BENEFITS

Growing BusinessBENEFITS

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  • The Basics of the Affordable Care Act

    Game Plan

    In-Depth

    If Your Business Includes You and at Least One Employee

    Notify your employee(s) about the new health insurance marketplace. If you do $500,000 or more in annual volume of business, you must inform all part-time and full-time employees that:

    • There’s a new online Health Insurance Marketplace where they can find affordable health coverage.
    • If they purchase a health plan through the Marketplace, they may be eligible for a premium tax credit, but may also lose the contribution to any health benefits plan your company may offer.

    Provide employees with an SBC. The Summary of Benefits and Coverage (SBC) explains your company health plan coverage and what it costs, so your employees can better understand and evaluate their health insurance options. If your plan is self-funded, the obligation to provide the SBC falls squarely on your shoulders. Failure to provide the SBC could result in a penalty. (If your plan is fully insured, your issuer will likely provide the SBC.)

    Determine how to handle premium rebates. Under ACA, insurance companies must spend at least 80% of a small business’ premium dollars on medical care. If they fail to do so, insurers must rebate their policyholders.

    Limit employees’ health FSA and HSA contributions. Does your company offer employees a health Flexible Spending Arrangement (FSA)? If so, the maximum employee contribution is now $2,500 per year. (This cap applies to elective employee contributions, not to your employer contributions.) In addition, new contribution limits apply to HSAs in 2014 — generally $3,300 for those covered by a qualifying self-only high-deductible health plan, and $6,550 for those covered by a qualifying family high-deductible health plan.

    Increase Medicare withholding on wages. The employee portion of the Medicare Part A Hospital Insurance tax is now 2.35% on wages and compensation of over $200,000 for single filers and $250,000 for married joint filers. It’s your obligation to withhold this additional tax on wages above those thresholds. (The employer portion of the tax remains unchanged at 1.45%.)

    Cover eligible employees within 90 days. Beginning January 1, 2014, employees who are eligible for employer-provided health coverage will not have to wait more than 90 days to get on your plan.

    Get familiar with Transitional Reinsurance Program fees. The Transitional Reinsurance Program reimburses insurers in individual health insurance marketplaces for high claims costs. The program is funded through fees paid by employers (for self-insured plans) and insurers (for insured plans).

    The Department of Health and Human Services estimates that an employer’s tax-deductible fee for 2014 will be $63 for each individual covered under their health plan. This fee applies to all employer-sponsored plans that provide major medical coverage, including retiree programs, unless such programs are secondary to Medicare.

    Optimize your workplace wellness program. Under the Affordable Care Act, the incentive you may offer your staff as part of an employee wellness program has increased to 30 percent of the total premium cost of the employee’s coverage (up from 20 percent).

    You also may be able to use an incentive of as much as 50 percent of the total premium cost with respect to certain qualifying tobacco cessation programs. If you’re considering offering such a program, the program needs to comply with applicable rules.

    Game PlanGame Plan

    Game Plan

    • Get more information about the new health insurance marketplace and guidance from the U.S. Department of Labor.
    • Regarding a Summary of Benefits and Coverage, check with your issuer to make sure it will and does provide the SBC, because if the issuer fails to do this, you could incur a penalty as well.
    • If you receive a health premium rebate, determine whether some or all of it constitutes a plan asset. If it does, you must use that portion in a way that complies with your ERISA fiduciary duties (for example, by reasonably allocating the rebate to existing plan participants). Get more information here.
    • Get more information about FSA and HSA contributions from the IRS in this PDF.
    • You’ll find details on the 90-day waiting period for employees in this PDF.
    • Get more information about the Transitional Reinsurance Program from the IRS here.
    • Get more information on workplace wellness programs from the U.S. Department of Labor here.