First off, let’s start with the “looming” deadline, March 1, 2013. All employers were previously required to provide written notice to their employees about state-specific exchange options. This deadline has been extended to some time this summer. Department of Labor has yet to release proposed regulations or any model notices.
What exactly are these Exchanges? They are online market places, run by the states or federal government, that will allow individuals and employer groups to compare and purchase health insurance. Exchanges will not replace the existing private health care market. Only 17 states have opted to run their own at this time. Ohio is not one of them. Federal officials have extended the deadline to February 15 for states to decide. It does appear that the federal government will have the primary responsibility of running the exchanges in more than half the states — far more than they ever anticipated when the law was passed in 2010.
There is NO requirement that small businesses offer health insurance, beginning in 2014. Some smaller businesses, with more than 50 employees, will have to pay a penalty if they do not offer affordable coverage.
Businesses with 50 or fewer FTE employees are exempt from these penalties.
Businesses with 51 or more FTE employees will be fined $2,000 per employee (excluding the first 30 employees) if they do not offer coverage for employees who average 30 or more hours per week.
To avoid penalties, employers must offer insurance that covers at least 60% of actuarial value of the cost of benefits. The coverage also must be affordable to the employees, meaning an individual employee’s premium cannot exceed 9.5% of their household income. If the coverage does not meet the affordability standard, employees may receive tax credits to purchase insurance on their own through the exchange. In this case, the employer will either have to pay $3,000 per employee receiving the tax credit, or pay $2,000 per employee, excluding the first 30 (whichever is less).
Employers with more than 50 employees who (1) offer health coverage to employees through an eligible employer-sponsored plan, (2) pay any portion of the costs of such plans, and (3) where the employee’s share of the cost exceeds 8% of their wages, must report to the federal government the coverage they offer, the monthly premiums of the lowest cost option, and the employer’s share of the cost. More information yet to be released.
If you are a firm with more than 200 employees, and you do offer health insurance, you must automatically enroll your employees in the plan. They could opt out of coverage, but they are the ones that would have to make that decision.
Settle in and buckle your seat belts because 2013 is sure to be a tumultuous ride!
C&A Business Services is committed to assisting companies with increased compliance requirements, resulting from rapidly evolving legislation. Our goal is to minimize your administrative burden across the entire spectrum of payroll, HR and benefits, so that you can focus on running your business. Neither the content nor manner in which this is presented reflects the thoughts or opinions of C&A or its employees. This notice is provided as a courtesy, to assist you in understanding the impact of certain regulatory requirements, and should not be construed as legal advice. Although we strive to provide the most up to date information, such information is, by nature, subject to revision and may not be the most current available. Please contact us with additional questions or concerns.