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What is MEC and What Does It Cover?

Understanding Minimum Essential Coverage (MEC) can be complicated when compared to minimum value, essential health benefits, and actuarial value. 

Let’s start by answering: what is it and what does it cover? Minimum Essential Coverage is a plan that meets the Affordable Care Act (ACA) requirements for health coverage. Some of these programs include:

  • Marketplace plans
  • Job-based plans
  • Medicare
  • Medicaid

All applicable large employers (ALEs) with 50 or more full-time or full-time equivalent employees are required by law to provide ACA-compliant health coverage to their employees. ALEs who do not provide coverage ACA-compliant coverage are subject to fines and penalties from the Internal Revenue Service. 

What Are the Minimum Essential Coverage Option Levels Available?

There are three different plan options available. Understanding the difference between the three helps employers decide which MEC plan is best for their employees.

  • Standard MEC plans are ACA compliant and include coverage for wellness, preventative services, prescription discounts, and telehealth services. 
  • Enhanced MEC plans take coverage one step further than standard plans and are aimed at attracting and retaining top talent by also including primary and urgent care visits with low copays, and discounted specialist and laboratory services. 
  • The highest-level MEC plans include the enhanced MEC plan benefits along with added coverage such as prescription coverage and low copays. 

What Do Minimum Essential Coverage Plans with Hospital Indemnity Cover?

The goal of worksite MEC plans is to provide affordable healthcare coverage for the average person. MEC plans with added hospital indemnity policies can offset high deductibles and full out-of-pocket expenses so that an emergency does not become a financial crisis. The 10 health benefits they include are:

  1. Ambulatory Patient Services (outpatient services)
  2. Emergency Services 
  3. Hospital Visits 
  4. Maternity and Newborn Care
  5. Pediatric Services (including oral and vision)
  6. Mental Health and Substance Use Disorder Services (including behavioral health treatment) 
  7. Prescription Drugs
  8. Rehabilitative and Habilitative Services and Devices 
  9. Laboratory Services 
  10. Preventative and Wellness Services and Chronic Disease Management 

How Much Do You Save With MEC?

ALEs who fail to provide 95% of their full-time employees with ACA-compliant benefits are subject to high fines and penalties. Use our calculator to find out how much your business can save by providing Minimum Essential Coverage benefits while staying compliant with federal regulations.

Use our MEC Benefits calculator to see how much your business can save by offering MEC coverage.

What is the Difference Between MEC and Minimum Value?

Minimum value is a higher threshold than MEC. Minimum value is when a plan pays 60% of the actuarial value of allowed benefits under the plan. If a large employer offers benefits and meets Minimum Essential Coverage requirements, but they do not meet the minimum value, they meet the ACA employer requirements.

MEC and Essential Health Benefits

Essential health benefits are the core benefits that “qualified health plans” must cover. MEC also has a lower threshold than essential health benefits. If a group health plan doesn’t provide all of the benefits under essential health benefits, the coverage will likely meet Minimum Essential Coverage, so companies will be ACA-compliant.

Why is it Important to Understand the Differences?

Each of these coverage specifications is important to ensure large employers provide proper coverage to their employees. As an employer, you must understand your legal liability in providing benefits, as well as understanding what coverage you need to offer your employees to give them the best options and ensure compliance with the ACA. 

Curious why offering health insurance to your employees is so important? It encourages and promotes a healthier, happier, and stronger workforce. Read our article that explains why healthy employees improve work productivity here.

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What Exactly is Telemedicine?

Healthcare providers have been offering remote services for years, which have allowed patients to receive healthcare from the comfort of their own homes.

However, following the COVID-19 pandemic, telemedicine services became a necessity and are now a common tool utilized by many patients and healthcare professionals.

Why? These phone and video calls help patients protect themselves and others as well as provide a host of other benefits (but more on this later!) 

In this article, we’ll discuss what telemedicine is, the types of telemedicine, and when patients should be using these services. Let’s dive in.

What is Telemedicine?

Telemedicine allows healthcare providers to connect with patients without an in-person visit. Telemedicine services are provided primarily online or via smartphone through video chats or phone calls.

What is the Difference Between Telehealth and Telemedicine?

The terms “telemedicine” and “telehealth” are often used interchangeably, though the two have a few key differences: telemedicine refers specifically to remote clinical services and telehealth can refer to remote non-clinical services. 

Telemedicine, as stated by the World Health Organization, is “healing from a distance.” You receive treatment without an appointment or visiting the office.

Telehealth uses electronic information to support long-distance clinical healthcare, education, and administrative activities. It improves patient care and physician education rather than providing a service. Telehealth involves scheduling appointments, medical education continuation, and training for physicians.

In short, all telemedicine is telehealth, but not all telehealth is telemedicine. 

Types of Telemedicine

Using telemedicine, you can discuss symptoms and medical issues, receive a diagnosis, learn treatment options, and get prescriptions. There are a few common types of telemedicine which include:

Real-Time or Interactive Medicine

Interactive telemedicine, also commonly referred to as real-time or live telemedicine,  involves a physician and patient communicating in real-time.  

Real-time telemedicine involves any two-way communications –such as video conferencing and phone calls – that let providers and patients talk and allows healthcare providers to offer medical care. 

Some common services provided via interactive telemedicine include assessments of medical history, basic visual examinations, psychiatric evaluations, and even ophthalmic tests.

Remote Patient Monitoring

Remote patient monitoring gives caregivers the ability to monitor patients who have medical equipment that collects information like blood pressure, blood sugar levels, and more.

Through technology, information is sent to healthcare professionals and allows them to provide care and keep an eye on patients without the patients needing to visit in person. 

Remote patient monitoring can result in benefits such as reducing the time a patient needs to be in the hospital, reducing a patient’s exposure to other illnesses present in a healthcare building, as well as giving the patient time to recover at home. 

Remote patient monitoring is especially effective for chronic conditions such as heart disease, asthma, and diabetes.

Store and Forward Practices

In telemedicine, store and forward practices allow providers to share their patient’s information with other healthcare specialists and professionals.

The most significant advantage of these practices is that it doesn’t require the simultaneous attention of the delivering and receiving parties.

Many healthcare professionals—such as field technicians, caregivers, or specialists, for example—can collect the necessary data and upload it for use by other healthcare professionals.  

