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Health Care Reform for Brokers
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You can also view Health Care Reform updates for: Individuals & Families | Employers | Providers

How Employers Are Impacted By Health Care Reform
 
Small Size Businesses
Small Business

Less than 50 employees
Large Size Businesses
Large Business

50 or more employees
Required to provide insurance? No Yes, only to full-time employees*
OR
pay a penalty
Coverage requirements? If the employer has a plan already, it must cover certain Essential Health Benefits and meet one of the "Metal Levels" of coverage (60%, 70%, 80% or 90% of the Actuarial Value of the plan). Plans must have a minimum value of at least 60% and not cost employees more than 9.5% of their income.
Where to buy insurance? If employers have insurance today, the plan's benefits may change to ensure it meets all the coverage requirements. Employers can continue to buy insurance as they do today (either directly from an insurance company or through a broker) or purchase from the SHOP Exchange. If employers have insurance today, it is likely they can keep the same plan with just a few modifications to bring it into compliance under Health Care Reform. If they need coverage, they can buy insurance the same way they would today, either through an insurance company directly or a broker.
* Full-time is defined as those working an average of 30 or more hours per week.

Essential Resources for Small Groups

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Small Group Checklist
Image: Paperwork Information
Employer's Guide To Health Care Reform

Overview of Small Group Options

Small groups are typically those with fewer than 50 eligible employees — that definition hasn’t changed when it comes to purchasing health insurance coverage. But Health Care Reform requires some employers to offer affordable coverage or pay a penalty, known as the Pay or Play mandate. To determine which requirements apply to your clients, calculate the number of full-time equivalent employees. Though this mandate has been delayed until 2015 for groups with 100 or more employees and 2016 for groups with 50-99 employees, the calculation below can help determine the company size under the provisions of Health Care Reform.

Calculation to Determine Group Size
Total numbers of monthly hours worked by part-time employees
÷ 120 +
Number of employees working more than 30 hours per week

If the total is 50 or more, they are a large group employer. If the total is less than 50, they are a small group employer.

Small group plans have four coverage levels: bronze, silver, gold and platinum. Each plan covers the same set of Essential Health Benefits. These plans vary in the amount of out-of-pocket expenses — like copays and deductibles — that they cover. The chart below shows the amount, on average, that the health insurance company and member would pay.

plan vs customer payment

View and compare our 2014 small group products.

Small Business Health Options Program (SHOP)

Small business employers can now buy insurance from the Small Business Health Options Program (SHOP) Exchange. Employers will choose the plans they want to offer and how much they want to pay. Employees then select the plan that best meets their needs and budget.

Small employers are not required to purchase insurance on the Exchange and will not face a penalty if they do not offer insurance to their employees.

Tax Credit for Some Small Groups

Small employers that purchase coverage from the SHOP Marketplace may be eligible for a tax credit of up to 50% of the businesses' share of their employees' premium in 2014.

To be eligible for the small business tax credit, the employer must:

  • Have less than the equivalent of 25 full-time employees; and
  • Have an average annual employee wage below $50,000; and
  • Cover at least 50% of the cost of health insurance coverage.

These tax credits will be available to small employers until 2016.

Small Group Reporting Requirements

Employers are required to report the cost of employer-sponsored health insurance coverage in Box 12 of employees’ W-2 forms. Reported costs should include those paid by the employer and contributions from the employee. Employers who filed less than 250 W-2s for the 2013 tax year are exempt from this requirement until further notice.

Notifying Employees

Notification must be sent to all new hires about the health insurance exchanges.

Essential Resources for Large Groups

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Large Group Checklist
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Employer's Guide To Health Care Reform

Overview of Large Group Options

Large group employers are typically those with 50 or more full-time employees. Under Health Care Reform, these employers will be required to offer what’s known as minimum value, affordable health insurance to their full-time employees in 2015 or pay a fine. Employers with 50 – 99 employees have until 2016 to offer health insurance without any penalty.

