HEALTHCARE BENEFITS & ACA REQUIREMENTS SNAPSHOT
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The landscape of healthcare regulations has dramatically changed with the Affordable Care Act (ACA). Nothing seems to be really firmly set yet. One thing appears to be certain: the cost is skyrocketing at all levels.
By now, large employers have already rolled out their programs and made necessary addition to their benefits staff. Individuals who wanted coverage to start with the new year have already filed their applications. It is somewhat different for smaller employers since their mandate on Healthcare coverage requirements is being delayed.
In any event, here are a few key points as a reminder or a reference for those of us who still need it.
QUICK REFERENCE CHECK LIST
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What is ACA About?
- Healthcare benefits are not mandated in the same title as FICA or SS. The mandate is "individual."
- Offered Healthcare benefits have to cover "Essential Coverage."
- The Patient Protection and Affordable Care Act provisions offers what is called the Metal Plan
- Small Groups Market: Health care coverage for individual- and small-group markets has only one level
When does it start? Timetable
- It took effect on January 1, 2014.
- Open enrollment closes March 31, 2014
- Proposed date for 2015 open enrollment: November-January 2014
- Since 2013, employers have been required to provide a notice of coverage options, upon hiring.
- Worth noting: according to DOL, there is no fine for failure to provide information on Exchanges
- Advice: It is best to provide information; This will also ease employees' feeling of uncertainty. Information on subsidy calculator could be helpful, as an example, so that employees could make an informed decision as to opt-out of company coverage or not.
How Does It Work and Affect Businesses?
- If Healthcare benefits offered are not "affordable", and do not offer "minimum value," employees can go to the Marketplace
- Minimum value: at least 60% of costs should be covered by the plan
- Affordable: the employee's cost is not to exceed 9.5% of his/her annual, total income
- For calculations of affordability, methodology is strictly based on 30h/week as a FTE. Refer to healthcare.gov or cms.gov
- Any employer who has an employee choosing to go to the Marketplace will be "taxed" a "shared responsibility payment"
Penalties or Shared Responsibility
- Large employers
- With 50 or more FTEs and not offering minimum value health benefits to eligible employees and their adult children up to age 26: the penalty is of $2,000/FTE if at least one full-time employee receives a tax credit/subsidy through the Marketplace.
- If employers provide coverage: the penalty is of $3,000/FTE who obtains coverage through an exchange and receives a premium tax credit/subsidy.
- Metal plan does not apply (affordability is based on lowest level of coverage offered)
- Small and individual group markets
- Small employers of 50 or less: There is no penalty for not offering Health care coverage
- Individuals: Healthcare coverage purchase is mandated. Penalty vary from $95/adult and $47.50/child to $285/family or 1% of annual income- Demystification: Income is defined as total income beyond the filing threshold
- Small employers purchasing coverage through Small Business Health Options Programs (SHOP) could be eligible for a tax credit of up to 50% of their premium payments
- The SHOP requirement has been delayed until 2015
How do SHOP work?
- SHOP were to create a marketplace of competitive small-group market plans.
- The goal:
- To assist qualified small employers in either purchasing a small-group plan for their employees with up to 50% tax credit on premium paid, or
- To give employees the opportunity to select a health plan through SHOP.
- Small Businesses must have 25 or fewer employees
- Average annual wage of employees is less than $50,000
- Offer all full-time employees coverage and pay at least 50% of the premium.
- Changes: SHOP is delayed and will be limited to one single option versus the originally-intented four
- Size is set by States: employers of 1-50 or 1-100 FTEs can participate in SHOP until 2016
- In 2016: participation size requirement is to change to 1-100 FTEs
- In 2017: States will be able to allow employers of 100+ (defined as large) to buy large group coverage through SHOP
- All full-time employees – (average of 30 hours or +/week) must be offered coverage
- At least 70% of FTEs must enroll in the SHOP plan, in many States.
- Applying for SHOP between November 15 and December 15 will waive the employee threshold enrollment requirement.
- Insurance must cover the "essential health benefits package"
SHOP Channel - Metal Plan
- The metal plan insurance can be provided by an employer or purchased by the employee
- Metal Plans have four levels of coverage:
- Bronze, 60 percent;
- Silver, 70 percent;
- Gold, 80 percent;
- Platinum, 90 percent.
- Catastrophic: Available to those under 30, and/or those who cannot afford the bronze level
- The Metal Plan is also defined as "Essential Health Coverage," which differs from minimum essential coverage, and that includes the following 10 categories (cf. SHRM):
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- Ambulatory patient services.
- Emergency services.
- Maternity and newborn care.
- Mental-health and substance-use-disorder services, including behavioral-health treatment.
- Prescription drugs.
- Rehabilitative and habilitative services and devices.
- Laboratory services.
- Preventive and wellness services and chronic disease management.
- Pediatric services, including oral and vision care.
Data for 2013: Kaiser Survey
For additional information on ACA, refer to healthcare.gov.