When Should You Use Telemedicine?

Telemedicine is for straightforward questions and issues, and any follow-up consults. It also can be helpful with psychotherapy and teledermatology. Some examples of straightforward issues include cold and flu symptoms, insect bites, diarrhea, pink eye, and sore throats.

Telemedicine has advanced our current health care options by offering several new benefits. It is making healthcare accessible for more patients, whether they live in a remote location, have a packed schedule, or any number of other reasons.

When Should You NOT Use Telemedicine?

Telemedicine is not for emergencies. For anything that requires urgent, primary care, you should go to a doctor in person. 

Benefits of Telemedicine

Telemedicine Saves Time

These services also help people avoid unnecessary hospital visits, which helps healthcare professionals give advice at a distance, save time, and reduce costs for both patients and doctors. Not only will it help avoid hospital visits when they aren’t necessary, but it will also give patients in the hospital the ability to discharge sooner by monitoring their vitals with telemedicine.

Telemedicine is Affordable

A recent study found that the average telemedicine visit is around $79, whereas an average doctor’s appointment is $149, and a trip to the emergency room costs, on average, $1,734. As telemedicine continues to grow, health insurance providers are offering coverage for telemedicine visits. Some states even require that health insurance plans reimburse patients for telemedicine visits.

Telemedicine is Accessible

Telemedicine offers a more accessible opportunity for healthcare and changes the way we visit the doctor. At Innovative HIA, we offer the most competitive limited benefit plans in the industry, including virtual health options! Check out our services for more information!

Read on for the pros and cons of telemedicine.

ACA Compliance: Understanding Employer Mandate Penalties for 2023 and 2024

Employers, especially Applicable Large Employers (ALEs) with 50 or more full-time equivalent employees in the previous year, are subject to crucial regulations under the Affordable Care Act (ACA) when it comes to healthcare coverage. It’s essential to have a comprehensive understanding of these rules to steer clear of potential penalties.

In this blog, we will break down the key aspects of the employer mandate penalties for 2023 and 2024.

Meeting the Offer Requirement

One of the central requirements for ALEs is to provide minimum essential coverage to at least 95% of their full-time employees. Failure to meet this offer requirement can result in significant penalties. Let’s delve into the specifics:

2023 Penalties

In 2023, the penalty for failing to meet the offer requirement is set at $2,880 per full-time employee, excluding the first 30. For instance, if an employer has 200 full-time employees and doesn’t meet the offer requirement, the penalty calculation would be as follows: (200 – 30) x $2,880, totaling $489,600.

2024 Penalties

Looking ahead to 2024, this penalty increases slightly to $2,970 per full-time employee. It’s important to note this increment when planning your employee coverage strategy.

Additional Penalties

Even if an employer manages to meet the 95% offer requirement, there’s a second potential penalty to consider. The coverage offered must not only encompass the minimum essential coverage but also meet specific criteria regarding value and affordability. Let’s explore this in more detail:

Affordability Criteria

In 2023, coverage is deemed affordable if an employee pays no more than 9.12% of their income for the lowest-priced plan. Keep in mind that the affordability percentage for 2024 is yet to be determined, so staying updated on this information is crucial.

Penalty for Unaffordable Coverage

If, in 2023, a full-time employee is not offered an affordable plan with minimum value and chooses instead to enroll in a subsidized Marketplace plan, a penalty of $4,320 per full-time employee applies. This penalty solely affects those employees who decline the employer’s plan in favor of a subsidized Marketplace option.

2024 Penalty Increase

For the year 2024, this penalty escalates to $4,460 per full-time employee, emphasizing the importance of offering affordable coverage options to your workforce.

IRS Communication and Reporting

Employers subject to penalties will receive Letter 226-J from the Internal Revenue Service (IRS). This letter outlines the penalty, providing employers with an opportunity to contest it if they disagree with the IRS assessment. It’s worth noting that errors on Form 1094-C or 1095-C, used for reporting to the IRS, can lead to penalties. If a penalty arises from a reporting mistake, it can often be reduced or even eliminated by responding to Letter 226-J and addressing the error promptly.

Importance of ACA Compliance

Compliance with the Affordable Care Act (ACA) regulations is of paramount importance for employers, particularly Applicable Large Employers (ALEs). Understanding the significance of ACA compliance extends beyond avoiding penalties; it has a far-reaching impact on both employee well-being and the company’s reputation.

Avoiding Penalties: Compliance with ACA regulations is the surest way to avoid costly penalties. By meeting the 95% offer requirement for healthcare coverage to full-time employees, employers can steer clear of substantial financial penalties imposed for non-compliance. These penalties can add up quickly and strain a company’s resources, making compliance a prudent financial decision.

Employee Well-being: Providing healthcare coverage to employees is not just a regulatory obligation but also a means of safeguarding their well-being. Access to healthcare coverage ensures that employees can receive necessary medical care when they need it, promoting their physical and financial health. Healthy employees are more productive and engaged, contributing positively to the company’s overall success.

Company Reputation: ACA compliance also plays a crucial role in shaping a company’s reputation. Businesses that prioritize employee benefits and adhere to healthcare regulations are viewed more favorably by potential recruits, clients, and the public. On the other hand, news of non-compliance or penalties can tarnish a company’s image, potentially affecting customer trust and shareholder confidence.

 

In summary, ACA compliance is not just about avoiding penalties; it’s a commitment to the well-being of employees and the preservation of a positive corporate image.

Eligibility Determination

Determining the eligibility of employees is a fundamental aspect of ACA compliance, especially when dealing with variable-hour or seasonal employees. Accurate employee categorization is crucial in meeting the 95% offer requirement.

 

Variable Hour and Seasonal Employees: Variable hour or seasonal employees can pose challenges when determining eligibility. These employees may have fluctuating work hours, making it necessary for employers to carefully track their hours worked. Employers must establish clear criteria for categorizing employees as full-time, part-time, or variable hour, ensuring that each group receives the appropriate healthcare coverage.

Importance of Accurate Categorization: Accurate employee categorization is essential for meeting the 95% offer requirement. Misclassifying employees can lead to non-compliance and potential penalties. Employers must maintain meticulous records and implement robust systems for tracking and categorizing employees to avoid discrepancies.

