2014 was a landmark year for the implementation for portions of the Affordable Care Act (ACA). Employers with 100 or more full-time equivalent employees are now subject to the employer mandate and have to start offering affordable, comprehensive coverage or face penalties.
Those employers are working through the complicated process of reporting back to the IRS, which will substantiate that they are meeting all of the requirements.
“That’s what they are struggling with. It’s not necessarily the insurance or the health care part of it, but rather the administrative side of reporting back to the government and ensuring the information is correct,” says Abbe Mitze, account executive II at HealthLink.
That’s why it’s important that your insurance consultant and tax consultant are working together on this, she says.
Smart Business spoke with Mitze about what employers need to know about the ACA legislation in its most current form, and how to stay up to date going forward.
What’s the latest on who has full-time employee status?
Under the ACA, those who work more than an average of 30 hours per week are considered full-time. Previously, an employer could determine what they considered to be a full-time employee, which most put at 40 hours.
Reducing it to 30 hours has expanded the population of full-time employees, therefore, putting additional expenses on large employers who are now required to provide coverage to these employees, when coverage is required. Legislation has been proposed to change that to either 35 or 40 hours. It passed the House in January, and although the Senate hasn’t voted yet, it’s expected to pass. The speculation, however, is that President Barack Obama will veto it.
This — along with some other proposed modifications — is something to continue to keep an eye on with the upcoming 2016 presidential election.
Everything you’ve talked about has to do with employers with 100-plus employees, what about smaller employers?
Employers with 51 to 99 employees were subject to the employer mandate regulations and subsequent fines for not complying, but were given a reprieve until 2016. Many of the eEmployers with less than 50 employees are taking advantage of transitional relief. They get to keep their non-ACA compliant benefit design, and thus continue to avoid community rating, meaning you can’t use health as a factor in determining premiums. Insurance companies will be able to only use age and tobacco use.
In 2016, both groups — those with two to 50 employees and 51 to 99 — will be considered small group and have community rating apply to them. Right now, it’s estimated that community rating could increase costs 30 to 50 percent for healthy employee groups. Because of this, they definitely need to start looking at all the solutions that are available in the market now to prepare. This includes small group self-funding solutions that don’t have to follow community rating.
So, no changes in 2015 are expected?
No, there’s no true expectation that things are going to change.
But there is one other thing looming on the horizon — 2018 is when the Cadillac Tax is slated to begin. That’s when, if your total premium exceeds a certain threshold — $10,200 for individual coverage and $27,500 for family coverage — a 40 percent excise tax is imposed.
How can employers make sure they continue to stay up to date and compliant with the law?
Make sure you have a very consultative insurance broker that will keep you up to date, in addition to using your own media resources. This can be your insurance carrier, your network, your third-party administrator or your broker. All of your partners who help provide the coverage to your employees really play a critical role in helping you navigate this.
You are so focused on your specific business and making sure that it’s successful, it’s critical to have a trusted adviser at your side.
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