginning in 2015, certain large employers who do not offer affordable health insurance that provides minimum value to their full-time employees may be subject to significant penalties.
In a nutshell, in 2015, “applicable large employers” will be subject to an annualized employer “shared responsibility” penalty of $2,000 (indexed) per full-time employee (minus the first 80 full-time employees in 2015) if the employer does not offer health insurance to at least 70% of their full-time employees and their dependents. This amount will be increase from 70% to 95% after 2015. This is commonly referred to as the “Pay or Play” penalty.
Even if an applicable large employer offers insurance coverage to full-time employees, the employer still could be subject to an annualized penalty of $3,000 (indexed) per employee who receives an Exchange subsidy if the offered employer-sponsored health coverage does not meet minimum value standards or is not affordable. This $3000 penalty is capped at the amount that would apply if the $2,000 penalty described above were to apply.
What should an employer do now to prepare for these penalties?
(A) Determine if they are an “applicable large employer” -To do this, employers should count both full-time employees and part-time employee hours as follows:
1) Count the full-time employees for each month in the prior year.
2) Count the full-time equivalents for each month in the prior year.
a) Add total hours for non-full-time employees but count no more than 120 hours per month for any one non-full-time employee.
b) Divide the number obtained in (a) by 120. This is the full-time equivalent number.
3) Add the numbers obtained in (1) and (2) above (i.e., the full-time employee and full-time equivalent numbers) for each month.
4) Add the 12 sums obtained in (3) and divide by 12. This is the average number of full-time employees and full-time equivalents.
5) If this number obtained in (4) is under 50 (or under 100 for the 2015 determination for certain employers), the employer is not an applicable large employer for the year being determined.
Note: The applicable large employer is determined on a controlled group basis. For example, if there are three companies, each of which is wholly owned by the same parent company, the companies are all considered one employer for this calculation. Also note that, special transition rules apply in determining applicable large employer status for 2015 and that a special seasonal employee exception may apply even if the threshold in (5) is exceeded.
(B) If an employer will be an applicable large employer in 2015, it should determine whether it could be subject to penalties in 2015. For example, the employer should review its group health plan to determine if the insurance coverage is “offered” to full-time employees meets minimum value standards and is considered affordable to employees.
© An employer also will need to address how it will determine the full-time status of employees – will it use the “monthly measurement period” or the “look back measurement period.” This is particularly important for employers who have many variable-hour employees or seasonal employees.
(D) If the employer’s group health plan does not meet the threshold tests to avoid the penalties noted above, the employer should evaluate whether it wants to restructure its health care offerings or pay the penalties (which are non-deductible).
(E) Finally, employers should review their data collection procedures to ensure that they will be able to report the healthcare information required to be reported for 2015 (the actual reporting will occur in 2016 for the 2015 calendar year). Insurers, sponsors of self-insured plans, and other entities that provide minimum essential coverage during a calendar year will be required to report certain information to the IRS and to participants. In addition, applicable large employers will be required to report about the coverage they provide to both the IRS and to their employees. Drafts of the IRS forms to be used in reporting this information have recently been published (Form 1095-B, Form 1095-B Transmittal, Form 1095-C, Form 1095-C Transmittal). Employers should review these forms to understand the data that will need to be reported.
It is not too late for employers to take action now to avoid penalties in 2015.
In short, it depends.
Recently, several clients have received their annual premium rebate checks from their group health insurance company and are looking for guidance on the proper use of these funds. Under the Patient Protection and Affordable Care Act (“PPACA”), it requires health insurance companies now operate on specific medical loss ratios (80% for employers with less than 100 employees and 85% for employers with more than 100 lives). If an insurance company does not meet the stated medical loss ratios (MLRs), it is required to rebate part of the premium received back to groups.
Below is a summarized analysis used to determine if an employer can keep the premium rebate in whole or in part:
Plan Assets: The first step is to determine who owns the rebate. In accordance with the DOL’s guidance (Technical Release 2011-04), the portion of the rebate that is attributable to employee contributions is considered a plan asset. Therefore, if employees contributed to the cost of the group medical insurance plan, they are entitled a percentage of the rebate equal to the cost paid by the employees (i.e.- if employees paid 25% of the premiums, they would be entitled to 25% of the rebate). If the employer paid the entire cost of the premium, then no part of the rebate would be attributable to employee contributions permitting the employer to retain the full rebate.
