Employer Options < 50:
Compliance Checklist for Employers:
- Employer Mandate: Just before July 4, 2013, the Administration announced that it was delaying implementation of the employer mandate penalty provisions from 2014 until 2015. This postpones what has been variously referred to as the “Play or Pay” provision, however, it doesn’t delay all of PPACA and employers must still abide by the portions of the law still in place.Information on the delay of the employer mandate is available at: http://www.treasury.gov/connect/blog/Pages/Continuing-to-Implement-the-ACA-in-a-Careful-Thoughtful-Manner-.aspxUnder the Pay-or-Play Provision of PPACA all “applicable large employers” (very generally, employers that employed on average at least 50 full-time employees (taking into account full-time equivalents) on business days during the preceding calendar year) are required as of January 1, 2015, to provide qualifying healthcare coverage to their full-time active employees and their children (up to age 26) or be subject to penalties if they do not.Rules under this provision mean that to determine the number of employees, businesses will now have the choice of calculating the head counts by averaging the full 12 months of 2014 or a consecutive six-month period during 2014. A full-time employee is one who is employed (work and paid leave and vacation) an average of at least 30 hours a week, or 130 hours in a month. There are special rules for how to count seasonal employees for purposes of the 50-employee threshold. Full-time equivalent refers to any employee who is not by himself working a full-time schedule (i.e., 30 hours per week or 130 hours per month). Generally, to calculate the number of full-time equivalents in a given month, an employer will need to add up all the hours worked by non-full-time employees (capped at 120 hours of service per month for any given employee), and divide the total hours by 120. To the extent that an employer fails to offer qualifying coverage to its full-time employees and their children (up to age 26), the employer will be subject to a penalty, generally equal to $2,000 per full-time employee (less the first 30 full-time employees). Even if an employer complies with the requirement to offer coverage, if an employer fails to provide affordable, minimum value, self-only coverage to each full-time employee, the employer generally will be subject to a $3,000 penalty for each employee who then goes and enrolls in exchange-based coverage and receives a federal premium subsidy or cost-sharing reduction. Additional information is available at www.irs.gov/uac/Affordable-Care-Act-Tax-Provisions.
- W-2 Reporting: W-2 reporting of employer-provided healthcare coverage is now required for all employers filing 250 or more W-2s for the prior calendar year. These employers are required to report the value of employer-sponsored healthcare coverage regardless of whether it is paid by an employer on behalf of the employee (as excludable income), by an employee through a cafeteria plan, or by an employee on an after-tax basis. Employers filing fewer than 250 W-2s may be required to start reporting in January 2014 (for calendar year 2013), depending on whether and when guidance is issued. Specific information about what and how to report is available at www.irs.gov/uac/Form-W-2-Reporting-of-Employer-Sponsored-Health-Coverage.
- Healthcare Exchanges: By October 1, 2013, employers will still be required to notify all employees of the upcoming availability of exchange-based coverage. Notification will need to be in writing and will need to outline certain factors that might be relevant to the employee’s decision to participate in the employer’s plan or seek coverage through an exchange. Specific information is available at www.dol.gov (search for Technical Release 2013-02) or http://www.dol.gov/ebsa/newsroom/tr13-02.html
- Summary of Benefits and Coverage: Enrollees must receive an annual Summary of Benefits and Coverage (SBC), very generally at open enrollment or upon hire. Detailed information about the SBC is available at www.dol.gov/ebsa/healthreform/index.html (scroll down to “Summary of Benefits and Coverage” and “Uniform Glossary”).
- Advance Notification of Certain Benefit Changes: Employers generally must provide notice to employees 60 days in advance of any material change in coverage to the extent the change would need to be reflected on the respective SBC.
- Preventive Care: All non-grandfathered health plans must now cover a variety of preventive care services for women with no participant cost-sharing. These services include contraceptive methods and counseling, well-woman visits, and screening and counseling for interpersonal domestic violence, among others. For additional information, see www.hhs.gov/news/press/2013pres/02/20130201a.html.
- Health FSAs: The limit for employee contributions to medical flexible spending accounts is now $2,500. Contribution limits for 2014 and beyond will be indexed to cost-of-living adjustments using increments of $50. Information about the limitations on FSAs is available at www.irs.gov/uac/Affordable-Care-Act-Tax-Provisions.
- Medicare and FICA: For individuals earning more than $200,000 and joint filers earning more than $250,000, the Medicare Part A (hospital insurance) tax has increased to 2.35 percent. To apply the new tax increase, employers should use $200,000 as a baseline income for each employee because they will not know the total household income for those filing jointly. For additional information, see www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Questions-and-Answers-for-the-Additional-Medicare-Tax.
- Medicare Part D Subsidy: The tax deduction for employers who receive Medicare Part D retiree drug subsidies has been eliminated. The tax deduction has also been eliminated for individuals earning $85,000 or more and married couples earning $170,000 or more. For additional information, see www.irs.gov/uac/Newsroom/Frequently-Asked-Questions:-Retiree-Drug-Subsidy.
- Patient-Centered Outcomes Research Institute (PCORI) Fee: Insurance carriers and sponsors of self-insured plans, retiree-only plans, and grandfathered plans are required to fund PCORI through the payment of certain per capita fees. Employers will only be directly liable for the fee if they sponsor a self-insured plan, although insurers will seek to pass through the cost of the fee for insured coverage through to employers in the form of higher premiums. The PCORI regulation is available at www.gpo.gov/fdsys/pkg/FR-2012-12-06/pdf/2012-29325.pdf.
- Medical Loss Ratio (MLR) Rebates: The Patient Protection and Affordable Care Act requires issuers of fully insured plans to provide rebates if they do not spend at least 85 percent of the prior year’s health insurance premiums on healthcare services. It is important to note that MLR rebates have differing requirements and tax consequences dependent upon the situation.
- Stricter limits on Annual Dollar Limits on Essential Health Benefits: For plan years beginning on or after September 23, 2013, plans will be subject to a complete bar on the use of not only lifetime limits, but also any annual limits on “essential health benefits.” Employers and plans can continue to impose annual and lifetime dollar limits on non-essential health benefits.
- Cost-Sharing Limitations for Non-Grandfathered Plans: For plan years beginning on or after January 1, 2014, non-grandfathered individual and small group insurance policies cannot impose maximum deductible limits that exceed $2,000 for self-only and $4,000 for family coverage. Large group insurance and self-funded plans are not subject to these maximum deductible limits. Essentially all policies cannot impose a maximum out-of-pocket limit on cost-sharing that exceeds $6,250 for self-only coverage and $12,500 for family coverage (as adjusted for cost of living).
This checklist is intended for informational purposes only and does not constitute legal advice. These items are subject to change pending further review and regulation by state and federal governments.