Written by Ellie Tonder, Vice President of Operations
The Supreme Court is expected to release its decision on the healthcare (or health care) reform package known as ACA (Patient Protection and Affordable Care Act), implemented by President Obama in 2010, before the end of June. Some news outlets state that we will hear as early as tomorrow (June 28, 2012).
We felt that this is a time to weigh in on how we see ACA affecting our clients. We know that this is a hot button topic which has caused heated debate over the last two plus years. Without jumping into politics, we want to share our perspective as it relates to healthcare compliance, alternative healthcare coverage (Self Insurance) and other healthcare related options for employers.
ACA for Small to Mid-Sized Businesses – More Questions
- Are you still trying to determine compliance as it relates to ACA and your employees?
- Employers will have to begin determining soon (in anticipation of 2014) whether their health plans are affordable, if the health bill is not repealed. There will be a huge impact on small to mid-size groups in 2015 because the penalties will be retroactive to 2014 if they didn’t gauge accurately.
- Do you understand the W-2 Reporting of income values (if you have over 250 employees)?
- As part of healthcare reform, the disclosure of healthcare compensation must be included on year-end W-2 tax forms (for companies with more than 250 employees). For companies that employee less than 250 employees, the requirement does not kick in until 2014. Click the W-2 Reporting Chart button below.
- Do you understand the change in the maximum benefit for flexible spending accounts?
- The IRS recently released guidance regarding the 2013 Health FSA limit of $2,500 scheduled to go into effect on January 1, 2013. Click HERE to see the FSA Factsheet provided by the US Treasury.
- Will you be eligible for a premium tax credit?
- One of the ways employers can determine this is to consider whether their employees’ current annual share of their health premiums exceed 9.5% of their income. If they do, then their employees will qualify for the tax credit in 2014 and they can buy individual insurance from a state-run health insurance exchange.
- Do you understand how to purchase coverage through the health care exchange?
- Per our friends at Wikipedia, “A health insurance exchange is a marketplace that offers purchasers of health insurance a variety of plans from different insurance providers. A public health insurance exchange is a marketplace run by states and offers standardized health care plans for individuals, some of whom are eligible for federal subsidies. State-run exchanges are a central provision of the Patient Protection and Affordable Care Act (PPACA).”
- Have you created the Summary of Benefits and Coverage (SBC) for your employees?
- This Summary of Benefits Coverage must include:
- A four-page Benefit Summary (two-sided, 8 pages maximum)
- Coverage Examples that estimate customer costs based on the specific plan’s benefits for three medical scenarios – Having a Baby, Treating Breast Cancer and Managing Diabetes
- A standard Glossary of medical and insurance terms
- A website and phone number where individuals can get additional information
- See more by clicking the Summary of Benefits and Coverage button below.
- This Summary of Benefits Coverage must include:
- What about the penalties of ‘Pay or Play’?
- It will be imperative that employers either ensure their health plan(s) are affordable (‘Play’) so as to avoid the $3,000 penalty or not offer a health plan at all and ‘Pay’ the $2,000 penalty per employee per year.
- Do you have the time to sift through this?
- Employers won’t know what their health insurance premium increases will look like in 2014 – but if recent history provides any insight the median in 2011 was 9% (Source: 2011 Kaiser HRET Benefit Survey Summary and the 2011 HRA-NCA Benefits Survey). Since 2001, the average premiums for family coverage have increased 113% (this also averages to about 9% over the last 11 years) employers can expect rates to increase by about as much each year moving forward.
- This is another very good reason for employers to self-insure. Employers need to be able to control spiraling healthcare costs by improving cash flow without sacrificing employee health coverage. By self-funding, the employer is paying for their actual claims and administrative fees and not paying an insurance company a flat amount no matter what the costs are. Employers also avoid excess charges such as taxes, reserves and carrier profits. This may assist employers in being able to absorb some of the fixed costs in the future so as not to have to pass along cost sharing of premiums to their valued employees.
Quick Links – Healthcare Reform Answers from FosterThomas
In addition to the answers above, we’ve also created a fact-filled Healthcare Reform News section on our website. Click any of the buttons below to guide you to answers that make sense and will help you understand healthcare reform and your business.Healthcare Reform News FSA Fact Sheet Self-Funding/Self Insurance Summary of Benefits and Coverage