For further guidance on premium rebates or any of the PPACA or ACA requirements for employers, please contact our office.
Starting in 2015, the Affordable Care Act (ACA) requires applicable large employers to offer affordable, minimum value health coverage to their full time employees (and dependents) or pay a penalty. The employer penalty rules are also known as the employer mandate or the “pay or play” rules.
Effective in 2014, affordability of health coverage is used to determine whether an individual is:
On July 24, 2014, the IRS released Revenue Procedure 2014-37 to index the ACA’s affordability percentages for 2015.
For plan years beginning in 2015, an applicable large employer’s health coverage will be considered affordable under the pay or play rules if the employee’s requires contribution to the plan does not exceed 9.56 percent of the employee’s household income for the year. The current affordability percentage for 2014 is 9.5 percent.
Applicable large employers can use one of the IRS’ affordability safe harbors to determine whether their health plans will satisfy the 9.56 percent requirement for 2015 plan years, if requirements for the applicable safe harbor are met.
This adjusted affordability percentage will also be used to determine whether an individual is eligible for a premium tax credit for 2015. Individuals who are eligible for employer-sponsored coverage that is affordable and provides minimum value are not eligible for a premium tax credit in the Exchange.
Also, Revenue Procedure 2014-37 adjusts the affordability percentage for the exemption from the individual mandate for individuals who lack access to affordable minimum essential coverage. For plan years beginning in 2015, coverage is unaffordable for purposes of the individual mandate if it exceeds 8.05 percent of household income.
Employer Mandate
The pay or play rules apply only to applicable large employers. An “applicable large employer” is an employer with, on average, at least 50 full-time employees (including full-time equivalents) during the preceding calendar year. Many applicable large employers will be subject to the pay or play rules starting in 2015. However, applicable large employers with fewer than 100 full-time employees may qualify for an additional year, until 2016, to comply with the employer mandate.
Affordability Determination
The affordability of health coverage is a key point in determining whether an applicable large employers will be subject to a penalty.
For 2014, the ACA provides that an employer’s health coverage is considered affordable if the employee’s required contribution to the plan does not exceed 9.5 percent of the employee’s household income for the taxable year. The ACA provides that, for plan year beginning after 2014, the IRS must adjust the affordability percentage to reflect the excess of the rate of premium growth over the rate of income growth for the preceding calendar year.
As noted above, the IRS has adjusted the affordability percentage for plan years beginning in 2015 to 9.56 percent. The affordability text applies only to the portion of the annual premiums for self-only coverage and does not include any additional cost for family coverage. Also, if an employer offers multiple health coverage options, the affordability test applies to the lowest-cost option that also satisfies the minimum value requirement.
Affordability Safe Harbors
Because an employer generally will not know an employee’s household income, the IRS created three affordability safe harbors that employers may use to determine affordability based on information that is available to them.
The affordability safe harbors are all optional. An employer may choose to use one or more of the affordability safe harbors for all its employees or for any reasonable category of employees, provided it does so on a uniform and consistent basis for all employees in a category.
The affordability safe harbors are:
Individual Mandate
Beginning in 2014, the ACA requires most individuals to obtain acceptable health insurance coverage for themselves and their family members or pay a penalty. This rule is often referred to as the “individual mandate”. Individual may be eligible for an exemption from the penalty in certain circumstances.
Under the ACA, individuals who lack access to affordable minimum essential coverage are exempt from the individual mandate. For purposes of this exemption, coverage is considered affordable for an employee in 2014 if the required contribution for the lowest-cost, self-only coverage does not exceed 8 percent of household income. For family members, coverage is considered affordable in 2014 if the required contribution for the lowest-cost family coverage does not exceed 8 percent of household income. This percentage will be adjusted annually after 2014.
For plan years beginning in 2015, the IRS has increased this percentage from 8 percent to 8.05 percent.
The Department of Health and Human Services (HHS) recently updated the Code Set Rules. The Code Set rules are part of the Health Insurance Portability and Accountability Act’s (HIPPA’s) Administrative Simplification Provisions. These rules create uniform electronic standards for common health plan administrative processes. Requiring health care providers and other stakeholders to use the same data formats for common transactions simplifies certain administrative aspects of providing and paying for health care.