Minimum Essential Coverage

Understanding what constitutes Minimum Essential Coverage (MEC) under the ACA is crucial for employers. MEC defines the types of healthcare plans that meet regulatory requirements, and offering these plans is central to compliance.

Types of MEC: MEC includes various healthcare plans that provide essential benefits. These may encompass employer-sponsored group health plans, government-sponsored programs like Medicaid and Medicare, and certain individual market plans. It’s vital for employers to ensure that the coverage they provide falls within the scope of MEC to satisfy regulatory obligations.

Emphasizing Employee Access: Offering MEC is not just about meeting regulatory requirements; it’s about ensuring that employees have access to comprehensive healthcare coverage. MEC plans are designed to cover essential healthcare services, promoting the well-being of employees and their families. Employers should prioritize providing these plans to protect their workforce.

Final Notes

Understanding the intricacies of employer mandate penalties for 2023 and 2024 is essential for ALEs to navigate the ACA’s regulations successfully. Staying informed about changes in penalties, affordability criteria, and IRS communication is vital to avoid costly repercussions. For more detailed information and additional resources, consider visiting the official IRS website, where you can access comprehensive guidance on employer mandate penalties and compliance requirements. 

Still Have Questions?

We serve employers who want to offer their employees affordable benefits. We simplify the complexity of providing those benefits and ensure compliance with the Affordable Care Act. We provide affordable benefits for the everyday person. We are different because of our personal service, speed of implementation, and innovative approach to providing benefits coverage.

 

Learn more about us and our services, here.

How Voluntary & Worksite Benefits Can Help You Retain Your Employees

In the ever-evolving landscape of business, the quest to attract and retain top-tier talent has become an unrelenting pursuit for organizations striving to achieve sustained success and growth. In this pursuit, companies are constantly seeking innovative and effective strategies to create an environment that not only attracts the best employees but also nurtures their loyalty, engagement, and job satisfaction. Among the myriad tactics at an employer’s disposal, the provision of comprehensive voluntary/worksite benefits has emerged as a potent tool that not only demonstrates care and commitment but also significantly contributes to employee retention.

The Crucial Role of Benefits in Employee Satisfaction and Retention

Recent surveys and research studies have illuminated the pivotal role that employee benefits play in shaping the perceptions, attitudes, and behaviors of the workforce. It is no longer a mere afterthought or a passive aspect of compensation; benefits have transformed into a central pillar of the employment relationship. Approximately 60% of employees have conveyed that benefits carry substantial weight in influencing their overall job satisfaction and their perception of the company they serve. This undeniable link between employee contentment and benefits highlights the critical importance of offering a comprehensive benefits package that resonates with their desires, aspirations, and personal circumstances.

Understanding the Appeal of Voluntary/Worksite Benefits

Within the realm of employee benefits, voluntary/worksite benefits have emerged as a compelling avenue that not only addresses specific needs but also demonstrates a profound understanding of the intricate financial and healthcare priorities of employees. Several key factors contribute to the appeal of voluntary benefits, making them an attractive proposition for employees:

  • Pre-Taxed Premiums: The allure of pre-taxed premiums is rooted in their tangible financial benefits. By reducing taxable income, pre-taxed premiums effectively increase an employee’s take-home pay, providing a direct and immediate positive impact on their financial well-being. This financial relief, both substantial and practical, underscores the company’s commitment to promoting employees’ fiscal health.
  • Payroll Deduction Convenience: The simplicity and convenience of having benefit premiums deducted directly from payroll resonate with employees seeking seamless financial management. This streamlined process eliminates the need for separate payment arrangements, automating contributions and ensuring that employees remain consistently enrolled in their chosen benefit programs.
  • Efficient Claims Processing: Voluntary benefits often come with the promise of efficient claims processing and quick claims turnaround. This streamlined experience, coupled with responsive customer service, engenders trust and confidence among employees, assuring them that their benefits are readily accessible in times of need.
  • Affordable Coverage Options: Voluntary benefits are thoughtfully designed to provide accessible coverage at affordable rates, catering to the diverse spectrum of employees’ financial circumstances. This inclusivity fosters a sense of equity and reinforces the company’s commitment to supporting the entire workforce, irrespective of varying income levels.

Customization: The Cornerstone of Effective Benefits

The modern workplace is characterized by its diversity – a mosaic of lifestyles, preferences, and circumstances. This diversity underscores the necessity of offering benefits that can be tailored to meet the unique needs and preferences of individual employees. The effectiveness of voluntary benefits as a cornerstone of an employee retention strategy hinges on their relevance and utilization. A personalized approach to benefits not only acknowledges the individuality of the workforce but also maximizes their engagement with the offerings.

At Innovative HIA, we steadfastly believe in the power of customization. Our commitment to offering tailored voluntary benefits extends beyond a mere acknowledgment of diversity; it is a testament to our dedication to empowering employees with benefits that resonate with their specific requirements and aspirations. By understanding and addressing the diverse needs of your workforce, we contribute to a culture of inclusivity and care, which in turn strengthens employee loyalty and retention.

The Comprehensive Suite of Voluntary/Worksite Benefits at Innovative HIA

Our comprehensive range of voluntary/worksite benefits encompasses various facets of well-being, each strategically designed to provide comprehensive coverage and support:

Accident Insurance: Accidents are often unpredictable and can lead to unforeseen medical and out-of-pocket expenses. Accident insurance steps in to provide a safety net, helping employees navigate the financial aftermath of accidental injuries. By alleviating the burden of unexpected costs, accident insurance promotes peace of mind and underscores the company’s commitment to employees’ holistic welfare.

Term Life Insurance: In an era of uncertainty, financial protection for loved ones is paramount. Term life insurance offers an affordable avenue to provide this protection during an employee’s active working years. This coverage reassures employees that their families will be safeguarded in the event of an unforeseen tragedy, reflecting the company’s dedication to supporting not just employees, but their entire familial network.

Critical Illness Insurance: Health challenges can strike at any time, often bringing with them significant financial burdens. Critical illness insurance serves as a safety net, providing employees with essential coverage that fills potential gaps in existing insurance. This support alleviates concerns about medical expenses, allowing employees to focus on their recovery without the added stress of financial uncertainty.

