Health Care Reform FAQ's for Your Employer Clients

[taterpeeler]

@Post Quartermaster, your response in bold is exactly what I am stating in my FAQ. You just stated the words in a different order.
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OK All, Here is a follow up - my responses in bold. I hope this helps.

1. Do I have to offer insurance?--the answer is no. Your source that you gave is regarding small employer under 50 ee's. What I stated in my initial FAQ "If you have 50 or more full time or full time equivalent employees and one or more of your employees receives premium credits (government subsidies) to help purchase health insurance in the exchange, you are required to offer health insurance or pay a penalty. If no employees receive subsidies, then you are not required to offer health insurance and pay no penalty." source - Questions and Answers on Employer Shared Responsibility Provisions Under the Affordable Care Act
2. Question about how to calculate the FTE's-you state that you cannot avoid the obligation to provide insurance by making everyone a part-time employee. In actuality you can. I wish that were the case, but unfortunately you are incorrect. Part time employees do count towards the total number of FTE's. FTE is defined as full time equivalents. Here is the source and tool from benefit mall that I use for my groups to determine their small/large group status. https://myworkspace.benefitmall.com/PORTAL/Portals/0/TXEmailAttachments/FTEGuideFillFINAL2.pdf
3. Question-If I offer a group plan, what are the requirements so I don't pay a penalty-not a complete answer. By the way, self-funded plans are not required to offer Essential Benefits. ACA reform affects all group health plans, regardless of whether they are fully insured or self-insured. Here is the source and a great tool to refer to: http://www.ciswv.com/CIS/media/CISM...d-Plans-Under-Health-Care-Reform-070312_1.pdf
4. Question-Can I offer a group plan and still owe a penalty?--the comment about 9.5% of household income should include a comment about the safe-harbor option of 9.5% of w-2. 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 employer offers multiple healthcare coverage options, the affordability test applies to the lowest-cost option available to the employee that also meets the minimum value requirement. Here is the source: Questions and Answers on Employer Shared Responsibility Provisions Under the Affordable Care Act
5. Last question about other ways is but one way. I'm not sure what this means.



I hope this is helpful for everyone.
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If anyone has any other questions or comments please post as I think this is a very Healthy Debate.

Thanks

sorry hate to bust your bubble but you probably should read the ENTIRE answer from your source..... I post the 2nd paragraph of you 9.5% affordablility clause and you will see it is EXACTLY as we told you... I will let the rest of these very experienced veteran brokers handle the rest...

here is the 2nd paragraph: Because employers generally will not know their employees' household incomes, employers can take advantage of one of the affordability safe harbors set forth in the proposed regulations. Under the safe harbors, an employer can avoid a payment if the cost of the coverage to the employee would not exceed 9.5% of the wages the employer pays the employee that year, as reported in Box 1 of Form W-2, or if the coverage satisfies either of two other design-based affordability safe harbors.

 

[AllenChicago]

HIC GROUP.. What is your name and what state are you in? Curious because you have posted 28 times since joining on 6/4/2013 (yesterday), and you are the only one in this thread with no identifying information. Thanks in advance, if you choose to share anything about yourself.
-allen

 

[The HIC Group]

sorry hate to bust your bubble but you probably should read the ENTIRE answer from your source..... I post the 2nd paragraph of you 9.5% affordablility clause and you will see it is EXACTLY as we told you... I will let the rest of these very experienced veteran brokers handle the rest...

here is the 2nd paragraph: Because employers generally will not know their employees' household incomes, employers can take advantage of one of the affordability safe harbors set forth in the proposed regulations. Under the safe harbors, an employer can avoid a payment if the cost of the coverage to the employee would not exceed 9.5% of the wages the employer pays the employee that year, as reported in Box 1 of Form W-2, or if the coverage satisfies either of two other design-based affordability safe harbors.

@taterpeeler - the additional info that you stated is the obvious. You do realize that 9.5% of an EMPLOYEE's salary is the minimum that their household income would be, right?

Having the employer use the employee's salary as total household income is just common sense. I didn't think I needed to go into detail with that scenario.

