Inform your health care reform strategy
While the Affordable Care Act doesn’t officially define a large business, you may be subject to employer-shared responsibility if you have 50 or more full-time employees. If your business meets this definition, you can either offer health insurance that meets required guidelines or face paying potential tax penalties.1
What to consider
Understand your responsibility as defined by the ACA. For 2015, you may face potential tax penalties if you don’t offer coverage to full-time-equivalent employees and their child dependents up to age 26. However, the final regulations provide some transition relief for businesses that offer coverage to most but not all employees and their dependents.²
Employer shared responsibility
- For plans beginning in 2015, employers with 100 or more full-time-equivalent employees must offer minimum essential coverage to 70% of full-time employees and their child dependents up to age 26. An exception to this requirement is that if employers don’t currently offer dependent coverage, they won’t be required to provide it in 2015 as long as they’re taking steps to offer it in 2016.
- For plans beginning in 2016, employers with 50 or more full-time-equivalent employees must offer minimum essential coverage to 95% of full-time employees and their child dependents up to age 26.
- Under the final rules for the provision, foster children and stepchildren aren’t considered dependents who must be offered coverage.
Minimum essential coverage
If you offer coverage to your full-time employees, it must meet the following requirements to qualify as minimum essential coverage:
- cover a minimum value of at least 60% of expected costs for a standard population
- limit an employee’s share of the premium contribution for employee-only coverage to 9.5% of the employee’s income³
None of your full-time employees will qualify for financial assistance in the individual marketplace if the coverage under your group health plan meets the requirements listed above.
What to do
Assess your current coverage.
Assess your current workforce and health care coverage to determine whether penalties apply to your situation. Explore various safe harbors in the law that may minimize penalties.
Limit FSA contributions.
Make sure you limit annual employee paycheck contributions to flexible spending accounts (FSAs) to $2,550.
Determine your responsibilities under the Fair Labor Standards Act.
- If your company is subject to the Fair Labor Standards Act, provide written notice about health insurance exchanges and other information to new employees.
- If your company is subject to the Fair Labor Standards Act, has more than 200 full-time employees, and offers employees at least one health care plan, prepare at some point in the future to automatically enroll new full-time hires in a coverage option, following any permissible waiting period (no longer than 90 days under the ACA). You’ll also have to automatically continue existing selections for current full-time employees from year to year. Employers aren’t required to comply with this provision until regulations are issued and take effect.
Find out if you have to report the cost of health benefit coverage.
If you filed at least 250 W-2 forms in the previous calendar year, report the cost of employees’ health benefit coverage on W-2 forms distributed in January.
Review your current wellness program.
Review your current wellness program to make sure you’re maximizing employee rewards. Starting in 2014, the maximum reward for health-contingent wellness programs is 30% of the cost of coverage (with an additional 20% for programs that prevent or reduce tobacco use).