Now that the Affordable Care Act (“ACA”) has been upheld by the Supreme Court, the time has come for employers to start figuring out what the new law means to your business. Keeping in mind that feature length articles and undoubtedly books are being written on this topic, my goal here is to provide you with some quick and easy guidance to set you on the path to compliance.
Question 1: Does the law mandate that employers provide insurance to their employees?
Answer: No. The ACA does not require businesses to provide insurance. For businesses with fewer than 50 full-time and full-time equivalent employees, there are no consequences for not providing health insurance. When calculating how many full-time equivalent employees you have, part-time workers are considered.
Question 2: How does the ACA help employers provide coverage to employees?
Answer: You may be eligible for tax credits to help you pay for your employees’ insurance. The credits are as large as 35% today and rise to 50% in 2014.
You might qualify if you:
1) have low-wage workers,
2) pay at least 50% of the premium cost, and
3) have up to 25 full-time equivalent employees.
Be careful here, every worker you have may not be an “employee.” If you are unsure about a worker’s classification, seeking outside assistance is a good idea. Also, you can get more information on this at the IRS website: www.irs.gov/sbhtc. (Beginning in 2014, you will need to buy your company’s coverage through the Affordable Insurance Exchange in your State to get the tax credit.)
Question 3: Can my business be hit with an extra tax because of the ACA?
Answer: Technically, there are no new taxes on small employers in the ACA. However, starting in 2014, a large employer may have to pay an assessment if it does not offer affordable insurance. The assessment does not apply to businesses with less than 50 employees. Large employers that do not offer health benefits coverage at all may be required to pay an assessment of $2,000 per year for each full-time employee, excluding the first 30 full-time employees. Larger employers that do offer health benefits coverage that is “unaffordable” or lacks minimum value may be assessed a payment of $3,000 per year for each full-time employee receiving federal financial assistance.
Employers with fewer than 50 employees are exempt from new employer responsibility policies. They don’t have to pay an assessment if their employees get tax credits through an Exchange.
Question 4: Does the ACA affect employer-based plans for retirees?
Answer: Yes. Employer-based plans that provide health insurance to retirees ages 55-64 can get financial help through the Early Retiree Reinsurance Program. This program is designed to lower the cost of premiums for all employees and reduce employer health costs.
Question 5: Will my business be able to take advantage of the Affordable Insurance Exchange?
Answer: In 2014, small businesses with fewer than 100 employees can shop in an Affordable Insurance Exchange, which is intended to give small business owners better choices and lower prices. An Exchange is a new marketplace where individuals and small businesses can buy affordable health benefit plans that must meet certain benefits and cost standards.
Here are some milestone dates to be aware of:
September 23, 2012: If your Open Enrollment period falls on or after this date, plan participants must receive a Summary of Benefits and Coverage during the enrollment period. The purpose of the Summary is to allow participants to compare your plan with others that they might be eligible for.
December 31, 2012: If you issue more than 250 W-2′s, you have to report the cost of health benefits for the 2012 tax year on them. This reporting requirement has no effect on 2012 tax liability.
January 1. 2013: Employees can only contribute up to $2,500 to a Flex Spending Account.
March 1, 2013: By this date, employers must inform employees of state health insurance exchanges.
Visit www.healthcare.gov/prevention for a full list of services and implementation dates.
Additional Resources that you may find helpful:
General Information: www.healthcare.gov/small-business
The tax credit: www.irs.gov/sbhtc
Finding coverage now: finder.healthcare.gov lets you find insurance options for your company by exploring your coverage and pricing options
Prevention and wellness provisions of the law that may affect you and your family: www.healthcare.gov
While I hope this nuts-and-bolts Q & A and timeline prove helpful in getting you on the path to compliance, remember, this blog provides just the basics – make no mistake, the ACA is complicated. When it comes to the specifics of your business and employee needs, this may be an instance where a call to your benefits provider and/or counsel makes sense (and cents).