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Are employers required to provide insurance to their employees?

No. The new health care law, the Affordable Care Act, does not require employers to offer health care coverage. Employers with 1-50 eligible employees will not be subject to penalties for not providing health coverage. However, there are many advantages to the employer. These include: Employee Loyalty & Retention, Productivity, Tax Advantages, Budget Control, and Aggregate Billing. Employers with more than 50 full time equivalents who do not offer benefits may be subject to a penalty.

What if the small employer has more than 50 employees?

If the small employer has more than 50 eligible employees but fewer than 101, the small employer will be able to buy insurance through Covered California starting in October 2015 for coverage that begins in 2016. Meanwhile, the employer with more than 50 eligible employees can continue to buy health coverage in the private marketplace.

What is an eligible employee?

An eligible employee works an average of 30 hours per week based on a month of work. You may decide to offer coverage to part-time employees who work between 20 and 29 hours per week. Ask your Certified Insurance Agent for a complete list of eligibility guidelines.

What happens if I do not cover my employees?

Businesses with 50 or fewer eligible employees are not subject to penalties if they do not provide health coverage to their employees. Businesses with greater than 50 eligible employees are not subject to tax penalties for the 2014 tax year.

How much does health insurance cost the small business owner?

The employer cost of offering health insurance depends on several choices the employer will make. These include:

  1. The level of coverage – bronze (60%), silver (70%), gold (80%), or platinum (90%) -offered to the employees. This is known as the “tier” or “metal tier”.
  2. The “Anchor Plan” or sometimes referred to the “Benchmark Plan” the employer chooses to base their contribution on. Employers will choose a specific plan within their chosen metal tier to tie their contributions to.
  3. The percent of premium the employer chooses to contribute to employee premium costs as a percent of the cost of the anchor plan.

The amount the employer chooses to contribute to dependent coverage (if offered).

How much is a small business owner required to contribute to employee premiums?

To participate in Covered California’s SHOP, employers must contribute a minimum of 50 percent of employee-only premium amount of their selected anchor plan (or reference plan).

Is the employer contribution defined as a dollar amount or as a percentage of the plan?

The minimum amount of premium the employer contributes is a percent of the premium. Carriers normally require 50% contribution by employer and state requires the employee to pay no more than 9.5% of his pay.

How much do employees pay for coverage?

The employee’s cost depends on the level of coverage the employer chooses and the plan the employee selects. As part of the Affordable Care Act, all health plan offerings are classified into one of four levels based on their actuarial value. This term refers to the share of health care expenses the plan covers for a typical group of enrollees. The four levels or tiers of coverage – platinum, gold, silver and bronze – in part, determine the amount of premium the employees will be responsible for.

The employer determines the coverage tier in which the employees must choose plans. As the plans increase in actuarial value, they cover a greater share of medical expenses overall. In the lowest tier plan, bronze, employees would pay about 40 percent of their health care expenses through cost sharing such as deductibles, coinsurance and copays. In the highest tier plan, platinum, employees would pay about 10 percent of the expenses.

What does Minimum Essential Coverage mean?

Minimum essential coverage satisfies the individual mandate for coverage. Coverage does not have to include essential health benefits to be minimum essential coverage. It is defined as:

  1. Coverage under certain government-sponsored plans
  2. Employer-sponsored plans, with respect to any employee
  3. Plans in the individual market
  4. Grandfathered health plans
  5. Any other health benefits coverage, such as a state health benefits risk pool, as recognized by the HHS Secretary

Minimum essential coverage does not include health insurance coverage consisting of excepted benefits, such as dental-only or vision-only coverage.

Is the 90-day waiting period the first of the month after 90 days or is it the 90th day?

Employee shall be enrolled on, or before the 90th day. We recommend employer implement policy of first of the month after 60 days of full time employment.

As an employer, what type of documentation or record keeping does the Affordable Care Act (ACA) require when an employee declines coverage?