"Full time" is defined as anyone working an average of 30 hours or more per week. If the employer already offers coverage, it’s important to determine whether it is sufficient to avoid penalties:

Does the coverage provide minimum value benefits?
Minimum value requirements mean that the insurance pays, on average, at least 60% of covered health care expenses for the member/customer population.

Can employees afford the coverage?
A plan is considered affordable as long as full-time employees do not spend more than 9.5% of their taxable household income on the monthly premiums.

Large group employers can face a range of penalties around offering coverage. An employer could face per-employee fines if they elect not to offer coverage or if the coverage they do offer is not affordable or does not provide minimum value benefits.

Minimum Value/Affordability Requirements

Minimum Value (MV) is the amount the Health Plan expects to pay versus the amount that the member would pay for things like deductibles and coinsurance. The employer's plan must cover at least 60% of the cost of covered health care expenses.

To calculate a plan’s minimum value, please visit www.cciio.cms.gov.

If an employee has to pay more than 9.5% of their annual household income for the company's health insurance, the coverage is not considered affordable. The government will allow a company to determine affordability using one of three "safe-harbor" methods:

  • The employee's share of self-only coverage does not exceed 9.5% of wages reported on Box 1 of IRS Form W-2
  • The employee's share of self-only coverage does not exceed 9.5% of the employee's rate of pay multiplied by 130 hours
  • The employee's share of self-only coverage does not exceed 9.5% of the Federal poverty line (FPL) for one person.

When an employer offers employees multiple plans, the affordability test applies to the lowest-cost plan option that includes the minimum level of coverage.

Employer Look Back Process

Employers may have workers who are not hired as full-time but work a variable number of hours throughout a month. An employer may not offer coverage to these employees. But if an employee worked an average of 30 hours or more per week, they should have been offered coverage just like a full-time employee.

There is a safeguard in place for employers who aren’t sure if their employees should be offered coverage. The look back process helps determine if variable hour employees averaged 30 hours or more per week. Any employees who did average more than 30 hours a week must be offered coverage.

How the look-back period works:

  1. Choose measurement period: Select a time period of 3-12 months to measure the actual number of hours the employee worked
  2. Calculate employee hours: Employers have up to 90 days after the measurement period to determine the employees who averaged more than 30 hours per week
  3. Determine mandatory insurance requirements: : If an employee averaged 30 hours per week or more, they must be offered health insurance coverage for 6 months, or the length of the measurement period.

Large Group Reporting Requirements

Starting in 2016, large employers will be required to report information to the Internal Revenue Service (IRS) on the health insurance they offer, including:

  • Number of full-time employees
  • If coverage was offered to full-time employees and dependents
  • The employees and their dependents who are enrolled in the plan(s)
  • Employee's contribution to the premium

Employers are required to report the cost of employer-sponsored health insurance coverage in Box 12 of employees’ W-2 forms. Reported costs should include those paid by the employer and contributions from the employee. Employers who filed less than 250 W-2s for the 2013 tax year are exempt from this requirement until further notice.

Notifying Employees

Notification must be sent to all new hires about the health insurance exchanges.

Essential Resources on Fees & Penalties

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Taxes & Fees whitepaper
Image: Paperwork Information
Employer's Guide To Health Care Reform

Taxes & Fees

Health Care Reform introduces a number of taxes and fees that may affect the cost of premiums.

    Amount What it pays
For Health insurance companies Health insurer fee $8 billion (2014) - $14.3 billion (2018) Helps fund premium tax credits for individuals and families
Reinsurance contribution fee $3.67 per person enrolled per month (estimated) Helps stabilize the health insurance industry during the first years of Health Care Reform
Risk adjustment fee $1 per person enrolled per year (estimated) Helps stabilize individual, family and small business health insurance markets during the first years of Health Care Reform
Exchange user fee Exact amount to be determined Allows the Health Plan to offer their products on the Exchange
PCORI fee $1 (2012 - 2013)
$2 (2013 - 2014)
TBD: After 2014
Helps fund research to improve health care decisions and delivery.
For Employers Cadillac tax 40% of premium that exceeds $10,200 (individual) or $27,500 (family) Tax on employers who offer high cost health insurance beginning in 2018
Reinsurance contribution fee
(Self-Funded Plans)
$3.67 per person enrolled per month (estimated) Helps stabilize the health insurance industry during the first years of Health Care Reform
PCORI fee
(for Self-Funded, HRA
and HSA Plans only)
$1 (2012 - 2013)
$2 (2013 - 2014)
TBD: After 2014
Helps fund research to improve health care decisions and delivery.
For Individuals Medicare surcharge 0.9% gross income Supports the Medicare program and only applies to those earning more than $200,000 (single) and $250,000 (married)

