Employer shared responsibility - The employer mandate component of the Affordable Care Act (ACA) was delayed once again (on Feb. 10, 2014) pushing back provisions to 2015 and 2016. ACA provisions require that Kansas businesses offer affordable, minimum value coverage to their full-time employees and their dependents. This is often referred to as employer shared responsibility or "Play or Pay.” Businesses with fewer than 50 employees are not affected by the employer mandate provisions.
Employer mandate for Kansas businesses with 50 to 99 employees - These businesses now have until their first plan year on or after Jan. 1, 2016, to phase in health care coverage for their full-time workers before risking a federal penalty for not complying.
Employer mandate for Kansas businesses with over 100 employees - These large groups will see the mandate gradually implemented. The new regulations call for larger employers to offer coverage to 70 percent of their full-time employees in 2015; with the percentage increasing to 95 percent in 2016.
Provision details - Employers with 50 or more full-time employees, defined as those working 30 or more hours a week, will pay a tax penalty if they don’t offer health insurance plans that give employees and their dependents a minimal level of affordable coverage. If your business offers minimum value coverage that is affordable to all full time employees and their dependents, your business cannot, under any circumstances, be subject to pay or play penalties.
A “minimum” level of health insurance coverage is a plan that covers 60 percent of the worker’s total health care expenses. This means the plan pays at least 60 percent of covered services while an employee pays no more than 40 percent through deductibles, copays and coinsurance.
An employer is considered to be providing “affordable coverage” if the cost of the least-expensive employee-only plan doesn’t require an employee to pay more than 9.5 percent of his or her income in premium. An employer will have to pay a penalty if the cost of the plan exceeds 9.5 percent of the worker’s income AND an employee obtains a tax credit for Marketplace coverage.
Questions and answers - The amount of the annual Employer Shared Responsibility Payment, and other key items of the provision, is available at the IRS website.
SHOP (Small Business Health Options Program) - SHOP was set to be a new federally-facilitated online health insurance shopping option in 2014. However, enrolling for SHOP coverage online is delayed until plan years Jan. 1, 2015 through Dec. 1, 2015.
Contact BCBSKS directly - Employers with fewer than 50 employees may contact Blue Cross directly to enroll in SHOP coverage. To be eligible, your business organization must:
Small employers must complete and print the SHOP application. Instructions on how to complete the application and where it must be mailed are included on the application. If you plan to claim the Small Business Health Care Tax Credit, you'll need to get an official eligibility determination from the SHOP Marketplace. If you're eligible, you'll claim the tax credit when submitting your 2014 federal income tax returns.
How much is your Small Business Health Care Tax Credit worth? - If you're eligible, your tax credit may be worth up to 50 percent of your premium contributions. To find out if you're eligible and how much your tax credit might be worth, visit these links:
Five plans to choose from - Blue Cross is offering two Bronze, two Silver and one Gold plan in the SHOP Marketplace. Working directly with us you'll be able to pick the plan you wish to enroll in. To view a specific plan brochure and SBC today, visit our shopping site.
More information and assistance
Notice of coverage - Kansas businesses have the responsibility to inform all current employees about the availability of the Health Insurance Marketplace (Exchange) and how it can be accessed.
Employers that offer medical coverage to some or all of their employees should provide the “Employee Notice of Coverage Options,” using this model notice (also en español). The notice must be provided in writing and may be delivered electronically if ERISA standards for electronic delivery are met.
Changes for non-grandfathered small business plans - Small businesses who currently offer non-grandfathered plans – plans that came into existence after March 23, 2010 will see changes in the benefits offered and how premiums are calculated. This change will occur on the group’s anniversary date.
All non-grandfathered health plans must include essential health benefits. Also, beginning Jan. 1, 2014, premiums for all non-grandfathered health plans will be based only on these four factors: age, geographic location, family size and use of tobacco products. The group’s premium will be built by considering these four factors for each employee in the plan.
Flexible spending accounts - For some of your employees, flexible spending accounts are an important budgeting tool. This is an ideal time to remind them that beginning in 2013, contributions to such accounts can be no more than $2,500.
