Affordable Care Act large group
By Hubie Laugharn
Below is a bullet point list of the most important aspects of the Affordable Care Act for large employer groups over 50 employees.
This is what we know as of 2-18-13
- Starting Jan. 1, 2014 or a company’s open enrollment for 2014.
- The Employer Shared Responsibility provisions apply to an employer with 51 or more employees. Employer will be required to offer healthcare insurance to all full-time employees or pay a tax/fine (Pay or Play).
- Play: an employer must offer a minimum of the Bronze plan and contribute toward the premium of the employee so the employee does not pay more than 9.5% of their wage. If the employer complies with both the “minimum value” and the “minimum employer’s contribution” 9.5%, the employer cannot be taxed/fined, if an employee goes to the exchange for financial help!
- Play: Plans must cover minimum benefit package: The “Medal” plans: Bronze, Silver, Gold, and Platinum. Bronze / 60% plan (least expensive) individuals will be responsible for 40% of the medical cost. Silver / 70% plan, the insured will be responsible for 30% of the medical cost. Gold / 80% plan and the Platinum / 90% plan.
- Pay: if an employer does not offer healthcare insurance and no employee receives assistance from the exchange, there is No Tax/Fine.
- Pay: if an employer does not offer healthcare insurance but one employee gets assistance from the exchange, the employer will pay $2,000 per employee excluding the first 30 employees.
- Pay: if the employer offers healthcare insurance, but their plans are not equivalent to the minimum Bronze plan or the premium paid by the employee exceeds 9.5% of their pay, and one employee gets assistance from the exchange, the tax/fine will be $3,000 per employee getting financial help from the exchange. However, the max tax/fine is the lower of the $2,000 or the $3,000 tax/fine.
- The employer is not taxed/fined for part time employees (29 hrs or less).
- The max deductible on all plans will be $2,000.
- HSA health plans will still be able to continue with their high deductibles over $2,000, however, we feel that they may be deemed “Cadillac” plans and as such, will be taxed 40% starting in 2018. In 2012, the tax for non-prescription drugs was raised from 10% to 20%.
- Increase medical expense deduction from 7.5% to 10% to employees.
- W-2 filing is required after Jan. 31, 2013 for companies that issue more than 250 W-2s annually. The amount of the total premium is divided by the total W-2s issued and entered in the appropriate boxes.
- Must provide notice regarding “Covered California” the name of the exchange in California.
- Max waiting period may not exceed 90 days. 30-60 day waiting period will have a $400 tax/fine.
- Incentives for wellness participation increases to 30% from 20% deductions.
- Special payroll tax of .9% for employees with incomes over $200K.
Affordable Care Act Small Business
By Hubie Laugharn
Is Insurance Required?
There is no law requiring small business owners to provide health insurance, however the Affordable Care Act makes critical changes that small business owners need to know of when deciding if they are going to purchase insurance for their staff. If you do choose to offer coverage, there are regulations you will have to follow—the most important of which we explain here or in person during one of our consultations.
Though large companies may face penalties if they do not offer coverage under the Affordable Care Act, small businesses with fewer than 50 full-time-equivalent employees will not be penalized if they do not provide coverage. If you have at least 50 full-time-equivalent employees but none receive an individual premium tax credit or cost-sharing reductions (both based on income), there’s no penalty—whether or not you offer health insurance.
To learn more about what the Affordable Care Act requires of small business and to find out how penalties are calculated see “Shared Responsibility Requirement.”
Is Your Business Eligible for Group Coverage?
Under California law AB1672, small employers are guaranteed group coverage should they choose to purchase it, regardless of the employees’ health status. A “small employer” is defined as a business with 2 to 50 full-time employees. Owners are generally counted as employees, so sole proprietorships with one employee fall into this category, as do partnerships without any employees (by definition partnerships have two or more partners).
California state law AB1672 says that small employers cannot be denied coverage as long as they:
- Pay their premiums.
- Have been in business longer than two months.
- Offer medical insurance coverage to all eligible full- and part-time employees.
- Comply with insurer requirements regarding employer contribution and employee participation.
- Have not committed fraud against the insurer.
For more information on small business healthcare and employee benefits, call Solana Insurance Services (949) 675-1920.
Solana Insurance Employee Benefits
3700 Newport Blvd. #309
Newport Beach, CA 92663