How to Comply with the ACA
Employers of all sizes must comply with the Affordable Care Act even though for many businesses, compliance might be hard to understand. Small businesses may benefit from some of the incentives built into the act such as access to the broad health insurance market place and the exemptions that can be found in the act. Only large businesses (with 50 or more full-time equivalent employees) are required to offer health insurance or pay a penalty. The law has phased in over the last years, and the employer mandate affecting large businesses has just come into effect in 2015.
If your business already offers a health insurance plan considered a “Qualified Health Plan” that meets minimal ACA standards, your business will not have to make changes. Your employees may opt to find their own private plans. You are not required to contribute to their premiums if they decide to do so.
All large employers are required to provide their employees with a detailed summary of benefits for the plans they offer, in order to allow employees to compare their company-provided benefits with those they can get on a plan of their own, should they opt to select one. If the employer fails to provide this benefits form there can be a non-compliance penalty.
Smaller employers (less than 25 full-time employees) may be eligible for a small business health care tax credit. The credit can be worth up to 50% of the employer’s contribution to employees’ health insurance premium. To qualify for the credit, the employer must pay at least half of their employees’ total health insurance premium costs and pay average annual wages of $50,000.
Regardless of company size, employees eligible for employee-sponsored coverage must not be made to wait more than 90 days before coverage begins.
Beginning this year, small businesses will have to report certain health care expenditures on their employees’ W-2 forms. If the business provides self-insured health coverage to employees, a report will have to be sent to the IRS containing particular information for each employee covered.
Personal and Employer Mandates:
The main provision of the Affordable Care Act legislation is the Federal Government’s drive to make health insurance as universal as possible. The more widely distributed healthcare coverage is in the population, the lower will be health care premiums and the better the American health insurance system will function. Under the personal mandate, all Americans will be obligated to obtain health insurance or pay a substantial penalty. Under the employer mandate, large businesses will be obligated to provide the option of employer sponsored health care insurance, but allow their employees to seek their own plans.
Penalties for Failure to Offer Healthcare Coverage:
The rules and penalties do get a little complicated because of the Government’s efforts to negotiate through a minefield of objections. Large employers who do not offer coverage for their full-time employees will face a penalty of $2,000 for each full-time employee (after the first 30 employees) not covered. If the employee coverage offered is “unaffordable” for their employees or does not provide at least “minimum value” coverage, the employers face a penalty of $3,000 for each full-time employee who receives a premium tax credit or subsidy for exchange coverage (not to exceed $2,000 for each full-time employee past the first 30).
The Responsibility of Healthcare Insurers:
Most of the weight of the Affordable Care Act falls on the shoulders of the health insurance companies who must accept all applicants for health insurance regardless of risk, and guarantee not to discontinue coverage except in exceptional cases of fraud or malfeasance. All offered health insurance plans must guarantee a certain level of coverage in quality and extent.
Surmount’s HRM system includes built-in coding to ensure compliance with the ACA reporting requirements. Please contact us to find out more.