Under the latest rules, self funded employers will need to apply for a Health Plan Identifier (HPID). Most employers will have to apply by November 5, 2014. This number will be used to ensure employers comply with certain Code Set rules requirements.
The Code Set Rules have affected covered entities for a number of years. However, certain aspects of these rules were not enforced in the past. In order to promote efficient health coverage, health care reform includes provisions to ensure health care stakeholders are complying with specific transaction and code set requirements.
Review of the HIPAA Code Set Rules
The final HIPAA Transaction and Code regulations published in August 2000 applied to most health plans as of October 16, 2003. They require covered entities conducting certain transactions electronically to use specific standards and code sets. Covered entities include:
Most of the applicable transactions occur between the health plan and health care providers covering areas like claims submission and payment, eligibility, and authorizations/referrals, however the enrollment and disenrollment transaction process generally involves the employer and the health plan.
New Requirements for a HPID for Self Funded Plans
The Code Set rules require all parties involved in the health care system to use an identifying number. Large group health plans (plans with an annual cost of $5 million or more) need to register for their Health Plan Identifier (HPID) number by November 5, 2014. Small group health plans (plans with an annual cost of less than $5 million) will have an extra year to obtain an HPID. Annual cost is based on paid claims before stop loss recoveries and excluding administrative costs and stop loss premiums.
Insurance carriers will likely apply for the 10-digit HPID number for all of their fully- insured group health plans. Employers will have to apply for their 10-digit HPID for self-funded medical plans. The health plan needs to use the HPID number for any of the standard transactions the Code Set rules cover.
Every health plan considered a covered entity must obtain an HPID. The regulations include delineations of group health plans including Controlling Health Plans (a health plan that controls its own business activities, actions and policies) and Subhealth Plan (a health plan whose business activities, actions or policies are directed by a Controlling Health Plan).
Employers are not really sure how the relationship between controlling health plans and subhealth plans would apply to employer-sponsored health plans and are awaiting further clarification from HHS on this issue.
All health plans, regardless of size, must use their HPIDs in standard transactions by November 7, 2016. A “standard transaction” is a CMS menu of transactions, like a claim payment, that must be coded with an HPID.
Employer must provide information about their organizations and health plans when they register for the HPID electronically. More information on applying for an HPID is available here.
Certification Requirements for Compliance with Standard Transaction Rules
Health plans must also verify with HHS that they comply with the Code Set rules. Health plans have been subject to these rules for almost a decade, however there has been little to no oversight on compliance with the common formats. HHS is now requiring a certification showing that the plan is using the standard formats. Initially, the certification will only be done on a few of the required transactions.
The health plan must first certify that they meet the Code Set requirements for eligibility, claim status and EFT and remittance advice transactions. Plans have two different options to certify they are complying. Both involve having specific vendors certify the plan uses the proper transaction formats. The two options are as follows:
The HIPAA Credential option involves testing the required transactions with at least three trading partners. Those three partners have to represent at least 30% of transactions conducted with providers. If it does not constitute 30%, then the plan must confirm it has successfully traded with at least 25%.
The Phase III Core Seal will require the Controlling Health Plan to test transactions with an authorized testing vendor.
All certifications will be filed with HHS. The first one will be due by December 31, 2015. Health insurance carriers and Third Party Administrators will most likely provide the certifications for employer-sponsored health plans, but employers will still need more details on the filing.
The second certification applies to other transactions the Code Set rules cover. Specifically, the second certification applies to claims information, enrollment, premium payments, claims attachments, and authorizations or referrals. HHS has not issued any guidance on these certifications yet. These second certifications are also due by December 31, 2015. However, because of the lack of specific guidance, it is very likely this due date may be delayed.
Action Plan
To register for an HPID, employers need to take the following steps:
1. Determine when the plan must obtain an HPID
2. If your plan if fully insured, contact your insurance carrier. It appears most insurance carriers will apply for the HPID for fully insured plans.
3. If your plan is self-funded, schedule time over the next several months to register for an HPID for your health plan. The registration is a CMS-managed online application process. The regulations estimate that it will take 20 -30 minutes to complete the application. Sponsors will be directed to an online enumeration system titled: Health Plan and Other Entity Enumeration System (HPOES).
