Nov 20, 2013
Summary of Affordable Care Act provisions impacting employers
The recent media coverage and discussion about the Affordable Care Act (ACA), commonly known as “Obamacare,” has focused on the expansion of coverage to the uninsured and purchasing coverage through the health insurance exchange. The ACA will also impact employers and individuals who are covered through an employer-sponsored plan. This summary highlights some of the more prominent provisions of the ACA affecting employers.[i]
The Health Insurance Exchange
·The ACA creates a new health insurance exchange or marketplace to offer a choice of insurance plans meeting minimum standards for coverage and to provide information to assist consumers and employers in making informed choices about the policies available for purchase. The employer shared responsibility obligation, or the “employer mandate” (see below), does not go into effect until January 1, 2015.
·Employers can participate in the exchanges now. Small employers may take advantage of an existing Small Business Health Care Tax Credit, which has certain guidelines for defining a small business that differ from those under the ACA.
·Those without coverage may purchase health coverage through the exchange. The coverage may be subsidized for individuals in families with income not exceeding 400 percent of the Federal Poverty Level who are not eligible for Medicare, Medicaid, the Children’s Health Insurance Program or affordable employer-sponsored insurance.
·Employers of all sizes may also continue to purchase coverage outside of the exchange.
Employer Shared Responsibility Obligation
·Effective January 1, 2015, employers with 50 or more full-time employees (including full-time equivalent employees) could be subject to a “Share Responsibility” payment, or statutory penalty, if either:
(a) the employer does not offer coverage to at least 95 percent of its full-time employees (and their dependents); or
(b) the employer offers coverage to its full-time employees that is not “affordable” or does not provide “minimum value.”
·Employers are not required to provide coverage to any employee or dependent, but large employers with at least one full-time employee enrolling in subsidized coverage in the health exchange are subject to a penalty, beginning in 2015.
·Large employers not offering coverage to full-time employees will be subject to a penalty of $2,000 multiplied by the total number of full-time employees minus 30. This penalty only applies if at least one full-time employee receives subsidies in the exchange. Employers not offering “affordable” coverage may be subject to a $3,000 penalty for each full-time employee if at least one employee receives a tax credit to purchase affordable coverage from the exchange. The penalty amounts are subject to change each year by the growth in insurance premiums.
·An “employer” under the ACA includes for-profit, not-for-profit and government entity employers.
·To determine whether an employer has enough employees to be subject to the employer shared responsibility obligation, an employer should look to the size of its workforce in the prior calendar year. Federal regulations apply to determine whether certain employees should be considered full-time or full-time-equivalent.
·To determine whether an employer-sponsored plan meets the “minimum value” threshold, the Department of Health and Human Services has developed an online calculator to determine if the plan meets the minimum value threshold.
·An employer-sponsored plan must also be “affordable.” Coverage is considered affordable if the full-time employee’s share of self-only coverage costs no more than 9.5 percent of the employee’s annual household income.
New Employer Reporting Requirements
·Employers were required to provide notice to employees regarding the health insurance exchange by October 1, 2013. For more information on the notice requirement, see a prior client alert posted by Chuhak & Tecson.
·Employers providing minimum essential coverage will be required to report to the IRS annually with information about the coverage offered, beginning in 2015.
ACA’s Anti-Retaliation Provision
·The ACA also provides broad protections for whistleblowers. The ACA added Section 18C to the Fair Labor Standards Act (FLSA) to protect employees who are subject to retaliation for reporting potential violations of the ACA’s consumer protections or affordability assistance provisions.
Chuhak & Tecson’s Employment Law Practice Group provides this client alert as part of its ongoing mission to be Right There With You. Should you have any questions regarding how the Affordable Care Act will impact employers, or other questions involving employment law, we encourage you to contact us. Learn more about our Employment Law Practice Group.
This Chuhak & Tecson, P.C. communication is intended only to provide information regarding developments in the law and information of general interest. It is not intended to constitute advice regarding legal problems and should not be relied upon as such.
Client Alert authored by: Ryan A. Haas
[i] This summary is based on the terms of the ACA and regulations that have been released by the Department of Treasury, Department of Health and Human Services and Department of Labor and could change given a change in the Act or regulations.