Penalties Overview

Beginning January 1, 2015, employers with 100 or more full-time equivalent employees will be required to pay a penalty if they do not provide minimum value, affordable coverage to at least 70% of full-time employees and their dependents. After 2016, coverage must be offered to 95% or more of employees. The new rules will take effect upon the plan’s renewal date.

Employers with 50 – 99 employees have until their renewal date in 2016 to offer health insurance to 95% or more of full-time employees and their dependents.

What is the Penalty?

In 2015, the penalty for not offering coverage is $2,000 a year for each full-time employee. The first 30 full-time employees are not counted. This means that if an employer has 100 employees, the penalty of $2,000 would apply to 70 employees (totaling $140,000 in penalties for 2015).

The penalty for offering coverage that an employee cannot afford (meaning it does not meet the minimum affordability guidelines) is $3,000 for each employee that receives assistance for exchange coverage.

It is important to note that these penalties will increase in amount each year.

How is the Penalty determined?

Penalties are determined on a monthly basis and calculated based on the number of months coverage was not offered or did not meet the minimum requirements. For example, if an employer offers the necessary coverage for five months out of the year, the penalty would only apply to the seven months when the employer did not offer coverage.

Penalty Triggers

Employers will learn that they owe a penalty if at least one of their full-time employees purchases insurance from the Individual Exchange and is eligible for help paying their monthly premiums (a "premium tax credit"). The premium tax credit is available for individuals who fall below certain income thresholds. Once this occurs, the employer will receive notification and have an opportunity to respond to the Internal Revenue Service (IRS) before they have to pay the penalty.

If an employee declines employer-sponsored coverage and enrolls in a health plan on the Individual Exchange, the employer would only be charged a penalty if that employee becomes eligible for help paying for the Individual Exchange insurance. Therefore, as long as the employer offers affordable coverage that meets the guidelines, the employee would not be able to receive a premium tax credit on the Individual Exchange, and therefore the employer would not pay a penalty.

2013

January 1, 2013

Summary of Benefits and Coverage: Must be offered to employees on renewal of the health plan, effective 9/23/12.

Flexible Spending Account (FSA): Contribution limited to $2,500.

Medicare Withholding Tax Increase: Withholding increases from 1.45% to 2.35% for individuals making $200,000+/families making $250,000+.

January 31, 2013

New W-2 Reporting Requirements: Employers filing more than 250 W-2s must report the cost of health coverage on employees' W-2 form in January 2013 for calendar year 2012. Those who file fewer than 250 W-2s are exempt until 2014.

July 1, 2013

Patient Centered Outcome Research Tax (PCORI Tax):First PCORI Tax due for reporting period of 10/1/2011- 10/1/2012. Fee for the first year is $1.00 per covered life per reporting period. Self-insured plans required to remit payment. Insured plans covered by health insurers.

October 1, 2013

Exchanges Open: Enrollment in individual and small group exchanges begins October 2013 for coverage effective January 2014.

Employer Notification of Exchanges: Employers subject to FLSA must notify employees of Exchanges. Template letters are available at DOL.gov.

2014

January 1, 2014

Individual Provision: Most U.S. citizens and legal residents will be required to have health insurance or pay a penalty.

Premium Tax Credits: These credits are available to eligible individuals to help pay for insurance coverage on the individual Exchange.

