The Affordable Care Act: Employer Checklist for 2013 and Beyond
UPDATE: THIS ARTICLE WAS WRITTEN PRIOR TO THE HEALTH INSURANCE MANDATE BEING DELAYED UNTIL 2016 FOR SELECT EMPLOYERS. READ ENA’S MOST RECENT ACA ALERT HERE.
The Affordable Care Act (“ACA”) has a number of upcoming requirements that must be addressed in the very near feature. This article will address those that employers must address in 2013, 2014 and beyond. Expect that as additional regulations and guidance are issued, employers will need to make modifications and adjustments.
Health Insurance Exchange-Notice
- Disclosures must be made at the time of hire for new employees or by March 1, 2013, for current employees.
- Wisconsin will not set up a health insurance exchange, but will instead participate in the federal exchange.
- Employers must make three disclosures about the federal exchange:
- Inform employees of the existence of the exchange, the services provided by the exchange and how the employee may contact or access the exchange.
- Inform employees of whether the employer’s offered plan covers 60% of the costs for care. If the plan does not, the employer must further inform employees that they may be eligible for a premium subsidy or a cost-sharing reduction by purchasing coverage on the exchange.
- Inform employees that if they purchase coverage on the exchange, they will lose any available employer contribution for employer-sponsored health coverage.
Health Insurance Exchange-Implementation
- Beginning in 2014, small businesses (fewer than 100 employees) can shop in an Affordable Insurance Exchange, which is a new marketplace where individuals and small businesses can buy affordable, qualified health benefit plans.
- Exchanges must offer a choice of plans that meet certain benefits and cost standards.
- Administrative costs are predicted to be lower than today because individuals and small businesses will be able to pool together.
- Limits on insurance rating, such as no more rating based on employees’ health status or gender, should lower premiums for many small businesses.
- The small business tax credits (for small businesses with less than 25 employees) and the new competition promoted by the Exchanges are intended to help keep the cost of insurance down.
Medicare and FICA payroll tax
- Increase for highly compensated individuals ($250,000 families/$200,000 individuals).
- Medicare tax rate will increase from 1.45% to 2.35%.
- Takes effect in 2014.
90-Day Limitation on Waiting Periods
- For plan years beginning on or after January 1, 2014, a group health plan or group health insurance issuer shall not apply any waiting period that exceeds 90 days.
- A waiting period is defined as the period that must pass before the individual is eligible to be covered for benefits under the terms of the plan.
- Does not distinguish between full-time and part-time employees.
- Employers must automatically enroll new full-time employees in one of the employer’s health benefits plans (subject to any waiting period authorized by law) and continue the enrollment of current employees in a health benefits plan offered through the employer.
- Requires adequate notice and the opportunity for an employee to opt out of any coverage in which the employee was automatically enrolled.
- Applies to an employer with 200 or more full-time employees.
“Play or Pay” Requirement
- “Applicable large employers,” i.e. 50 or more full-time employees (FTEs), beginning in 2015 must offer coverage to FTE and their dependents, or pay a penalty.
- Full-time is defined as 30 hours per week.
- Fine is $2000 or $3000 per employee, excluding the first 30 employees from calculation.
- Penalty assessed annually for each FTE and is assessed for any month that any FTE is certified to receive a premium tax credit or cost-sharing reduction for coverage purchased through an Exchange if:
- Employer failed to offer minimum essential coverage through eligible employer-sponsored health plan, (highest penalty) or;
- Employer offers minimum essential coverage, but it is either unaffordable (i.e., employee contribution >9.5% of their household income), or does not provide “minimum value” (i.e. health plan’s share of health care expenses is < 60% of total covered health care costs) (lower penalty).
- Policy regarding “household” income.
- The Treasury and IRS have described a proposed safe harbor allowing employers to use an employee’s Form W-2 wages instead of household income in determining whether coverage offered is affordable.
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