What Employers Need to Know About the Affordable Care Act (ACA)
While the deadline for most companies to inform employees about the new Health Insurance Marketplace came in October 2013, the implementation will not be effective for businesses until January 2015. 2014 is therefore the year to set up the right strategy for the health care benefits your company offers employees.
What Does the Company Need to Tell Employees?
Under the health care law, many employers must notify their employees about the Health Insurance Marketplace by October 1, 2013. If a company is covered by the Fair Labor Standards Act, written notice to employees must be provided informing them: – About the Health Insurance Marketplace – That, depending on any coverage the company offers, employees may be able to get lower costs on private insurance in the Marketplace based on their income – That if employees buy insurance through the Marketplace, they may lose the employer contribution (if any) to their health benefits
Small Businesses have 50 or Fewer Employees
Businesses with 50 or fewer full-time equivalent (FTE) employees are not required to provide insurance to employees. That said, companies in this size range can use the Small Business Health Options Program (SHOP) to offer coverage to their employees. The employer controls the coverage offered and how much is paid toward premium costs. Health coverage through SHOP should open by November 2014, for coverage that takes effect in January 2015, according to the New York Times, who reported that the marketplace “is still the most important provision in the Affordable Care Act for small businesses,” as it can offer “the most competitive combination of price and quality” stated John C. Arensmeyer, the chief executive of Small Business Majority, an advocacy group.
Large Business have Over 50 Full Time Equivalent Employees
If your business has over 50 employees, you are considered a “large business”. Large businesses generally won’t be able to use the SHOP Marketplace to offer health insurance right away; starting in 2016 however all SHOPs will be open to employers with up to 100 FTEs.
Shared Responsibility for Large Businesses
The Employer Shared Responsibility Payment is a new requirement under the Affordable Care Act that will apply to some larger employers in 2015. Large businesses will be effected who don’t offer insurance that meets certain minimum standards, or who have at least 1 full-time employee who could get lower costs on their monthly premiums through the Marketplace. Employees won’t be able to save money on monthly premiums in the Marketplace if the coverage you offer your full-time employees in 2015 is affordable and meets minimum value. If an employee’s share of the premium costs for employee-only coverage is more than 9.5% of their yearly household income, the coverage is not considered affordable. A health plan meets minimum value if the plan’s share of the total costs of covered services is at least 60%. (Try the Kaiser Family Foundation Subsidy Calculator at the end of this article to calculate the Premium Assistance for Coverage in Exchanges.)
How much is the Employer Shared Responsibility Payment?
The amount of the annual Employer Shared Responsibility Payment is based partly on whether you offer insurance. If you don’t offer insurance, the annual payment is $2000 per full-time employee (excluding the first 30 employees). If you do offer insurance, but the insurance doesn’t meet the minimum requirements, the annual payment is $3000 per full-time employee who qualifies for premium savings in the Marketplace. Unlike employer contributions to employee premiums, the Employer Shared Responsibility Payment is not tax deductible. The Internal Revenue Service has more information about the Employer Shared Responsibility Payment.
Is it Worth Trying to Circumvent the ACA?
There has been a lot of talk (hype) about employers cutting employee hours such that they are part-time in order to avoid the ACA. If you have a business that can attract and retain motivated talent under such conditions, well, that is a judgment call I won’t make. However most companies rely on motivated talent, and health care coverage is a minimum requirement for most high tech employees.
Polls show that Americans may be confused about the health care laws but overall are in favor of the main provisions. Embracing the letter and the spirit of the law will allow companies to provide compelling health care coverage to employees fostering employee loyalty and investment in the company.
Obamacare v Affordable Care Act
Just for fun!
Resources:
Employers Should Carefully Consider Their ACA Strategies
HealthCare.gov
https://www.healthcare.gov/businesses/
United States Department of Labor
http://www.dol.gov/ebsa/healthreform/