 

[rugerred]

@taterpeeler - the additional info that you stated is the obvious. You do realize that 9.5% of an EMPLOYEE's salary is the minimum that their household income would be, right?

Having the employer use the employee's salary as total household income is just common sense. I didn't think I needed to go into detail with that scenario.

What about a household with two salaries?

 

[The HIC Group]

What about a household with two salaries?

I recommend to all my employer groups to focus on the employee's individual salary. The employer has no control whether or not the employee's spouse get's terminated, layoff, etc... It's just a good rule of thumb.

hope this helps.

 

[Ann H]

HIC Group, I know that you are new to this forum. I appreciate your motivation for a healthy discussion, and your hope that the discussion will help others who are struggling to understand this law.

We likewise enjoy healthy discussions, and accuracy. It's important on a forum (where inaccurate posts can abound), to try to bring it around to accuracy as much as possible, because the public and a lot of agents read these threads. As you mentioned, we hope this can help others.

In that spirit, please do not be offended if we challenge your facts or your conclusions. Neither you, nor any of us, would want to mislead a reader.

Let's try to take each issue at a time. TaterPeeler was correct when he led you to the IRS's Safe Harbor rule for affordability, allowing the Employer to avoid a penalty if the Employer uses the compensation reported in Box 1 on the Employee's W-2 instead of the Household income. This is not always the minimum household income, like you countered. For instance if the spouse was self-employed and had a big loss, or if they had investment losses for instance, their household income could be less than the Employee's Box 1 W-2 compensation. Technically, that could make the Employer's plan "unaffordable" if it cost more than 9.5% of the Employee's household income. But this IRS Safe Harbor protects Employers from the penalty because the Employer based the affordability on the Box 1 W-2 compensation for the Employee.

Leevena is correct about Self-Funded plans not being subject to all parts of Obamacare to the same extent that Traditionally Funded plans are. By the way, Leevena has decades of experience in that self-funded market niche. He is correct.

I don't know if you read my post above about part-time employees. Your last post documented that they count toward FTE's. But that was not the issue raised by Leevena nor commented on by me. Although they count toward FTE's, we are telling you they still don't count for the penalty. The two types of penalties are only assessed on full-time employees.

As for whether or not a large-size business must offer health insurance, you did state in your original post that they must "or pay a penalty", so I will agree with that. But just to make it clear for other readers, a business is not required by PPACA to offer health insurance. They just will have a penalty charged for every FULL-TIME employee (less 30), if even one employee gets a subsidy in the exchange. And in some cases, that means they can NOT offer health insurance and still NOT face a penalty, even if they have more than 50 FTE's (full-time equivalents). If the employer wants to NOT offer health insurance and still not have a penalty, moving all employees to part-time status is one way of obtaining that goal.

I know most of these posters, because most of us have over 1000 posts, and we've discussed and researched a lot of issues together (including the issues you mentioned in your posts), HIC Group. I can tell you that accuracy is important to all of them. I also know that it worries us when a new poster arrives, posts seemingly factual information that appears to set him apart as an expert, but that information is so flawed that it shows that his/her level of understanding of this law is lacking. I would put your post in that category. It appears that you certainly have read about the rules, but do not have a clear grasp on them.

I am also worried about concepts you used in the second to last last paragraph of your original post where you recommended short-term plans, funded through a PRA. Using a PRA, FSA or HRA is currently uncertain whether it will survive rulings coming down from HHS, DOL and IRS. And as for recommending short-term plans, that leads me to believe that risky advice is being recommended.

I hope you understand our reasons for jumping on this thread and trying to bring it around to accuracy, respectable recommendations, and source documentation that the average reader could have some amount of trust in, as they research the portions of the law that apply to them.

 

[The HIC Group]

Hello Ann,

Thank you for taking the time to post on this thread. Very good insight. I agree with some of your comments and disagree with others.

I do not consider myself an expert because I have 1000+ posts on this forum, but because of my background and training. I would love to connect with you on linked in and hopefully we can stay in touch. Seni Sok | LinkedIn