Since President Obama signed the Affordable Care Act into law in 2010, there have been many changes and updates to the rules and regulations that make up this federal statute.
The new year brings important changes with regards to health insurance, not all of them celebrated, but many of them necessary to continue increasing the number of people covered by health insurance.
Significant changes include the expanded responsibilities of employers with 50-99 full-time equivalent (FTE) employees.
While companies with 49 or fewer employees remain exempt from the requirement, the penalties for individuals who do not buy health insurance that qualifies as minimum essential coverage will increase in 2016.
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Some changes even fall on the insurer’s side and include the elimination of pre-existing conditions exclusions and the inclusion of caps on out-of-pocket expenses, which will help further expand health care. In addition, employers are obliged to make sure that the plans they offer meet the requirements of minimum essential coverage, cover a minimum of 60 percent of allowed costs, and they are now obligated to provide a subsidy if the premiums of the offered plans exceed 9.5 percent of an employee’s modified adjusted gross income (MAGI). Several of those changes may influence your company’s strategies and approaches to adhering to the law, depending on the size of your company.
Understanding the Most Relevant Changes
SHOP Has Expanded Its Services
The Small Business Health Options Program (SHOP) is now available to employers with 51-100 FTE employees in many states and available everywhere to employers with less than 50 FTE employees. The SHOP option allows employers to compare plans and oversee employee participation. Also, due to the development of the website, employers can manage almost every detail online including offering multiple plans, selecting only the coverage you want to offer, controlling the amount of your company's contribution, et cetera. SHOP also offers the option to work with a SHOP-registered agent or broker at no additional cost to help companies successfully navigate the marketplace.
Take Action: If you fall into the group of employers with more than 50 full-time employees, explore your options for employee healthcare plans on SHOP.
Full-Time Equivalent (FTE) Employers Required to Carry Coverage
There are quite a few acronyms with which to become familiar, and FTE is one of the most important. If you own several businesses with common ownership, you may find that when you sum all the employees from your various ventures in aggregate to calculate where your business falls on the business-size spectrum that your enterprise may have new obligations in 2016.
An employee who works 30 hours or more per week is considered a full-time employee. Part-time employees also contribute work hours, and your company must calculate the amount of labor they contribute. If a company has 20 full-time employees and 60 part-time employees who work an average of 15 hours per week, under these computations, the company actually has 51 FTE employees and should be offering health insurance coverage or face substantial penalties.
Take Action: If you’re not sure whether you qualify as FTE, use this calculator to avoid serious penalties if you do qualify and don’t offer coverage.
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Open Enrollment Has Changed
The clock is ticking on businesses and taxpayers to select some sort of healthcare coverage in 2016. After January 31, 2016, many will find themselves facing sizable penalties or fees if they haven’t obtained appropriate coverage. This is the last year that procrastinators will find themselves with wiggle room. Starting in 2016, the open enrollment period will only last from October 15th to December 7th. There are, of course, exceptions for those who change jobs, get divorced, or move from one state to another, which qualifies citizens for a Special Enrollment Period in which to find new healthcare insurance coverage.
Take Action: Don’t procrastinate researching health insurance plans, or you will have to pay penalties.
Employer Mandate Responsibilities Grow
In 2016, the employer mandate expands. As mentioned above, employers with more than 50 FTE employees find themselves with new responsibilities. These employers must offer all employees who work an average 30 hours per week or more, some sort of quality affordable healthcare coverage option to 95 percent of full-time employees and their child dependents up to age 26. Employers must also offer new full-time hires coverage options within permissible waiting periods of no more than 90 days. The penalties for avoiding your obligation as an employer are significant and can be as much $2,000 to $3,000 per employee, depending on which requirements are not met.
Take Action: Read the fine print on your responsibilities even if you looked at them last year, since they have changed significantly.
Essential Health Benefits Now Required
Unless your plan is grandfathered in, and most plans that qualified under this exception are expiring in 2016, all healthcare options must offer these ten essential benefits:
- Emergency care
- Lab tests
- Mental health and substance abuse services
- Outpatient care including management for chronic diseases
- Pediatric services including dental and vision care for children under 19
- Pregnancy and newborn care
- Prescription drugs
- Preventive and wellness services, including counseling, screenings, and vaccines
- Rehabilitation services and devices
Take Action: All health insurance companies must offer these benefits, so you don’t need to do anything special to ensure the plan you choose encompasses them.
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If the health plan your company is considering offering to full-time employees does not cover these fundamental basics, it could be creating more problems than it’s solving. Consult with an insurance broker today to learn more about the strategic planning you can use when offering healthcare options in your business if you’re wondering how best to reply to the regulations established by the ACA and their effect on your your business.