As fall approaches, both state and federal Exchanges created by the Affordable Care Act (ACA) are preparing for potential opportunities and challenges they may face during the 2015 open enrollment period. The start date for the Exchange open enrollment has been delayed by a month, beginning on November 15, 2014, and will run through February 15, 2015. Those desiring coverage beginning January 1, 2015 must enroll by December 15, 2014.
This delay will help to ease some enrollment pressure points, but does not address some of the challenges associated with a new automatic renewal policy. Specifically, the Obama Administration and the Department of Health and Human Services (HHS) just announced a proposed rule to automatically renew existing Exchange health plans and premium subsidies for 2015 that individuals obtained in 2014.
Automatic Renewal Concerns
A key feature of the 2015 open enrollment period is implementation of the automatic renewal system. Consumers who do not return to the www.healthcare.gov website and change their plan or eligibility information will be automatically re-enrolled in their current plan from the previous enrollment period for the 2015 plan year. The overall goal is to relieve pressure on the Exchange website while allowing for roughly 95% of consumers to re-enroll in health plans. However, automatic re-enrollment raises issues with the subsidy programs operated by the Exchanges.
Beginning in 2015, the automatic re-enrollment function is likely to cause issues with consumers that have a different income levels than the previous year. With the automatic re-enrollment feature, most consumers may not report changes in their income, thus creating discrepancies in subsidy distributions. For instance, if someone experiences a decrease in income from the previous year, but the change is not reported due to the automatic re-enrollment, the consumer may not receive subsidies that he/she is eligible for, and vice versa if the consumer’s income increases. With roughly 87% of consumers enrolled in an Exchange plan receiving subsidy tax credits, resolving this issue will be key to the success of the upcoming enrollment period.
In addition, reports continue to surface that the IRS has not been able to document the reported income for several million Americans who enrolled an Exchange plan for the 2014 plan year. Therefore, hundreds of thousands of individuals may end up receiving subsidies for two different plan years, which they might not qualify for resulting in an unexpected tax burden, interest and penalties.
Open Enrollment Period Delayed
Despite the issues plaguing the Exchanges, a recent change in the date of the 2015 open-enrollment period may help alleviate some of the future website and enrollment strains. This spring, the Obama Administration announced a month-long extension of the 2015 open enrollment period until February 15, 2015. An initial delay was announced last fall that pushed back the start date from October 15 to November 15, 2014. As a result of these changes, insurance companies will benefit from the delay, consumers will have more time to enroll in an Exchange plan, and websites hope to have fewer technical and administrative hiccups. However, some have expressed concerns that the White House continues to make up the rules as they go along which violates normal regulatory protocols associated with a statutory-based initiatives like the ACA.
While the Exchanges prepare for the new open enrollment season, some problems from the previous open enrollment likely remain unresolved. As widely reported earlier, both www.healthcare.gov and its state-level Exchanges experienced a slew of technical issues and glitches in the 2014 open enrollment that hampered enrollment and significantly increased the wait time for enrollment activation for many.
Verifying Income Levels
Other technical issues have hampered enrollment, such as the lack of oversight in filling out applications on the Exchange websites. The delay in www.healthcare.gov’s verification requirement has led to chaos in the federal Exchange, as well as in states that use the federal Exchange, by implementing an “honor system” where individuals self-report their income without having to provide proof. As a result, HHS and the IRS must verify the incomes of a backlog of roughly 2 million individuals for federal subsidy eligibility.
AAG will continue tracking and reporting on key health care reform changes that will affect employers and individuals alike.
In the recent U.S. Supreme Court’s ruling in Burwell vs. Hobby Lobby, it was ruled that closely held for-profit companies have the right to refuse to offer insurance coverage for specific birth control methods if they conflict with the owner’s religious beliefs. Many benefits attorneys expect the impact of this ruling to limited for employers—despite what some political reps might suggest.
The June 30, 2014 ruling pertains to the Affordable Care Act (ACA) mandate that employers who provide medical coverage to employees must provide contraceptive coverage to female full-time employees with no cost-sharing. The U.S. Department of Health and Human Services (HHS) regulations had set forth an expansive interpretation of contraceptive coverage, including so-called “morning-after pills” and intrauterine devices (IUDs).
