Information For Employers
Beginning in October, 2013, the Health Insurance Exchanges represent the introduction of a new marketplace whereby Americans will be able to purchase health insurance. The primary difference between the exchanges and the markets that exist today will be the availability of government-issued subsidies for individuals and no underwriting for pre-existing conditions. Of utmost importance to employers will be determining which employees qualify for these subsidies, and the degree to which that triggers penalties and impacts communication, contributions and plan design. For certain small employers premium tax credits are available for purchase of group health plans in the Small business Health Options Program (SHOP).
Reducing costs post ACA will require business owners to look inward and ask “What kind of workforce do I employ? What is my annual turn-over rate? Which employees are most likely to buy health insurance? How will that impact my costs? Who will qualify for expanded Medicaid? Who will qualify for a subsidy in the Exchange? How do I notify my employees of their options? These are just some of the questions employers need to be able to answer moving forward.
Arizona Benefit Consultants has developed a behavior-based predictive model based on our knowledge of industry and employee behavior. Our consultants will perform an in-depth analysis of your workforce and make educated predictions as to how they will behave to help gauge your costs. Included in the analysis is a review of your current plan to determine if it meets safe harbor requirements, and provides you with a step-by-step guide as to how to get there.
The $2,000 fine is charged only when a large employer fails to offer coverage and is applicable to all full-time employees minus the first 80 (for 2015 only). If you continue to offer coverage, there is another penalty to worry about, $3,000 per employee in the event your coverage is “unaffordable” or does not meet the “minimum value” requirement. Unlike the $2,000 penalty which is a blanket penalty on all full time employees minus the first 30, the $3,000 penalty is on a case-by-case basis. However you can avoid the $3,000 penalty by simply designing a safe harbor plan that meets the affordability and minimum value requirements.
In order for your medical plan to pass the affordability test, the employee’s share of the premium on the lowest cost option cannot exceed 9.5% of his or her annual household income.
Small business Health Options Program (SHOP)
Similar to the Exchange for individuals, the primary appeal of the SHOP for small employers will be the availability of health insurance premium tax credits – up to 50% of the employer cost for health insurance for employers who meet the following criteria:
- Business must have been established for a minimum of 1 year
- Cannot exceed 25 employees
- Average wage per employee cannot exceed $50,000 a year
*NOTE the following delays announced by Health & Human Services (HHS):
- Until 2015, only one plan will be made available to employers in the SHOP.
- Online enrollment in the single plan option in the SHOP has also been delayed until November 2013.
- Employer Mandate delayed until 2015 for Applicable Large Employers (ALE’s) 100 or more full time employees (FTE’s). ALE’s with more than 50 FTE’s but fewer than 100 FTE’s will have until 2016.
- ALE’s (over 100) will have to offer coverage to at least 70% of FTE’s for 2015 and 95% in 2016 in order to avoid the $2000 penalty.
- For 2015 ONLY ALE’s first 80 employees are exempt from the $2000 penalty calculation for NOT offering coverage. The exemption goes back to 30 in 2016.