Coverage and Benefit Provisions

  • No exclusions from coverage for individuals with pre-existing conditions.
  • Mandatory coverage for clinical trials.
  • State-determined essential health benefits apply to individual and small group policies.
  • Annual limits cannot be applied to essential health benefits.
  • Employer groups cannot impose waiting periods of longer than 90 days to new employees.
  • Employers may increase the reward for employees meeting specified wellness initiatives (from 20%) to30% of the cost for single premium coverage.

Small Businesses: Small group tax credit expanded up to 50%, if coverage purchased through small employer exchange and qualifying requirements met.

2015

Large Businesses with 100+ employees: Must offer coverage that meets affordability and coverage requirements or pay a penalty.

 

2016

Large Businesses with 50-99 employees: Must offer coverage that meets affordability and coverage requirements or pay a penalty.

Large Businesses: Report information to the Internal Revenue Service (IRS) on the health insurance they offer

Small Businesses: Small group tax credit no longer available

2017

States can open exchanges to large groups.

2018

Cadillac tax imposed on plans with excessive premiums.
Topic Brief Description Tools/Resources
Annual Limits
see also Lifetime Limits
The ACA prohibits imposing annual limits on Essential Health Benefits and any lifetime dollar limits.  N/A
Dependent Coverage to Age 26 By allowing children to stay on their parents plan, the Affordable Care Act (ACA) makes it easier and more affordable for young adults to get health insurance coverage.

Dependent coverage overview (PDF)

Sample letter explaining a special enrollment period for dependents to age 26 (PDF)

Employer Checklists The following checklists are meant as a general guideline for actions that may be required of employer groups or Excellus BlueCross BlueShield. For more information, please contact your Sales Consultant.

Small Group Checklist (PDF)

Large Group Checklist (PDF)

Employer Mandate
see also Pay or Play
Requires employers with 50 or more full-time equivalent employees to pay a penalty if they don't provide minimum, affordable health insurance to their full-time employees and dependent children in 2015.

Full-Time Equivalent Employees (PDF)

Employer Responsibility Penalties (PDF)

Seasonal/Variable Hour Employees (PDF)

Essential health benefits Non-grandfathered plans in the individual and small group markets both inside and outside of the Exchanges must cover essential health benefits (EHB) beginning in 2014. EHB include items and services within the following 10 benefit categories: (1) ambulatory patient services, (2) emergency services (3) hospitalization, (4) maternity and newborn care, (5) mental health and substance use disorder services, including behavioral health treatment, (6) prescription drugs, (7) rehabilitative and habilitative services and devices, (8) laboratory services, (9) preventive and wellness services and chronic disease management, and (10) pediatric services, including oral and vision care. Each state will define the EHB benchmark plan for 2014 and 2015. HHS intends to evaluate the benchmark process for 2016 and beyond based on evaluation and feedback.

N/A

Exchanges Shopping marketplace that allows consumers to research, compare, and purchase health insurance. Consumers can shop online or file their application in person, by phone, or by mail. Employer Requirement to Notify Employees about Exchange (PDF)
FSA Contribution Limit For plan years beginning on or after January 1, 2013, the maximum allowable salary reduction contribution to a cafeteria plan (Section 125 plan) Health Flexible Spending Account will be $2,500. FSA Contribution Limit FAQ (PDF)
Full-Time Employee Under the ACA, "full-time" is defined as anyone working an average of 30 or more hours per week.  N/A
Grandfathering "Grandfathering" allowed some plans to be exempt from some ACA provisions.

