OBAMACARE & YOUR BUSINESS
Many business owners have specific questions about Obamacare and how it will affect their company. Avitus Group is the authority on the PPACA (Patient Protection and Affordable Care Act), otherwise known as Obamacare. We're helping thousands of businesses develop a strategy to maintain and improve the health of their business during this transition. Send your questions to the experts at Avitus Group, and we'll get back to you right away.
A 360 Degree View of Obamacare / PPACA
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About the PPACA
Businesses will be measured in 2013 to determine if they will be required to provide healthcare in 2014. Beginning in 2014, employers that employ an average of 50 full-time equivalent employees during the 2013 calendar year must offer health coverage that meets minimum essential coverage requirements or pay a fine.
Employer Size Calculation
Companies fall into one of two categories: a) Companies with fewer than 50 employees b) Companies with 50 or more employees. This is a big and often confusing issue for employers because part time employees enter into the equation. Ask us about our COMPLIMENTARY EMPLOYER SIZE CALCULATION and we'll do the calculations for you. This is a benefit available to any of our members. It is also an offer we're extending to ALL businesses for a limited time.
Strategic Planning for 2014
If your business is considered a large employer, you will be required to offer coverage to FTEs (full time employees) only. You may offer coverage to everyone if you want. FTE status will depend on expected hours for new hires and a portion of actual work history for existing employees on 12/31/13. In these changing times, Avitus Group Strategic Planning can help your company create a clear, measurable plan. Strategic planning helps you learn from the past, understand the present and KNOW the future!
An employer with fewer than 50 employees can choose not to provide coverage. There is no penalty to the employer. However, all employees of the business are mandated to have their own coverage. These employees can shop for insurance at an exchange. A health insurance exchange is a set of government-regulated and standardized health care plans in the United States from which individuals may purchase health insurance eligible for federal subsidies. All exchanges must be fully certified and operational by January 1, 2014 under federal law. Exchanges will be established for each state, either by the state itself or by the federal government.
If you are a large employer and decide not to offer coverage, the penalty is $2,000 per full time employee in excess of the first 30 full time employees. So, if your business has 75 full time employees, and you do not offer coverage, and at least one of your employees secures individual coverage and qualifies for a premium subsidy, then you would pay the $2,000 penalty on 45 of your employees (75 total less the 30 exempt). If you have 25 part time employees in addition, your penalty does not increase because you are not required to offer coverage to part time employees.
If you are an individual or family with with an annual income between $9,500 and $37,000, the penalty for not having health insurance will grow from $95 per person per year in 2014 to $695 per person per year in 2016. The penalty may be more depending on household income. For larger income families, the penalties are greater. In 2016, you may expect a $4,700 per family penalty per year for a $200,000 annual income family.
If you are required to provide insurance to your employees, the rules are:
1. The employee share of the
premium (for single coverage only) should not exceed 9.5% of the
employee household income. Sharing ratios that cause employee cost
to exceed this limit or that do not cover 60% of the premium allow
the employee to elect out of your coverage and get coverage
individually with subsidies, subjecting you to penalties of up to
$3,000 per subsidized employee if you are a large employer. There
is a safe harbor of 9.5% of the employee W-2 Box 1 wages, since
most employers will not know their employee's household
2. If you have more than 200 full time employee equivilants, you are required to auto-enroll all new employees in your plan.
3. If you are small enough (fewer than 25 full time employee equivilants) and your employees meet the salary requirements (average salary less than $50,000 per year), you can claim a credit for up to 35% of your share of health premiums.
4. The plan must be a large or small group plan offered within your state. Some question still exists if self-insured plans will qualify or not, but self-insured plans already in place and grandfathered should continue to qualify.
5. A standard Summary of Benefits and Coverage disclosure must to be given to eligible employees during open enrollment periods. We expect insurance companies to provide these. As with all required disclosures, penalties apply for non-compliance.
6. New annual reporting requirements must be followed - essentially, new "super-1099's". Most, if not all, required information will come from your insurance carrier.
7. If you are a large employer, you are required to offer coverage to full time employees only. You may offer coverage to everyone if you want. Full time employee status will depend on expected hours for new hires and a portion of actual work history for existing employees at 12/31/13.
All employers must provide a prescribed benefit notice on March 1, 2013 and to every new employee thereafter. The notice will:
1. Inform the employee of the
existence of a state insurance exchange. (Every state will have its
own exchange and its own insurance carriers and plans. States like
Montana, which refuse to build the exchanges, will have one built
by the federal government, but every individual will go to the
exchange for their state.)
2. Include a description of the services provided by the exchange.
3. Explain how the employee may contact the exchange to request assistance.
4. State that if the employer is paying for less than 60% of the plan costs for benefits provided under the plan, the employee may be eligible for a premium assistance credit and a cost-sharing-reduction subsidy if the employee purchases a qualified health plan in the individual market through the exchange.
5. State that if the employee purchases a qualified health plan in the individual market through the exchange, the employee may lose any employer contribution to any health benefits plan offered by the employer and that all or a portion of the contribution may be excluded from income for U.S. income tax purposes. We expect the Department of Health and Human Services to provide a report template for employers to use.