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HealthCare Reform
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Update: Health Care Reform
03/11/2013
Here are the major provisions that apply to employers (50+ employees) starting in 2014
- Must provide "minimum essential coverage"
- Applies to both fully insured and self-funded groups
- Applies to grandfathered groups
- Must offer coverage to dependents up to age 26. Coverage for spouses is not required.
- Effective on first new plan year on or after January 1st, 2014
Penalty Assessment: If an employer does not offer coverage starting 2014, then the penalty is $2,000 per full-time employee (minus the first 30 full-time employees)
Coverage Requirements
- Must be affordable: single employee contribution for lowest cost plan must not exceed 9.5% of employee's W2 income
- Must provide minimum actuarial value (plan pays more than 60% of medical costs across a typical population)
Penalty Assessment: If coverage fails any of these tests, then the penalty is $3,000 per employee receiving a subsidy in the Exchange
What is the employer mandate in general?
1. If you do not offer minimum essential coverage to your employees, either through a grandfathered plan, self-insured plan, government plan, or qualified plan through the soon to be created exchanges, your company will face a tax penalty equal to $166.67 per month for each full-time employee you have ($2,000 per full-time employee per year) until you do so.
2. However, your coverage offered must be “fairly” priced and offer adequate benefits so your employees do not opt-out. If they do so, there are also penalties of $250 per month.
• Important to note, the penalties above only affect companies that have more than 30 full-time employees. Calculations of full-time status are now total FTE hours worked:
• Full-time employees are considered anyone working more than 30 hours per week.
• Hours worked by part-time employees also count towards determining whether the threshold is met, by totaling the number of hours worked for a given month by all of the employer's part-time employees and dividing by 120, to determine how many FTE employees the employer has.
How will the health care reform affect rates?
In the group market, there are certain taxes and fees that will start effective January 1st, 2014.
- PCORI Fee: $1 per member per month. The purpose of this fee is to help fund the Patient-Centered Outcomes Research Institute.
- Insurer Fee: Approx. 2.3% of premium. This fee is to help fund Health Insurance Exchanges
- Transitional Reinsurance Fee: $6 per member per month. This fee helps offset the volatility in the small group and individual markets
- Risk-adjustment Fee: $1 per member per year. For administrative costs brought on by the health reform
Other Important Topics for Employer Groups
- 2014 Reform Provisions
- Adjusted Community Rating
- Annual Limits
- Dependent Coverage
- Essential Health Benefits
- Non-discrimination
- Preventive Care Services
- Small Business Tax Credit
- Wellness Programs
Please contact Navali & Company so we can analyze your current health care position, diagnose any areas of concern and advise your company on strategies to minimize risk moving forward.
**Please also refer to your state reform website for the latest updates on health care reform and required employer mandates.
03/11/2013
Here are the major provisions that apply to employers (50+ employees) starting in 2014
- Must provide "minimum essential coverage"
- Applies to both fully insured and self-funded groups
- Applies to grandfathered groups
- Must offer coverage to dependents up to age 26. Coverage for spouses is not required.
- Effective on first new plan year on or after January 1st, 2014
Penalty Assessment: If an employer does not offer coverage starting 2014, then the penalty is $2,000 per full-time employee (minus the first 30 full-time employees)
Coverage Requirements
- Must be affordable: single employee contribution for lowest cost plan must not exceed 9.5% of employee's W2 income
- Must provide minimum actuarial value (plan pays more than 60% of medical costs across a typical population)
Penalty Assessment: If coverage fails any of these tests, then the penalty is $3,000 per employee receiving a subsidy in the Exchange
What is the employer mandate in general?
1. If you do not offer minimum essential coverage to your employees, either through a grandfathered plan, self-insured plan, government plan, or qualified plan through the soon to be created exchanges, your company will face a tax penalty equal to $166.67 per month for each full-time employee you have ($2,000 per full-time employee per year) until you do so.
2. However, your coverage offered must be “fairly” priced and offer adequate benefits so your employees do not opt-out. If they do so, there are also penalties of $250 per month.
• Important to note, the penalties above only affect companies that have more than 30 full-time employees. Calculations of full-time status are now total FTE hours worked:
• Full-time employees are considered anyone working more than 30 hours per week.
• Hours worked by part-time employees also count towards determining whether the threshold is met, by totaling the number of hours worked for a given month by all of the employer's part-time employees and dividing by 120, to determine how many FTE employees the employer has.
How will the health care reform affect rates?
In the group market, there are certain taxes and fees that will start effective January 1st, 2014.
- PCORI Fee: $1 per member per month. The purpose of this fee is to help fund the Patient-Centered Outcomes Research Institute.
- Insurer Fee: Approx. 2.3% of premium. This fee is to help fund Health Insurance Exchanges
- Transitional Reinsurance Fee: $6 per member per month. This fee helps offset the volatility in the small group and individual markets
- Risk-adjustment Fee: $1 per member per year. For administrative costs brought on by the health reform
Other Important Topics for Employer Groups
- 2014 Reform Provisions
- Adjusted Community Rating
- Annual Limits
- Dependent Coverage
- Essential Health Benefits
- Non-discrimination
- Preventive Care Services
- Small Business Tax Credit
- Wellness Programs
Please contact Navali & Company so we can analyze your current health care position, diagnose any areas of concern and advise your company on strategies to minimize risk moving forward.
**Please also refer to your state reform website for the latest updates on health care reform and required employer mandates.
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