Hospital Indemnity Insurance: The rising costs of healthcare, coupled with high deductibles, can create financial strain during hospital stays. Hospital indemnity insurance is designed to offset these costs, ensuring that a hospitalization event does not translate into a financial crisis for employees. By offering a financial safety net, this coverage demonstrates the company’s commitment to alleviating employee stress and promoting their overall well-being.

At Innovative HIA, our commitment to enhancing the lives of your employees is the driving force behind our comprehensive voluntary/worksite benefits portfolio. We recognize that a thriving and engaged workforce is the cornerstone of a successful enterprise. Our mission is to empower your employees with benefits that not only cater to their unique needs but also enrich their overall well-being. We invite you to connect with us today to explore how our range of benefits solutions can play a transformative role in elevating your employees’ access to essential healthcare and support.

In conclusion, the realm of voluntary/worksite benefits stands as a testament to an organization’s commitment to its employees’ well-being, financial security, and overall satisfaction. The evolving landscape of employee expectations necessitates a strategic and proactive approach to benefits, one that aligns with the diverse needs and aspirations of the workforce. As organizations navigate the intricacies of talent retention and engagement, voluntary benefits emerge as a beacon of care, empowerment, and support, reinforcing the bond between employees and their employers. At Innovative HIA, our unwavering dedication to elevating the lives of your employees through tailored voluntary/worksite benefits serves as a testament to our commitment to fostering a workforce that thrives, grows, and flourishes. Contact us today to embark on a transformative journey toward enhancing your employees’ access to the healthcare and support they need and deserve. Together, we can shape a future where both your employees and your organization prosper and succeed.

 

What Does the 2024 ACA Affordability Decrease to 8.39 % Mean to You? How Will It Affect Your Health Plans?

With the IRS’s recent updates outlined in Rev. Proc. 2023-29, it’s essential to grasp the key takeaways that will impact the costs of your 2024 employer-sponsored health and prescription drug plans. 

 

To navigate the Affordable Care Act (ACA) effectively, you must be familiar with the three “safe harbors” for determining affordable employer-provided coverage: the Federal Poverty Level Safe Harbor, the Rate of Pay Safe Harbor, and the W-2 Wages Safe Harbor. Employers must meet one of these safe harbors to demonstrate affordability.

1. 2024 ACA Affordability Percentage Decrease to 8.39%

For the second consecutive year, the IRS has announced a decrease in the ACA affordability percentage used to assess compliance with the employer mandate. The new rate of 8.39% is a reduction from 2023’s rate of 9.12%, which had already decreased from 2022’s rate of 9.61%. This percentage represents the maximum portion of an employee’s household income that can be spent while still considering the plan “affordable” under the ACA.

2. 2024 Lowest-Cost Plan: Federal Poverty Line Affordability Safe Harbor

In 2024, calendar year plans offering medical coverage that costs employees no more than $101.93 per month for employee-only coverage automatically meet the ACA affordability standard under the Federal Poverty Line Affordability Safe Harbor. This designation deems coverage affordable for all Full-Time Employees (FTEs) and streamlines ACA 1094 reporting using the Qualifying Offer method. Note that for employees in Alaska, the rate is $127.31 per month, and in Hawaii, it’s $117.25 per month.

3. Utilizing the Rate of Pay Affordability Safe Harbor

When the lowest-cost plan exceeds $101.93 per month, employers should consider using the Rate of Pay affordability safe harbor. This method involves analyzing the lowest hourly rate of pay for hourly full-time employees and the lowest monthly salary for salaried full-time employees. While the calculation is now routine, it’s essential for employers to plan and prepare to keep their plans “affordable” at the reduced rate of 8.39% for 2024.

4. Historical Affordability Rates

The IRS has steadily reduced the ACA-affordability percentage in recent years. In 2020 and 2021, rates were at 9.78% and 9.83%, respectively. Starting in 2022, the rate dropped to 9.61%, and further to 9.12% for 2023. Now, with the 2024 rate at 8.39%, we’re experiencing pricing at its lowest levels ever.

5. Crafting Your 2024 Contribution Strategy

Employers should actively collaborate with their broker/consultant team to develop a 2024 contribution strategy that aligns with ACA affordability safe harbor requirements. Ensuring that at least one of the medical plan choices available to full-time employees, across all regions, doesn’t require an employee share of the premium exceeding $103.28 per month is essential to avoid “tack hammer” penalties, also known as the ACA employer mandate “B-Penalty.”

6. Affordability Mechanics

Avoiding the IRC §4980H(a) or “A Penalty” (the sledgehammer) and the IRC §4980H(b) or “B Penalty” (the tack hammer) is paramount. In 2024, the A-Penalty is $247.50 per month, while the B-Penalty is $371.67 per month. These penalties come into play depending on whether an employer fails to offer minimum essential coverage to at least 95% of its Full-Time-Equivalent Employees (FTEs) or offers coverage that doesn’t meet ACA standards.

7. Impact of Legislative Acts

The Inflation Reduction Act of 2022 (IRA) and the American Rescue Plan Act of 2021 (ARPA) have expanded ACA premium tax credits, eliminating income limits and reducing the percentage of household income required for Exchange-based coverage. This is expected to lead to further reductions in ACA affordability percentages through 2025.

Still Have Questions?

We serve employers who want to offer their employees affordable benefits. We simplify the complexity of providing those benefits and ensure compliance with the Affordable Care Act. We provide affordable benefits for the everyday person. We are different because of our personal service, speed of implementation, and innovative approach to providing benefits coverage.

Learn more about us and our services, here.

Employer’s Guide to ACA Compliance: Best MEC Providers

The Affordable Care Act (ACA) introduced significant changes to the healthcare landscape in the United States. For employers, navigating the complex web of ACA regulations can be challenging. However, compliance is not only necessary to avoid penalties but also essential for the well-being of your employees and the reputation of your company.

In this comprehensive guide, we will walk you through the key aspects of ACA compliance to help you ensure that your business meets all the necessary requirements.

Understanding the Basics of ACA

The ACA, also known as Obamacare, was enacted to make healthcare more accessible and affordable for Americans. For employers, it primarily focuses on Applicable Large Employers (ALEs), which are those with 50 or more full-time equivalent employees. Here are the fundamental concepts you need to grasp:

 

Applicable Large Employer (ALE): ALEs are subject to specific ACA regulations, including the employer mandate to offer healthcare coverage to eligible employees.

