Health Insurance for your Business and Employees
Offering health benefits is a major decision for businesses. The Patient Protection and Affordable Care Act (PPACA), or Affordable Care Act (ACA) for short, was signed into law to help extend health insurance coverage to millions of uninsured Americans. The law requires businesses to continuously navigate through the complex, ever evolving regulations to identify the necessary employee data required to comply with the legislation. The biggest challenge facing employers today is appropriately tracking the information required to determine which and when employees qualify for coverage. Your payroll service bureau already tracking and maintaining much of this data for you, you need only ask for the keys to unlock it, making compliance much easier for you and your business.
Understanding the Affordable Care Act (ACA)2
The ACA expanded Medicaid eligibility, created health insurance exchanges, and prohibited insurance companies from denying coverage (or charging more) due to pre-existing conditions. It also increase the age children are allowed to remain on their parents' insurance plan until age 26.1 As part of the American Rescue Plan of 2021, subsidies for coverage purchased through healthcare.gov have been increased, and eligibility for subsidies has been extended to higher income levels. It also created the Employer Mandate, requiring business with 50* or more full-time employees and/or full-time equivalents, called Applicable Large Employers (ALE) to offer health insurance that is considered both affordable and provides a minimum value and requires businesses to report this information to the IRS each year. Businesses that fail to comply with the legislation open themselves up to a myriad of potential fines and penalties.
Basics of ACA:
- The Patient Protection and Affordable Care Act (PPACA), also known as Obamacare, was signed into law in March 2010.
- It was designed to extend health coverage to millions of uninsured Americans.
- The ACA expanded Medicaid eligibility, created a Health Insurance Marketplace, prevented insurance companies from denying coverage due to pre-existing conditions, and requires plans to cover a list of essential health benefits.
- Lower-income families qualify for subsidies for coverage purchased through the Marketplace.
- Employers must offer health insurance that is affordable and provides minimum value to 95% of their full-time employees.
- Coverage is considered "affordable" if employee contributions for employee-only coverage do not exceed a certain percentage of an employee's household income. This percentage varies each year.
- A plan provides "minimum value" if it pays at least 60% of the cost of covered services (deductibles, copays and coinsurance).
- Employer Mandate Reporting, also referred to as the Pay or Play, requires all ALEs file an annual report that ensures compliance. The report, called the 1094/1095-B or 1094/1095-C, must be submitted to the IRS and all eligible employees each year.
- Failure to comply with ACA can incur hefty fines and penalties to be assessed against the employer, with special rules applying that dramatically increase the per-statement and/or total penalty if the IRS determines the failure is due to intentional disregard. 3
- Employer Shared Responsibility Payment is an additional penalty that will be incurred if the employer fails to offer minimum essential coverage to 95 percent of its full-time employees and their dependents, and any full-time employee obtains coverage on the exchange. For 2021, this penalty is $2700 per employee not offered coverage.4
The ACA has experienced many changes since its inception 2010. Most notably in 2017 Congress removed the Individual Penalty for persons not having health insurance but left the Employer Mandate and Employer Penalties intact.
President Biden signed an executive order to "give Americans that need health care coverage during this global pandemic the opportunity to sign up." The American Rescue Plan (ARPA) extended eligibility for ACA health insurance subsidies to people buying their own health coverage on the Marketplace.
All ACA-compliant health insurance plans—including every plan that's sold on the Health Insurance Marketplace—must cover specific "essential health benefits" including:
- Ambulatory patient services
- Emergency services
- Family planning
- Laboratory services
- Mental health and substance use disorder services
- Pregnancy, maternity, and newborn care
- Prescription medications
- Preventive and wellness services and chronic disease management
- Pediatric services
- Rehabilitative and habilitative service
In addition, the ACA requires most insurance plans, including those sold on the Marketplace, to cover at no cost to policyholders, a list of preventive services. These include checkups, patient counseling, immunizations, and numerous health screenings.
Every year, there is an open enrollment period on the Health Insurance Marketplace during which people can buy or switch insurance plans. If you miss this time, you cannot enroll until the following year unless you qualify for a special enrollment period because your circumstances change--for example, you marry, divorce, become a parent or lose a job that provided health insurance coverage.
More Financial Support Available for ACA plans
Biden urges uninsured Americans to enroll in ACA plans. Many Americans are eligible for additional financial assistance under the American Rescue Plan, the $1.9 trillion stimulus package passed by Congress in March. The ARP contained a number of changes to the ACA that made coverage more affordable by expanding government subsidies for enrollees.
The Biden administration has extended the special enrollment period through August 15, 2021, allowing Americans to sign up for ACA plans at any time during the next few months. “Every American deserves access to quality, affordable health care – especially as we fight back against the COVID-19 pandemic,” said HHS Secretary Xavier Becerra, when the extended enrollment period was announced in March.5
How ACA Provisions Differ for Employers?
The ACA contains benefits and responsibilities for employers to determine if their employees qualify for ACA. The size and structure of your workforce determines what provisions apply. An employer’s size is determined by the number of its full-time employees, including full-time equivalents.
Small Businesses (less than 50 full-time employees)
Small employers need to disclose evidence to qualify for ACA. Once eligibility has been established with the IRS, small businesses qualify for special provisions within ACA. Generally those businesses with fewer than 50 full-time employees, including full-time equivalent employees qualify as small employers. Small businesses can then purchase insurance through the Small Business Health Options Program (SHOP)
Large Businesses (more than 50 full-time employees)
There are two provisions of the ACA that apply to large employers:5
- the employer shared responsibility provision
- the employer information reporting provision for offers of minimum essential coverage. In addition, self-insured large employers – that is, employers who sponsor self-insured group health plans – have additional provider information reporting requirements.
How Does an Employer Determine Eligibility Status for ACA Compliance?
The biggest challenge for employers today, who are struggling to comply with the ever-evolving ACA legislation, is determining which employees qualify for coverage and then appropriately tracking the needed information. Collecting employee data to comply with ACA legislation can be simple or complex depending on the tools you have available. Payroll service bureau’s equipped with comprehensive software can track and collect data making compliance much easier for your business. The following are a few samples of reports offered to help keep employers in compliance with the ACA:
- “Eligibility Analysis Report”
- Use your measurement period to pull hours worked during that time
- Determines eligibility status for healthcare coverage
- Calculates eligibility on ongoing and new hire employees accurately
- “Full-Time Equivalent Analysis Report”