On March 22nd, 2016, McBrayer held a webinar on how the Employer Mandate of the Affordable Care Act will affect businesses in 2016. Anne-Tyler Morgan, a McBrayer healthcare and employment law attorney, guided participants through the various requirements of businesses under the law as it takes effect, breaking down the provisions by the size of the employer at issue and giving insight into the question of whether it is better for businesses to provide the coverage or pay a fine. For further information on this webinar, contact McBrayer’s Marketing Director, Morgan Hall, at mhall@mmlk.com or 859-231-8780.

View a video recording of the webinar here:

Some of the information shared by the presenter is also summarized below.

Self-employed Business Owners

  • If you’re self-employed, you’re subject to the individual mandate. As of 1/1/14, every individual is required to maintain basic insurance coverage, also known as minimum essential coverage. Minimum essential coverage must have an actuarial value of 60% or more. In other words, the insurer must pay an average of 60% of all covered medical costs until you reach your plan’s “out-of-pocket” limit. Subsidies may be available to certain individuals and small businesses through the Small Business Health Options Program (SHOP).

Businesses of All Sizes

  • Employers are required to provide employees with a standard “Summary of Benefits and Coverage” form explaining what their plan covers and what it costs. The purpose of the SBC form is to help employees better understand and evaluate their health insurance options.
  • Employers cannot impose longer than a 90-day waiting period on new employees before providing them with coverage.
  • Reports in the first year must be filed with employee individuals by March 31, 2016 and with the IRS by May 31, 2016 via paper filing and June 30, 2016 for electronic filers.

Businesses with Fewer than 25 Employees

  • SHOP is open to those employers with up to 50 full-time equivalent (FTE) employees and offers small employers increased purchasing power to obtain a better choice of high-quality coverage. Enrollment in SHOP is offered anytime during the year.
  • Businesses that have fewer than 25 full-time equivalent employees, pay average annual wages below $50,000 (indexed annually for inflation), and contribute a uniform 50% or more toward employees’ self-only health insurance premiums may qualify for the small business tax credit, which helps small businesses afford the cost of health care coverage for their employees. This credit is currently only available to those eligible small businesses that purchase coverage for their employees through the Small Business Health Options Program (SHOP).

Pay or Play?

  • Employers with 50 or more full-time employees, including full-time equivalents, that do not offer health insurance to their full-time employees (those working 30+ hours/week) and their dependents, or that offer coverage that is not affordable or that does not provide minimum value, may be required to pay an assessment if at least one of their full-time employees receives a premium tax credit to purchase coverage in the new individual Marketplace.
  • To be subject to the Employer Shared Responsibility provisions for a calendar year, an employer must have employed during the previous calendar year at least 50 full-time employees or a combination of full-time and part-time employees that equals at least 50.
  • Generally, if an employee’s share of the premium for employer-provided coverage would cost the employee more than 9.5% of that employee’s annual household income, the coverage is not considered affordable for that employee.
  • If an applicable large employer does not offer coverage or offers coverage to fewer than 95% of its full-time employees (and their dependents), it owes an Employer Shared Responsibility payment equal to the number of full-time employees the employer employed for the year (minus up to 30) multiplied by $2,000, as long as at least one full-time employee receives the premium tax credit.