Minimum Essential Coverage (MEC): ACA-compliant health plans that provide essential benefits and meet specific requirements.

Affordability and Minimum Value: ACA requires that employer-sponsored coverage is affordable and provides minimum value to employees.

Key Compliance Requirements

1. The 95% Offer Requirement

One of the central ACA requirements for ALEs is to offer Minimum Essential Coverage to at least 95% of their full-time employees. Failure to meet this offer requirement can result in substantial penalties.

2. Accurate Eligibility Determination

Determining employee eligibility, especially for variable-hour or seasonal employees, is crucial. Accurate categorization ensures that employees receive the appropriate healthcare coverage based on their work status.

3. Minimum Essential Coverage (MEC)

Understanding what qualifies as MEC is essential. This includes employer-sponsored group health plans, government-sponsored programs like Medicaid and Medicare, and certain individual market plans. Offering these plans is vital for compliance.

4. Calculating Affordability

Affordability is a key element of ACA compliance. In 2023, coverage is deemed affordable if an employee pays no more than 9.12% of their income for the lowest-priced plan. Stay updated on affordability percentages, as they may change over time.

5. Clear Communication with Employees

Effective communication is crucial. Ensure that your employees understand their healthcare options and rights. Transparent communication can also boost employee satisfaction and retention.

6. Strategies for Penalty Avoidance

Proactive steps can help you avoid penalties. Conduct regular reviews of your coverage offerings, stay updated on ACA changes, and consider utilizing ACA compliance software to streamline your processes.

7. The Role of HR and Benefits Administrators

Your HR and benefits administrators play a pivotal role in ACA compliance. They are responsible for accurate reporting, employee support, and ensuring that your organization meets all regulatory requirements.

8. Employee Education

Educating your employees about the ACA and their healthcare options empowers them to make informed decisions. Well-informed employees are more likely to choose appropriate coverage, reducing the risk of penalties for your company.

Best MEC Providers

Choosing the right Minimum Essential Coverage (MEC) provider is a critical decision for employers looking to ensure compliance with the Affordable Care Act (ACA) while providing their employees with quality healthcare options. Among the best MEC providers in the industry, one notable option is SBMA Benefits, a trusted name in the field. Let’s explore some of the top MEC providers, including the services offered by SBMA Benefits.

SBMA Benefits

SBMA Benefits has gained a reputation as a reliable and comprehensive provider of ACA-compliant Minimum Essential Coverage. Their services encompass a wide range of offerings that make them a valuable choice for employers aiming for compliance and employee well-being. Here’s what sets SBMA Benefits apart:

 

Diverse Coverage Options: SBMA Benefits offers a variety of healthcare plans designed to meet the ACA’s stringent requirements. They understand that different employers have unique needs, and their portfolio reflects this flexibility.

Affordability: As affordability is a key criterion under the ACA, SBMA Benefits strives to provide coverage options that are not only comprehensive but also affordable for employees. This ensures that you can meet regulatory standards while caring for your workforce’s financial well-being.

Clear Communication: SBMA Benefits excels in clear and transparent communication, ensuring that both employers and employees fully understand their coverage options and rights. This promotes a smooth enrollment process and minimizes the risk of compliance issues due to misunderstandings.

Compliance Expertise: SBMA Benefits has a team of compliance experts who are well-versed in the intricacies of ACA regulations. They can provide guidance and support to help you navigate the complexities of compliance with confidence.

Still Have Questions?

We serve employers who want to offer their employees affordable benefits. We simplify the complexity of providing those benefits and ensure compliance with the Affordable Care Act. We provide affordable benefits for the everyday person. We are different because of our personal service, speed of implementation, and innovative approach to providing benefits coverage.

Learn more about us and our services, here.

Mastering ACA Jargon: ALE Term Guide

Navigating the intricacies of the Affordable Care Act (ACA) can often feel like deciphering a complex code. One of the key aspects that businesses need to understand is the concept of “Applicable Large Employers” (ALEs) and the associated terms. 

 

In this guide, we’ll break down these ALE terms to help you make sense of your ACA compliance responsibilities and avoid costly penalties.

First, What is an ALE?

At the heart of ACA compliance lies the distinction between small and large employers. An ALE, or Applicable Large Employer, is an employer that meets specific criteria regarding the size of its workforce. Under the ACA, an ALE is defined as an employer that employed, on average, at least 50 full-time employees (including full-time equivalent employees) during the preceding calendar year.

Minimum Essential Coverage (MEC) Terms

MEC (Minimum Essential Coverage) is a term you’ll encounter frequently in ACA discussions. It refers to health coverage that meets the minimum requirements set by the ACA. Put simply, if your plan qualifies as MEC, it satisfies the basic ACA coverage criteria.

 

Minimal Value Coverage, on the other hand, means that your employer-sponsored health plan covers at least 60 percent of the total allowed cost of benefits under the plan. In practical terms, it ensures that your plan offers substantial coverage to your employees.

 

Essential Health Benefits: MEC plans must cover essential health benefits, which include services like preventive care, emergency services, maternity and newborn care, prescription drugs, and more. Understanding what constitutes essential health benefits in your plan is essential.

Additional ALE Terms

Minimum Value Standard: This is the benchmark used to determine if an employer-sponsored plan offers sufficient coverage. A plan must cover at least 60% of the total allowed cost of benefits to meet the minimum value standard.

 

Safe Harbor Methods: These are simplified approaches that employers can use to determine whether their health coverage meets the affordability requirement. The three common safe harbor methods are the Form W-2, Rate of Pay, and Federal Poverty Line (FPL) safe harbors.

 

Full-Time Equivalent (FTE) Calculation: Employers use this calculation to determine how many full-time equivalent employees they have when factoring in part-time and variable-hour employees. It’s essential for determining ALE status.

 

Affordable Care Act (ACA) Reporting: This term encompasses the process of reporting compliance with the ACA to the IRS and providing employees with relevant information about their coverage through forms 1094-C and 1095-C.

 

Dependent Coverage: The ACA requires ALEs to offer affordable coverage to full-time employees’ dependents. Employers should understand who qualifies as a dependent under the ACA.

