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Navigating health reform
Health Care Reform: Five Critical Compliance Questions
Health reform has generated a lot of questions for employers. Some are large and philosophical and demand thought and research. Some are important, but basic, and you simply need the answers to comply with the law. Here are five relatively basic questions every organization needs to answer.
1. Have you submitted the Patient-Centered Outcomes Research Institute (PCORI) fee?
If you offered a self-insured health plan for plan years ending between October 1, 2012, and December 31, 2012, you were required to submit an IRS Form 720 and the appropriate Patient Centered Outcomes Research Institute (PCORI) fee by July 31, 2013. If you missed this deadline, you may be subject to late filing penalties.
Employers can figure out how much they must pay by multiplying the average number of “lives covered” for the plan year by the rate of tax. Fortunately, the tax rate per participant is nominal.
2. Are you a “large” employer?
Starting in 2015, employers with 100 or more full-time employees plus full-time equivalents (FTEs) are considered large employers and are required to offer affordable health insurance coverage to all of their full-time employees and dependent children. If they don’t, they must pay a penalty.
Employers need to examine their workforce to determine if they will be subject to penalties. The penalties were delayed until 2016 for employers with 50-99 FTEs but only if certain conditions are met (for instance, if the employer maintained its current level of health care coverage including its level of contribution and coverage eligibility from February 9, 2014, through the end of plan year 2015). Large employers who don’t meet the conditions for the delay must comply or pay the corresponding penalties in 2015.
If you are a large employer with variable hour employees, your first step is to track employee hours to determine which employees work an average of 30 or more hours per week (and thus are considered full-time for the purposes of the shared responsibility penalties under the Affordable Care Act (ACA)).
3. Have you run the numbers to determine if individual employee premiums are affordable?
If you are a large employer and offer health insurance to employees, you should assess the affordability of the individual employee premiums for your full-time employees.
CliftonLarsonAllen can provide specific, concrete information that can help you weigh your options — whether that means discontinuing coverage, changing premium contribution levels, or modifying health benefits. We'll also estimate the cost of doing nothing — which in many cases could mean a 25 – 40 percent increase in your benefit costs. There are quite a few choices, but the calculations are not always straightforward.
4. Have you considered offering a SHOP plan?
If you are a small employer (50 or fewer employees), you may want to consider offering a small business health options program (SHOP) plan through your state or the federal health insurance exchange.
After January 1, 2014, small employers (with 25 or fewer employees) that wish to claim the Small Business Health Care Tax Credit in 2014 will only be eligible if they offer a SHOP exchange plan to their full-time employees. The U.S. Department of Health and Human Services has indicated that this requirement stands, even though the online enrollment function has been delayed. Employers will need to work with their insurance broker or agent, or the insurer for the SHOP exchange plan they wish to enroll in, to complete the necessary paper application process to participate in the SHOP marketplace.
5. Will your pre-tax health reimbursement arrangement or medical reimbursement plan still be allowed?
Pre-tax health reimbursement arrangements or medical reimbursement plans under IRS Section 105 or Section 125 that reimburse employees for individual health insurance premiums or cost sharing (without offering them a corresponding group health plan) are no longer allowed under the ACA. Although there are some exceptions, exploring this question is important because the fines are significant.
Change usually prompts a healthy questioning process. Answering these key questions will make sure you are engaged in the issues and the process of reform, while also complying with the various features of the ACA.