ACA doesn’t require any specific record keeping or documentation, but a commons sense approach would be to have the employee sign a waiver declining coverage. Technically, the Shared Responsibility for Employers Regarding health coverageregulations don’t apply, but the substantiation and recordkeeping requirements in § 6001 apply, including Rev. Proc. 98-25 (1998-1 CB 689).

Also consider best practices and retain records regarding acceptance or declination health coverage accordingly and keeping in mind that the offer of coverage will be noted on IRS Forms 1095C and Box 14 for reporting to the IRS in 2016.

Ideally the employer’s human resource information system (HRIS) or benefits enrollment system can be used to track this information.  Because of the tax reporting requirements it might be a good idea to consult a tax professional about the best way to keep and transmit this information for your particular company.

It is important to note that an ALE, applicable large employer, will receive a penalty when an employee goes to the Heath Care Exchange and receives a tax credit, only if no coverage is offered, or coverage offered in not affordable or provide minimum essential coverage. If you aren’t sure how your company is classified, use our Company Size Calculator to see where your business falls under the ACA.

How can a large employer be sure they are providing affordable, minimum value coverage to their employees?

If you are a large employer (use our Company Size Calculator  to see where your business falls under the ACA) you must offer affordable minimum value coverage to your employees or face a tax penalty. Employees can opt out of their employers’ health insurance if it is too expensive or is inadequate. A plan is inadequate if it does not cover at least 60% of an employee’s healthcare expenses. A plan is too expensive if premiums exceed 9.5% of the employee’s W-2 compensation. If you’re a large employer and your coverage is inadequate and/or expensive – and an employee declines your coverage and goes to the Exchange and receives a tax credit – you will face a penalty.

If your coverage meets the definitions of affordable and minimum value – employees may still turn it down for a number of reasons:

  1. They don’t want coverage at all – they’re covered under a spouse or family member’s plan
  2. They want to choose a different kind of plan through the marketplace or elsewhere

As long as your offered coverage is affordable and has minimum value it is the employee’s responsibility to be covered under the Individual Mandate regulation. Think of it this way: The ACA does not penalize an employer for employees who decline an offer of coverage. The ACA penalizes the employer who fails to offer coverage. So if an employee declines your affordable minimum value coverage, they must find their own or face their own penalty on their 2014 federal income taxes.

How can a small employer be sure they are providing affordable, minimum value coverage to their employees?

If you are defined as a small employer by the ACA (use our Company Size Calculator  to see where your business falls under the ACA), you won’t face a tax penalty whether you offer coverageor not. If you do offer any sort of health coverage to your employees, it’s extremely important to get every employee to either enroll or decline in writing.

Some additional points to keep in mind are the ACA requires that employers offer coverageto a worker’s children, but not spouses. However, employers are allowed to charge the worker the full-price of dependent coverage, with no company subsidy.

How can I help you?

I hope some of these answers to Frequently Asked Questions were helpful!  Not sure what you are looking for? Just let me know. I am truly interested in what is important to you and often meet or talk to families or human resource officers about potential changes or questions about coverage or policy.

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Most employers want to do one or more of the following:

1.  Make more money

2.  Save money

3.  Make their job easier.

I understand and am here to make sure you have more time to earn money, that you don’t spend too much in the process and to make your job a little easier.  I am not only a father and grandfather, but I owned and operated an oil service business for over 20 years before changing industries in 2007.

What is most important to you?  Your business?

What are concerns that you are dealing with currently, and in near future?

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How can I help you?

I am truly interested in what is important to you and often meet or talk to families or human resource officers about potential changes or questions about coverage or policy.

When it comes to running a business, or running a family for that matter, having the facts can make all the difference in the world. Whether you are expanding your family or business, trying to optimize your benefits program, or trying to balance cost with value – I am here to answer your questions and provide advice on issues you may not have considered.  As seasoned experts we have most information at our finger tips, but what we don’t have I can get for you.


For more info please be free to contact me any time.

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