Health Care Reform

Every Business is Impacted

If you have even one employee, you need to know about the PPACA. All employers must comply with certain provisions, some now and some in the future, for example:

  • Notices: The PPACA requires all employers to provide existing employees with information about state healthcare exchanges by fall of 2013. When open enrollment for the healthcare exchanges will start.
  • Information: By 2014, all employers will have to report on health benefits on employees W-2s. The W-2 form has already been redesigned.
  • Reporting: Jan. 2015 brings required reporting of each employee’s monthly status and hours (whether or not coverage is offered), cost of coverage, and benefit summary. Tax forms will be revised under the PPACA.

Determining if you are an “Applicable Large Employer”

  • Look at previous calendar year (or 6 continuous months)
  • Add up full time employees for each month. Full time is 30 or more hours per week.
  • Add up total non-full time hours (hours of all part time employees), and divide by 120. This gives you your full time equivalent count.
  • Add together, for each month, the full time employees and full time equivalents.
  • Sum all months for the year and divide by 12, drop fractions.
  • Anything 50 or above make you an ALE or Applicable Large Employer.
  • These calculations should include all business with common or joint ownership.

Who do I offer coverage to?

  • Any employee who averaged 30 hours of service per week or more in the previous look-back period.
  • Any new hire who, after 90 days, is reasonably expected to work more than 30 hours a week.
  • If a reasonably expected determination cannot be made after 90 days, then another 90 day period may be used to make the call.
  • If eligibility determination is made, and then hours change, coverage must continue for the longer of the look-back period or 6 months.

What kind of coverage do I offer?

  • Coverage must meet an actuarial value test. Actuarial value is the % of all medical expenses borne by the plan, versus the out of pocket of the members. The plan must experience or pay for at least 60% actuarial value coverage.
  • Coverage must meet an affordability test. Employee must pay no more than 9.5% of Box 1 W-2 wages in premium. (from previous year or estimated for new hires)

The Individual Responsibility Requirement

  • Law requires all Americans to have health insurance starting 1/1/2014
  • Exemptions for unaffordable coverage, certain religious groups, Native Americans.
  • Failure to comply means confiscation of tax refund starting at $95 for first year and rising to $695 or 2.5% of income by 2017.

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