Beginning in 2014, the Affordable Care Act (ACA), will require most Americans to have health coverage or pay a tax (otherwise known as the individual shared responsibility). About 60 percent of people who have health insurance receive it from their employers.1
The ACA does not require businesses to provide health benefits to their workers; but employers with at least 50 full-time and full-time equivalent employees may face non-tax deductible penalties if they don’t offer full-time employees (and their dependents) the opportunity to enroll in minimum value, affordable coverage, and the employee receives a premium tax credit or cost-sharing reduction.
In order to make an informed decision to “play” or “pay”, each employer needs to take some key steps — now — to conduct a self-evaluation of their benefits strategy:
Remember that many employee benefits are tax-deductible to your business and tax-exempt for employees. The cost to you will be less than the cost the employee would pay if he or she purchased the benefit on his or her own.
How employer responsibilities under the ACA work
The Employer Shared Responsibility (ESR) rules under the ACA will have a significant impact on group health plan coverage offered in 2015. There are a number of components in this rule, as well as other provisions in the law, which are important for employers to understand:
Penalties — Potential penalties may be assessed if you fail to offer health coverage to at least 95 percent of full-time employees and their dependents, or offer coverage that is neither affordable or does not provide minimum value, and at least one full-time employee receives a premium tax credit or cost-share reduction through the health insurance Marketplace (Exchange).
These penalties can be significant and are determined on a monthly basis.
What should employers do now to prepare for 2015?
These “play” or “pay” decisions involve important benefit decisions, as well as tax and legal issues. Consult with your Wellmark representative, legal and tax experts to understand the requirements and implications for your company. Continue to monitor WeKnowReform.com for updates.
1Robert Wood Johnson Foundation
2 2012 Employee Benefits Survey, Society for Human Resource Management
Wellmark is not providing any legal advice with regard to compliance with the requirements of the Affordable Care Act (ACA) and Mental Health Parity and Addiction Equity Act (MHPAEA). Regulations and guidance on specific provisions of the ACA and MHPAEA have been and will continue to be provided by the U.S. Department of Health and Human Services ("HHS") and/or other agencies. The information provided reflects Wellmark's understanding of the most current information and is subject to change without further notice. Please note that plan benefits, rates, renewal rate adjustments, and rating impact calculations are subject to change and may be revised during a plan’s rating period based on guidance and regulations issued by HHS or other agencies. Wellmark makes no representation as to the impact of plan changes on a plan's grandfathered status or interpretation or implementation of any other provisions of ACA or MHPAEA. Any questions about Wellmark's approach to the ACA or MHPAEA may be referred to your Wellmark account representative. Wellmark will not determine whether coverage is discriminatory or otherwise in violation of Internal Revenue Code Section 105(h). Wellmark also will not provide any testing for compliance with Internal Revenue Code Section 105(h). Wellmark will not be held liable for any penalties or other losses resulting from any employer offering coverage in violation of section 105(h). Wellmark will not determine whether any change in an employer administered funding arrangement, such as partially self-funded arrangements (“Employer Administered Funding Arrangement”), affects a health plan’s grandfathered health plan status under ACA or otherwise complies with ACA. Wellmark will not be held liable for any penalties or other losses resulting from any Employer Administered Funding Arrangement. For purposes of this paragraph, an Employer Administered Funding Arrangement is an arrangement administered by an employer in which the employer contributes toward a member’s out of pocket cost share, e.g. annual deductible amount, in the absence of which the member would be completely financially responsible.