 

Minimum Essential Coverage (MEC) Offer: ALEs must offer MEC to at least 95% of their full-time employees to meet the ACA requirements. Understanding what constitutes MEC is crucial.

 

Affordability Safe Harbors: These are specific methods that employers can use to determine if the coverage they offer is affordable for their employees. They include the Form W-2, Rate of Pay, and Federal Poverty Line (FPL) safe harbors.

 

Full-Time Employee Look-Back Measurement Periods: Employers can use these periods to determine the full-time status of employees for ACA compliance. The standard measurement period, stability period, and administrative period are essential components of this calculation.

 

Premium Tax Credits: These are subsidies provided to eligible individuals and families to help them afford health coverage purchased through the Health Insurance Marketplace. Employers should be aware of how their employees’ access to these credits can affect ACA compliance.

 

Minimum Value Calculator: This is a tool employers can use to determine if their health plans meet the minimum value requirement. It helps ensure that the plan covers at least 60% of allowed costs.

 

Reporting Entity: Employers may need to determine which entity within their organization is responsible for ACA reporting. This can vary depending on the structure of the company.

 

Grandfathered Plans: Some plans that existed before the ACA was enacted may be considered grandfathered, exempt from certain ACA requirements. Understanding the criteria for grandfathered plans is important.

Frequently Asked Questions (FAQs) About ACA Compliance

 

What is the ACA, and how does it impact employers?

The Affordable Care Act (ACA) is a federal law designed to make healthcare more accessible and affordable for Americans. For employers, it introduces regulations related to employee health insurance coverage. It defines Applicable Large Employers (ALEs) and mandates they provide affordable health coverage to their full-time employees.

 

How is an Applicable Large Employer (ALE) determined?

An ALE is an employer that, on average, employed at least 50 full-time employees (including full-time equivalent employees) during the preceding calendar year. Full-time employees work, on average, at least 30 hours per week or 130 hours per month.

 

What is Minimum Essential Coverage (MEC), and why is it important?

MEC refers to health coverage that meets the minimum requirements set by the ACA. It’s crucial because ALEs must offer MEC to at least 95% of their full-time employees to meet ACA requirements. MEC ensures employees have basic healthcare coverage.

 

How can I determine if my health plan meets the Minimum Value Standard?

The Minimum Value Standard requires an employer-sponsored plan to cover at least 60% of the total allowed cost of benefits. You can use the Minimum Value Calculator or consult with a benefits professional to assess your plan’s compliance.

 

What are Safe Harbor Methods, and how can they help with affordability calculations?

Safe Harbor Methods are simplified approaches employers can use to determine whether their health coverage meets affordability requirements. Common safe harbor methods include the Form W-2, Rate of Pay, and Federal Poverty Line (FPL) safe harbors, which provide alternative ways to assess affordability.

 

What penalties could my business face for non-compliance with ACA regulations?

Non-compliance with ACA regulations can result in significant penalties. Penalties may apply if you fail to offer MEC, the coverage is not affordable, or if at least one full-time employee receives premium tax credits through the Health Insurance Marketplace.

 

Are there any exemptions or special provisions for small businesses?

Small businesses with fewer than 50 full-time employees are generally exempt from the ACA’s employer mandate requirements. However, they may still choose to offer healthcare benefits voluntarily.

 

How can I ensure I’m accurately reporting ACA compliance to the IRS and employees?

To report compliance, employers must use forms 1094-C and 1095-C. It’s crucial to maintain accurate records and ensure that the information submitted is timely and error-free. Consider consulting with a tax professional or ACA compliance specialist for assistance.

 

What should I know about Premium Tax Credits and their impact on ACA compliance?

Premium Tax Credits are subsidies provided to eligible individuals and families to help them afford health coverage through the Health Insurance Marketplace. Employers should be aware that employees’ access to these credits can affect ACA compliance, particularly if your coverage is not affordable.

 

How often do ACA regulations change, and how can I stay updated?

ACA regulations can evolve, so it’s essential to stay informed. Regularly check official IRS resources and consider working with ACA compliance experts who stay up-to-date with changes and can provide guidance on compliance adjustments.

Any Questions?

We serve employers who want to offer their employees affordable benefits. We simplify the complexity of providing those benefits and ensure compliance with the Affordable Care Act. We provide affordable benefits for the everyday person. We are different because of our personal service, speed of implementation, and innovative approach to providing benefits coverage.

 

Learn more about us and our services, here.

Maintaining ACA Compliance in 2023: Your Questions Answered

Complying with the Affordable Care Act (ACA) can be a complex task for employers, especially with changing regulations and reporting requirements. It is crucial for organization leaders to stay informed about the latest developments and strategize to ensure ACA reporting and compliance. Even employers who have met ACA requirements without penalties or notices should pay attention to the evolving landscape. In this blog post, we will provide an overview of recent changes in ACA enforcement and explore the importance of developing a comprehensive plan for ACA reporting and compliance.

What is the ACA?

The Affordable Care Act, enacted in 2010, is a comprehensive healthcare reform law that introduced various regulations and requirements for employers. One significant aspect of the ACA is its mandate for businesses with more than 50 full-time employees to provide affordable healthcare options to their qualifying employees. Affordable coverage, as defined by the ACA, means that the cost of healthcare coverage must not exceed a certain percentage of an employee’s annual salary. Employers are obligated to report their healthcare coverage offerings to demonstrate compliance with ACA requirements.

What are the changes to the ACA?

The ACA has undergone several changes in terms of compliance and reporting requirements. Notably, there has been a heightened emphasis on enforcement due to increased funding for the Internal Revenue Service (IRS) through the 2022 Inflation Reduction Act. This additional funding, amounting to $80 billion, represents a significant budget increase of approximately 60% for the IRS. As a result, the IRS now possesses enhanced capabilities to enforce ACA requirements compared to previous years.

Furthermore, the IRS is also playing catch-up in enforcing ACA compliance due to circumstances like the COVID-19 pandemic. Recent treasury reports have revealed that the IRS issued only a fraction of the potential notices in previous years. Therefore, employers should not assume that they are fully compliant simply because they have not received any notices thus far. It is crucial for employers to conduct a thorough analysis of their systems, offerings, and data to ensure they understand which employees may qualify for subsidized coverage.