The ruling was limited to closely held companies (those with a limited number of shareholders) whose owners hold sincere religious beliefs, such as the firms that sued HHS in this case: Hobby Lobby, an arts and crafts chain that says it is run on biblical principles, and Conestoga Wood Specialties, a Pennsylvania cabinet-making company owned by a Mennonite family.
Few Employers Affected
“The Hobby Lobby ruling has a direct impact on a relatively small number of employers—as a percentage of total employers across the country there are very few that can be considered faith-based employers,” advised a recent alert from a law firm.
“Employers who do not have objections to the mandate are most likely able to continue with their plans without any changes merely because of this decision,” concurred another benefits attorney. “Employers who wish to take advantage of the ruling may want to amend their plans in order to make them clear about what is and is not covered.”
Why have there been apparently overwrought reactions to the ruling? Supreme Court decisions implicating any of the Affordable Care Act’s provisions are routinely used both by proponents and opponents of the act as evidence of the correctness of their position. Their positions are then picked up by and amplified in media coverage, often resulting in confusion on the part of the public.
Contraceptives Only
The opinion “seemed to limit itself to the contraceptive mandate only, likely quelling the concerns of many who argued a broader decision may put in jeopardy other items typically covered under group plans, such as vaccinations and blood transfusions,” according to a post by attorneys at Fisher & Phillips. In addition, the court warned that its decision should not be interpreted to provide a shield to employers to cover up illegal discrimination under the appearance of claimed religious beliefs (for example, companies claiming to object, on religious grounds, to same-sex marriage).
This decision on contraceptives likely will not seem to extend to larger corporations with diverse ownership interests. The court noted the difficulty of determining the religious beliefs of, for example, a large publicly traded corporation, and pointed out that the corporations in this case were all closely held corporations, each owned and controlled by a single family, with undisputed sincere religious beliefs.
Attorneys expect that “there may be relatively few employers that fit the exemption created by the court’s decision,” and that “HHS will likely draft new regulations to comply with [the] decision, and it remains to be seen whether new plaintiffs will challenge the contraception requirements or other requirements under the ACA on similar grounds.”
The Administration’s Options
The Supreme Court decision cited the federal Religious Freedom Restoration Act (RFRA) requirement that any laws that substantially burden a person’s exercise of religion must be justified by a compelling governmental interest and be the least restrictive approach to furthering the governmental interest. The majority opinion, written by Justice Samuel Alito and signed by three other justices, suggested that one “least restrictive” approach would be for the government to directly pay for contraceptives when an employer has religious objections to providing them.
A concurring opinion by Justice Anthony Kennedy suggested that the administration extend an accommodation already made available to religiously affiliated nonprofit organizations more broadly to private employers who claim that purchasing insurance that covers contraception, or certain types of contraception, would violate their religious beliefs.
The Hobby Lobby decision should stand as a reminder that while there may be differences of opinion about specific rules and requirements under the ACA, and some of those differences may be decided against the government, the law itself is not going away. Employers need to continue to monitor new developments and implement strategies for complying with the ACA.
Many employers originally thought they could shift health costs to the government by sending their employees to a health insurance Exchange/Marketplace with a tax-free contribution of cash to help pay premiums, but the Obama administration has squashed this idea in a new ruling. Such arrangements do not satisfy requirements under the Affordable Care Act (ACA), the Obama administration said, and employers could now be subject to a tax penalty of $100 a day — or $36,500 a year — for each employee who goes into the individual Marketplace/Exchange for health coverage.
The ruling this month, by the Internal Revenue Service, prevents any “dumping” of employees into the exchanges by employers.
Under a main provision in the health care law, employers with 50 or more employees are required to offer health coverage to full-time workers, or else the employer may be subject to penalties.
Many employers had concluded that it would be cheaper to provide each employee with a lump sum of money to buy insurance on an exchange, instead of providing employer-sponsored health coverage directly to employees as they had in the past.
But the Obama administration has now raised objections in an authoritative Q&A document recently released by the IRS, in consultation with other agencies.
The health law, known as the Affordable Care Act (ACA), was intended to build on the current system of employer-based health insurance. The administration wants employers to continue to provide coverage to workers and their families and do not see the introduction of ACA as an eventual erosion of employer provided coverage.