Grandfathering Advantages and Disadvantages (PDF)

Grandfathered Plans - List of Requirements (PDF)

Grandfather Status Application for Fully-Insured Groups (PDF)

Grandfather Status Recertification Form for Fully-Insured Groups (PDF)

Certification Form for Grandfather Status for Self-Insured Groups (PDF)

Individual Mandate The requirement that most individuals have health insurance or pay a penalty beginning in 2014. Learn about other changes for Individuals & Families
Lifetime Limits
see also Annual Limits
The ACA prohibits imposing annual limits on Essential Health Benefits and any lifetime dollar limits.  N/A
Medical Loss Ratio (MLR) Reporting A Medical Loss Ratio or MLR is the percentage of premium dollars insurers spend to provide covered medical services and improve the quality of health care for their members. Frequently Asked Questions (FAQ) (PDF)
Minimum Essential Coverage Individuals who don't maintain minimum essential coverage may be subject to the Individual Mandate penalty. Minimum essential coverage includes individual & family plans, employer-sponsored health plans and government-sponsored health plans like Medicare, Medicaid and Child Health Plus. N/A 

Part-Time Employee

Under the ACA, "part-time" is defined as anyone working less than 30 hours per week on average.  N/A
Patient-centered Outcomes Research Fee The Patient-Centered Outcomes Research Tax, also known as the Comparative Effectiveness Research Fee, is a fee paid to the government to fund Patient-Centered Outcomes Research Institute (PCORI) research. Frequently Asked Questions (PDF)

Pay or Play
see also Employer Mandate

Requires employers with 50 or more full-time equivalent employees to pay a penalty if they don't provide minimum, affordable health insurance to their full-time employees and dependent children in 2015.

Full-Time Equivalent Employees (PDF)

Employer Responsibility Penalties (PDF)

Seasonal/Variable Hour Employees (PDF)

Pre-Existing Conditions Exclusions As of September 2010 there are no pre-existing exclusions for children under age 19. Beginning in 2014, this provision applies to everyone, including adults. N/A

Premium Tax Credit
see also Subsidy

Financial assistance available for qualified individuals and families with income between 133 percent and 400 percent of the federal poverty level to help pay for premiums. Learn about other changes for Individuals & Families
Preventive Services
see also Women's Preventive Services
The ACA requires health plans to cover designated preventive services without any member cost sharing.

Preventive services overview (PDF)

List of preventive services (PDF)

Retiree only certification Employers should complete this form if they think that one or more of their plan options qualifies for an exemption from the market reform provisions of the Affordable Care Act because the plan(s) provides coverage for fewer than two active employees, often known as a retiree only plan. Certification form (PDF)
Small Business Health Options Program (SHOP) SHOP is a competitive health insurance marketplace where small businesses and their employees will be able to purchase coverage. N/A
Small business tax credits The Affordable Care Act includes a tax credit equal to 50 percent (35 percent in the case of tax-exempt eligible small employers) for qualified small employers that provide health coverage to their employees. The tax credit is available to employers with 25 or fewer employees with average annual wages of less than $50,000.

How to Get Small Business Tax Credits

Fact sheet (PDF)

Subsidy
see also Premium Tax Credit

Financial assistance available for qualified individuals and families with income between 133 percent and 400 percent of the federal poverty level to help pay for premiums. Learn about other changes for Individuals & Families
Summary of Benefits and Coverage The Departments of Health and Human Services, Labor and Treasury recently issued final regulations requiring health plans to provide a SBC and Uniform Glossary that clearly explain benefits and coverage within a standardized template with uniform language. Learn more or request a Summary of Benefits and Coverage (SBC)
W-2 reporting The ACA contains a requirement for employers to report the cost of health coverage under an employer sponsored group health plan on an employees W-2 form. The cost includes both the cost paid by the employer and contributions from the employee.

W-2 Fact Sheet for employers (PDF)

Women's Preventive Services
see also Preventive Services
The ACA requires health plans to cover designated womens preventive services without cost sharing for the member. Cost-sharing includes deductibles, copayments and coinsurance. Some of the benefits and services outlined in the women's preventive guidelines are already included within the existing ACA preventive services requirements.

Women's Preventive Services FAQ (PDF)

List of Women's Preventive Services (PDF)

Exempt Religious Employers Form (PDF)

The information provided here is not intended to advise you on how to comply with any provisions of the referenced legislation or related legislation or regulations, nor is it otherwise intended to impart any legal advice.

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