Additionally, the Treasury Department and the IRS have eliminated the provision of good-faith relief from penalties for companies that made efforts to comply with ACA requirements but experienced inaccuracies or omissions in their ACA reporting. As a result, employers will be held fully accountable for complying with ACA requirements.

Do I need a 1095-C to stay in ACA compliance?

Yes, if you are classified as an applicable large employer (ALE), you must file Forms 1094-C and 1095-C to meet ACA reporting requirements. These forms provide crucial information about the coverage options you offered to your employees and the cost of the lowest available premiums throughout the year. It is essential to file these forms accurately and on time to demonstrate compliance. The deadline for filing with the IRS is March 31, and you must furnish the forms to your full-time employees by January 31. It’s worth noting that the deadline for furnishing forms to employees has been extended permanently. However, regardless of the deadline extension, it remains critical to file Forms 1094-C and 1095-C on time to avoid penalties.

Late filings are subject to a tiered penalty structure. 

The first tier, from April 1st through April 30th, incurs a penalty of $50 per form for any late or corrected forms filed during that timeframe. The second penalty tier runs from May 1st to August 1st, where the penalty increases to $110 per form for filings during that period. After August 2nd, late forms will be assessed a penalty fee of $280 per form. Therefore, there is a strong incentive to file the required forms early and accurately to mitigate the risk of penalties.

How do I stay in compliance with ACA requirements?

To effectively navigate ACA compliance and reduce the risk of penalties, it is crucial to develop a comprehensive ACA strategy that allows you to take control of your compliance efforts. One fundamental step is to ensure that you offer healthcare benefits to at least 95% of your full-time employees. This involves identifying which employees qualify for coverage and ensuring that they receive the appropriate benefit offerings promptly and accurately.

Additionally, it is advisable to proactively work with ACA experts who possess in-depth knowledge and understanding of the ACA regulations. These experts can provide guidance and support in navigating the complexities of ACA compliance, leveraging technology to gather insights from your data and identify any potential risks within your organization.

Another important aspect of staying in compliance with ACA requirements is documenting your benefits offers and relevant data throughout the year. By establishing robust documentation processes and keeping track of your decisions, you can piece together a comprehensive picture of your compliance efforts. This documentation can be invaluable if you face any IRS inquiries in the future, as it will help you provide a clear and accurate account of your compliance measures.

Furthermore, filing ACA reports on time is crucial for maintaining compliance. By adhering to the filing deadlines, you minimize the risk of penalties. It is important to note that late or incorrect filings are subject to penalties under a tiered structure. Therefore, it is in your best interest to file early and accurately to avoid unnecessary financial burdens.

Final Notes

Maintaining ACA compliance and meeting reporting requirements can be overwhelming, but it is essential for employers to navigate the complexities of the ACA. By developing a comprehensive ACA strategy, documenting practices, and seeking expert guidance, organizations can minimize risks, avoid penalties, and showcase best practices in employee benefits. Stay informed and proactive to ensure ACA compliance and reporting success.

Still Have Questions?

We serve employers who want to offer their employees affordable benefits. We simplify the complexity of providing those benefits and ensure compliance with the Affordable Care Act. We provide affordable benefits for the everyday person. We are different because of our personal service, speed of implementation, and innovative approach to providing benefits coverage.

Learn more about us and our services, here.

What is the Difference Between Fully Insured and Self-Insured Health Plans?

In today’s complex healthcare landscape, having access to adequate health insurance coverage is of utmost importance. Health insurance provides individuals and families with financial protection against the high costs of medical care, ensuring that necessary treatments, medications, and healthcare services are accessible when needed. It offers a sense of security and peace of mind, safeguarding individuals from potential financial burdens that can arise from unexpected medical expenses.

Overview of the Two Primary Types of Health Plans: Fully Insured and Self-insured

When it comes to health insurance options, there are two primary types: fully insured and self-insured health plans. Understanding the differences between these two options is crucial for individuals, employers, and organizations seeking the most suitable coverage for their needs. Fully insured and self-insured plans differ in terms of how the plans are structured, who assumes the financial risk, and the level of control employers have over the plan design and administration.

Fully Insured Health Plans:

Fully insured health plans are the more traditional and common type of health insurance arrangement. In this model, employers contract with an insurance company or carrier to provide healthcare coverage to their employees and dependents. The insurance company assumes the financial risk associated with providing coverage, including paying claims and managing the plan’s administrative functions.

Under a fully insured plan, the employer pays a fixed premium to the insurance company based on factors such as the size of the group, location, and the health profile of the employees. Premiums are usually paid on a monthly or annual basis, providing employers with predictability in their healthcare costs. The insurance company sets the premium rates and determines the coverage options and benefit levels.

One advantage of fully insured plans is the stability they offer in terms of cost. Employers know in advance what their premium costs will be, which aids in budgeting and financial planning. However, this stability comes at the expense of flexibility and control over plan design. Insurance companies may impose certain limitations and restrictions on coverage, such as pre-authorization requirements for specific medical procedures or limitations on access to certain specialists or healthcare providers.

Self-Insured Health Plans:

Self-insured health plans, also known as self-funded plans, take a different approach. In this model, employers assume the financial risk for providing healthcare coverage to their employees. Rather than paying premiums to an insurance company, employers set aside funds to cover the cost of claims and other administrative expenses. Employers may choose to work with a third-party administrator (TPA) to handle claims processing and other administrative functions.

 

One of the primary advantages of self-insured plans is the potential for cost savings. Since employers assume the financial risk, they can potentially save money if the actual claims experience is lower than anticipated. Additionally, self-insured plans provide employers with greater flexibility and control over plan design. They can customize the plan to meet the specific needs of their workforce, implement wellness programs, and have direct access to claims and utilization data.

 

However, self-insured plans also come with risks. If claims exceed the anticipated amount, employers may face significant financial burdens. To mitigate this risk, employers often purchase stop-loss insurance, which provides protection against catastrophic claims expenses.

Main Differences Between Fully Insured and Self – Insured Health Plans

Overall, the main differences between fully insured and self-insured health plans can be summarized as follows:

 

Financial Risk: In fully insured plans, the insurance company assumes the financial risk associated with providing coverage, while in self-insured plans, employers take on the financial risk themselves.