Employer contributions to sponsored health coverage, which averages more than $5,000 a year per employee, are not counted as taxable income to workers. But the IRS has said employers could not meet their obligations under ACA by simply reimbursing employees for some or all of their premium costs from the marketplace/exchange.
Christopher E. Condeluci, a former tax and benefits counsel to the Senate Finance Committee, said the recent IRS ruling was significant because it made clear that “an employee cannot use tax-free contributions from an employer to purchase an insurance policy sold in the individual health insurance market, inside or outside an exchange.”
If an employer wants to help employees buy insurance on their own, Condeluci said, they can give the employee higher pay, in the form of taxable wages. But in such cases, he said, the employer and the employee would owe payroll taxes on those wages, and the change could be viewed by workers as reducing a valuable benefit.
A tax partner from a large accounting firm has also said the ruling could disrupt reimbursement arrangements used in many industries.
For decades, many employers have been assisting employees by reimbursing them for health insurance premiums and out-of-pocket costs associated with their health coverage. The new federal ruling eliminates many of those arrangements, commonly known as Health Reimbursement Arrangements (HRAs) or employer payment plans, by imposing an unusually punitive penalty. The IRS has said that these employer payment plans are considered to be group health plans, but they do not satisfy requirements of the Affordable Care Act for health coverage.
Under the law, insurers may not impose annual limits on the dollar amount of benefits for any individual, and they must provide certain preventive services, like mammograms and colon cancer screenings, without co-payments or other charges.
But the administration has said that employer payment plans or HRAs do not meet these requirements.
This ruling was released as the Obama administration rushed to provide guidance to employers and insurers who are beginning to review coverage options for 2015.
The Department of Health and Human Services said it would provide financial assistance to certain insurers that experience unexpected financial losses this year. Administration officials hope the payments will stabilize medical premiums and prevent rate increases that are associated with the required policy changes as a result of ACA.
Republicans want to block these payments, however, as they see them as a bailout for insurance companies who originally supported the president’s health care law.
Stay tuned for more updates on ACA as they are released. Should you have any questions, please do not hesitate to contact our office.
If you are interested in signing up for medical coverage through the Marketplace, please note that you only have until the end of the open enrollment period (March 31, 2014) to sign up for coverage effective either April 1, 2014 or May 1, 2014. The effective date of your coverage in the Marketplace depends on when your application is submitted and processed.
The only way you will be able to enroll in a Marketplace medical plan outside of the open enrollment period is if you qualify for a “special enrollment” due to a qualifying event. A qualifying event is a change in your life that would make you eligible to sign up for coverage outside of open enrollment such as a marriage, divorce, birth or adoption, moving to a new state, loss of employment or loss of coverage due to changes in employment, etc. With employer based medical coverage, you typically have 30 days from the date of the qualifying event to enroll or make changes to your coverage due to a qualifying event, but the Marketplace allows you 60 days from the qualifying event to make changes.
You can enroll on either Medicaid or the Children’s Health Insurance Program (CHIP) at any time during the year as there is no limited open enrollment periods for these programs. You only need to qualify for these programs to be eligible. You can either complete a Marketplace application to find out if you are eligible for either program or contact your state agencies for further information.
The tentative next open enrollment dates for the Marketplace are November 15, 2014 through January 15, 2015, however please note that these dates are subject to change.
Did you know that some of the major insurance carriers have revised their requirements on small group medical insurance regarding employee participation and employer contribution?
One major carrier offers 5 group medical plans in Florida for employers (with 2-100 employees) that lowers the required employer contribution to the lesser of 25% of the employee medical premium or $50 per employee. Additionally, they also only require 50% employee participation on any of these 5 plans.
Currently most major medical carriers require the employer to contribute 50% towards the cost of the employee premium and the group must maintain 75% employee participation (this does not include any eligible employees who can provide proof of valid coverage elsewhere).
Another national medical insurance carrier just lowered their employee participation requirements for all small group medical plans in Florida. This is valid only for new business with 2-50 eligible employees, but it does apply to all of their small business medical plans offered. Any existing small group clients with this carrier are still subject to the 75% participation requirement currently.
If you would like more information on any of the plans offered, please contact our office for more information.
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.