The Affordable Care Act brings change for employers in 2016

By Molly A. Thomas, RP®

 

Becoming familiar with the proposed changes to the Affordable Care Act and its rules and regulations will help employers understand how the Affordable Care Act of 2014 will affect how manage health insurance for their employees in 2016.

What will change in 2016? 

Beginning in 2016, businesses with 50-100 employees must offer affordable group health insurance benefits to full-time equivalent (FTE) employees who work an average of 30+ hours a week, or more than 130 hours a month.  (FTE is calculated by averaging part-time and full-time hours worked by each employee.)

What are the rules and penalties?  

Employers with 50+ employees must offer health insurance coverage that is deemed “affordable.”  If the employer-sponsored coverage is deemed unaffordable (costs more than 9.5% of employee-only income), then the employer will be charged a fee.

For employers who provide coverage not meeting minimum-value and affordability requirement, the fee is the lesser of $3,000 (the B penalty) per full-time employee receiving subsidies, and that fee can be no more than $2,000 per full-time employee minus the first 30 (the A penalty maximum).  In general, the fee is only “triggered” if at least one employee purchases a health insurance plan on the marketplace and is eligible for a federal premium subsidy.  Note: These rules only apply for employee coverage and not for dependent coverage.  

What are IRS reporting rules and deadlines? 

The Affordable Care Act also creates new IRS reporting standards (Code Section 6056 and 6055) which requires employers reporting of health coverage provisions if the business employs over 50 full-time equivalent employees.  If a business employs less than 50 fully insured employees, reporting is not required unless the employer has a self-funded plan and then would report coverage under 6055.

The original IRS deadline for 1095-Cs to employees was February 1, 2016. Employers will now have two more months to give individuals forms for reporting on offers of health coverage provided. The Treasury Department announced this extension in a statement issued on December 29, 2015.

When and how can businesses apply? 

Under the Affordable Care Act, small businesses can apply for health insurance coverage any time during the year.  Before shopping for a plan for your business, read the ObamaCare’s small business page http://obamacarefacts.com/obamacare-small-business/ to obtain information to help you find the best insurance for your employees.  Employers looking for health insurance plans can utilize the SHOP (Small Business Health Options) Marketplace https://www.healthcare.gov/small-businesses/), or choose a local insurance agent or broker who can provide the SHOP application and assist with both applying and finding the best health insurance plan for your business needs.

What are the advantages of using the Small Business Health Option (SHOP) Marketplace?

• Employers can control the coverage they offer to employees (multiple carriers).
• Employers can control how much they pay toward employee premiums.
• Employers can deduct from their taxes the rest of the premium costs not covered by the tax credit.
• Tax credits to employers are available for plans purchased through SHOP (Tax Credits are usually applied for two years).
• Employers and their employees will benefit from new protections offered by the Marketplace that limits higher premiums for businesses with older employees and employees with high health care costs.
• The Marketplace limits the administrative costs and the percentage of profits received by the insurance company from employee premiums.
• All of above except offering multiple carriers and tax credits are the same in the general group health market

Albert Einstein said it perfectly: “You have to learn the rules of the game. And then you have to play better than anyone else.”  Employers should utilize insurance agents, accountants, and other professionals who are knowledgeable about the Affordable Care Act and its impact on employer-sponsored group health insurance.

Wishing you, your business, and your employees much success in 2016!

 

Molly A. Thomas, RP® attended Erskine College and graduated from the College of Charleston with a BS in Education in 1981. She joined Abacus in February 2004. In April 2008, Molly received her certificate of completion from Florida State University in Insurance Planning and Risk Management and she was awarded the Registered Para Planner Designation from The College of Financial Planning in 2012. At Abacus, Molly coordinates each client’s insurance coverage including life, health, disability, long term care, property and casualty, commercial and business insurance.