Since the law was passed over four years ago, the Affordable Care Act (ACA) has made a number of significant changes to group health plans. Many of these key reforms became effective in 2014, including health plan design changes, increased wellness program incentives and reinsurance fees.
“There are additional reforms becoming effective in 2015 for employers sponsoring group health plans,” says Aaron Ochs, consultant and project manager at JRG Advisors. “The most significant development impacting employers in 2015 is the Shared Responsibility Penalty for applicable large employers and the related reporting requirements.”
Smart Business spoke with Ochs on how employers should review upcoming requirements and develop a compliance strategy for 2015.
What is the status of existing health insurance plans?
If a health insurance plan was in existence when the ACA was enacted on March 23, 2010, then it could be considered ‘grandfathered.’ However, if a company makes certain design or contribution changes to its plan that go beyond permitted guidelines, then the plan will lose its ‘grandfathered’ status.
The status will need to be reviewed for the 2015 plan year. These plans are exempt from some of the ACA’s mandates.
What is the reinsurance program?
The transitional reinsurance program was first introduced in 2014 and is intended to support the first three years of the marketplace’s operation (2014-2016). The fees are used to help stabilize premiums for coverage in the individual market. If you are a fully insured employer, you do not have to pay the fee directly as your insurance company pays the fees on your behalf. If you are a self-insured employer, you are responsible for paying the fee.
There are certain types of coverage that are excluded from the reinsurance fees. Fees are based on a national contribution rate, which the Department of Health and Human Services establishes annually.
There are some exceptions for self-insured companies that exempt them from the reinsurance fees.
Are there penalties for not offering health insurance coverage?
Perhaps the most impactful group of regulations of 2015 is the ACA employer penalty rules. These rules are applicable to Applicable Large Employers (ALEs) that do not offer health coverage to their full-time employees (and dependent children) that is both affordable and provides minimum value. Such employers will be subject to penalties if any full-time employee receives a government subsidy for health coverage through the Health Insurance Marketplace.
Employers who find themselves out of compliance with the shared responsibility requirements will be subject to an annualized employer penalty of $2,000 per full-time employee (less the first 80 full-time employees in 2015) if the employers do not offer health insurance to at least 70 percent (95 percent after 2015) of their full-time employees and their dependents.
How is ALE status determined?
It is important that employers determine their ALE status. ALEs are defined as employer with 50 or more full-time employees (including full-time equivalent employees, or FTEs) on business days during the preceding calendar year.
However, there is a one-year delay for medium-sized ALEs, those with fewer than 100 full-time employees (including FTEs).
Is there transitional relief for non-calendar year plans?
The final regulations also include transition relief for non-calendar plans that allow employers to begin complying with the pay or play rules at the start of their 2015 plan years, rather than on Jan. 1, 2015. The relief applies to employers that maintained non-calendar year plans as of Dec. 27, 2012.
There are additional checklists the employer should work through to determine their eligibility for relief. Again, employers should work with their benefits, legal and tax advisors to determine their eligibility for relief.
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