W-2 reporting - For tax year 2012, employers that issue more than 250 W-2 Forms must report the total cost of health care coverage on each employee’s W-2. Both the employer and the employee’s portion of the cost must be reported. The cost must be reported on the 2012 W-2 Forms which were issued in Jan. 2013. This was an optional employer responsibility beginning in 2011, but becomes mandatory in 2013.
Comparative effectiveness research fee - Fully insured and self insured plans will be assessed $1 per participant to fund comparative effectiveness research. This research was established to assess the most effective treatments for certain conditions and to share that information with health care providers. The fee increases to $2 per participant in 2014. Insurers will pay the fee on the insured plans and build the fee into their rates. Employers will be responsible for paying the fee on self-insured plans.
See how new fees and taxes affect premiums
Increased Medicare tax for high earners - Starting Jan. 1, 2014, high wage earners will be taxed an additional amount equal to 0.9 percent of any wages over $200,000 for single taxpayers and $250,000 for married couples filing jointly. Employees earning up to $200,000 will continue paying the same 1.45 percent Medicare tax.
Employer tax credit - One of the early provisions of the Affordable Care Act enabled qualified small businesses to be eligible for a tax credit of up to 35 percent of employer-paid health and dental premiums. In 2014, the tax credit increases to 50 percent of premiums paid by eligible small businesses and 35 percent of premiums paid by eligible tax-exempt organizations. You can learn all the tax credit details at healthcare.gov, or by visiting the IRS website.
Employee Wellness Discounts - Many Kansas employers provide incentives for their workers to remain healthy and/or prevent harmful health issues. Currently, such incentives and rewards can’t exceed 20 percent of the total cost of an employee’s health benefits coverage.
In 2014, employers that reward employees for healthy habits can expand the 20 percent limit to a maximum of 30 percent generally, or as much as 50 percent for tobacco usage.
Waiting periods - Beginning with plan years starting in 2014, employers will no longer be able to impose enrollment waiting periods that exceed 90 days. This provision applies to grandfathered and non-grandfathered plans. This restriction applies to the time period from enrollment to the coverage effective date.
Grandfathering - If a Kansas business already offers health insurance to its employees there is a good chance the plan is a grandfathered plan. Health insurance plans are considered "grandfathered" if they were in effect on March 23, 2010 have had at least one enrollee since that date, and have not substantially changed. Even if an employer enrolls a worker into such a plan after that date, the employee is still covered by a grandfathered plan. The status of a plan depends on when the plan was created, not when someone is enrolled in it.
A grandfathered plan is not subject to all the requirements of the Affordable Care Act (ACA). Such plans don’t have to cover government-mandated preventive health services or “essential health benefits," be subject to new rating rules, or include annual out-of-pocket maximums.
Issuer - A health insurance issuer refers to an insurance company that is licensed to conduct the business of insurance in a state.
Individual mandate - Health care reform requires that individuals must obtain a minimum amount of health care insurance or be subject to a tax penalty of $95 in 2014 or 1 percent of their taxable income, whichever is greater. This penalty increases annually. See a chart from the Kaiser Family Foundation detailing the penalties for being without health insurance.
Qualified Health Plan (QHP) - In order for a plan to be offered in the Marketplace, it must be certified. The certification designates that the plan provides essential health benefits and follows established limits on cost sharing (deductibles, copayments, out-of-pocket maximums).
Coverage levels - Plans offered on the Marketplace will be based on a tiered format of coverage levels named after types of metals. The four levels of coverage are based on “actuarial value.” Actuarial value is a measure of the level of protection offered by the insurance plan (for the average population) indicated by the percentage of health care costs that would be covered by the health plan.
As an example, a Gold plan would offer 80 percent coverage of health care costs, while the enrollee would be responsible for the remaining 20 percent of costs. Individuals with high cost health issues, such as cancer, could end up paying more than the average. Catastrophic plans, that cover essential benefits but have high deductibles, will be available to some individuals that have been exempted from the individual mandate.