 

Premiums: In fully insured plans, employers pay fixed premiums to the insurance company, whereas in self-insured plans, employers set aside funds to cover the cost of claims and administrative expenses.

 

Plan Design and Control: Fully insured plans offer less flexibility and control over plan design since insurance companies determine coverage options and benefit levels. Self-insured plans provide greater customization and control over plan design, allowing employers to tailor the plan to meet the specific needs of their workforce.

 

Cost Considerations: Fully insured plans provide stability and predictability in costs, as employers know in advance what their premium costs will be. Self-insured plans offer potential cost savings if claims experience is lower than expected, but employers bear the risk of higher-than-anticipated claims expenses.

 

Limitations and Restrictions: Fully insured plans may come with limitations and restrictions imposed by the insurance company, such as pre-authorization requirements or limitations on provider networks. Self-insured plans offer more flexibility in provider choices and plan customization, depending on the employer’s preferences and needs.

 

Administrative Responsibilities: In fully insured plans, the insurance company handles claims processing and plan administration. In self-insured plans, employers may choose to work with a third-party administrator (TPA) to handle administrative functions.

 

Understanding these distinctions is crucial for individuals and employers in choosing the most suitable health insurance option. Fully insured plans offer stability and simplicity but come with limited control. Self-insured plans provide flexibility and potential cost savings but require careful risk management and administrative oversight. Employers should evaluate their specific needs, resources, and risk tolerance to determine the best approach to healthcare coverage for their organization.

Still Have Questions?

We serve employers who want to offer their employees affordable benefits. We simplify the complexity of providing those benefits and ensure compliance with the Affordable Care Act. We provide affordable benefits for the everyday person. We are different because of our personal service, speed of implementation, and innovative approach to providing benefits coverage.

Learn more about us and our services, here.

Reducing Healthcare Costs for Qualified Large Employers

The Gold Standard in Low Cost, High-Care, and Easy-to-Administer Healthcare Plans

As a business owner of a Qualified Large Employer (ALE), managing healthcare costs while providing ACA compliant benefits to your employees can be a daunting task. With rising healthcare costs and the ongoing pandemic, finding effective solutions to mitigate expenses has become even more crucial. This is where Innovative HIA comes in. We offer a low-cost, high-care, and easy-to-administer healthcare option that positions itself as the gold standard in healthcare plans.

Self-Funded Healthcare Plans: Mitigating Risks, Reducing Costs

Innovative HIA’s self-funded healthcare plans operate on a risk basis, ensuring that clients receive the best possible care at the lowest cost. By choosing a self-funded plan, qualified large employers have more control over their healthcare expenses. If claims volume exceeds the fund, the client assumes the risk. However, Innovative HIA supports its clients by reducing its administrative fee to cover the claims and then gradually recoups the accommodation in subsequent years. This approach provides financial flexibility and helps mitigate the impact of high claims on employers’ budgets.

No Increase in Administrative Rates: Commitment to Affordability

At Innovative HIA, we understand the importance of affordability when it comes to healthcare plans for qualified large employers. We stand by our promise of not increasing administrative rates, ensuring that our clients can rely on stable and predictable costs. Our goal is to offer high-quality care at an affordable price, providing peace of mind to business owners while ensuring their employees receive the benefits they deserve.

Captive Healthcare Plans: Shared Coverage, Lower Fees

In addition to our self-funded plans, Innovative HIA offers captive healthcare plans. These plans leverage a cooperative structure where each company in the #1 position covers their own claims, while the others provide backup coverage. By strategically pooling resources and mitigating losses, captive plans help keep fees low and reduce exposure risk for qualified large employers. This approach enables businesses to share the burden of healthcare costs, leading to more manageable expenses for all participants.

ASO & Standard Groups: Flexible Options for Different Needs

Innovative HIA provides ASO (Administrative Services Only) and Standard group options to cater to diverse employer requirements. With ASO, you have the flexibility of a pay-as-you-go basis, where you absorb exposure for claims, while Innovative HIA creates reserves to cover any deficits. We have recently transitioned to the Innovative HIA captive, which pays the claims and further reduces exposure risk. The ASO and Standard group options ensure that qualified large employers have tailored solutions that align with their specific financial and administrative needs.

The Innovative HIA Captive: The Gold Standard in Healthcare Plans

Our Innovative HIA captive represents the gold standard in healthcare plans for qualified large employers. Operating on a self-funded basis, it allows clients to handle their claims first, empowering them with greater control over their healthcare expenses. The captive serves as the second position, stepping in to cover deficits if the client goes into the red. With stable administrative rates and a gradual collection of any deficits over the current and subsequent years, the Innovative HIA captive ensures financial sustainability while maintaining the quality of care provided to employees.

What Makes Innovative HIA Benefits Different?

Our customer service is what sets us apart. We work when you work. Our carrier partners have given us exclusive offerings to complement our medical plans, giving you the best possible price. Our quick execution and advanced approach to benefit coverage is second to none.

How Innovative HIA Supports the Onboarding and Offboarding Processes

At Innovative HIA, we support businesses beyond providing affordable minimum essential coverage (MEC). We are proud to support the employee onboarding process so your human resources (HR) teams have more time to focus on the daily tasks that keep your business running.

This is why we offer a complete insurance solution that covers:

  • Implementation
  • Enrollment
  • Administration, and
  • Reporting

Our benefits professionals are fully equipped to support onboarding and offboarding procedures to eliminate the hassle for businesses.

How? Using our benefits portal.

Our Benefits Portal

Employee benefits administration can be a pain for any HR department. At Innovative HIA, we aim to simplify the process by giving you access to everything you need in one place.

Our one-stop-shop portal is proprietary and unlike any other. Our portal grants you access to all of the tools necessary to support a new hire (from beginning to end).

We eliminate the headache of unnecessary paperwork with benefits management portal access. You can:

  • Make plan changes
  • Order ID cards
  • Check a claim status online
  • Track onboarding and offboarding
  • And more

Resources are only a click away.

Besides creating a seamless onboarding process with our all-in-one portal, we also provide video tutorials for our partners. These resources provide instructions that assist navigation through the portal.

Read on to view our enrollment portal walkthrough.