ACA Archives - Page 2 of 3 - Innovative Health Insurance Advisors

Which Industries are Most Susceptible to ACA Penalties from the IRS?

While all organizations are susceptible to receiving IRS penalties, some industries are particularly vulnerable. These industries include home healthcare, staffing, restaurant, and construction industries.

Why are these industries under fire from the IRS? Let’s take a look.

These Industries Typically Have a High Number of Hourly Workers

Home healthcare, staffing, restaurant, and construction industries have a high percentage of hourly workers with varying schedules. This can make it difficult for employers to determine which employees are ACA full-time and require an offer of health coverage.

HR is often a non-centralized function, making it challenging to gather the data necessary for compliance.

High Staff Turnover Rates

These industries are often associated with a high employee turnover rate. This can make it difficult for employers to track employees as their benefits.

Workforces that Disproportionately Decline Health Coverage

Home healthcare, staffing, restaurant, and construction industries generally employ workforces that are more likely to decline offers of health coverage benefits. Employers may struggle to track declinations and face ACA penalties from the IRS.

How Can Organizations Ensure They Are Complying with ACA Requirements?

Employers can ensure they are ACA compliant by determining the accurate full-time and part-time status of employees under ACA. Employers may experience significant ramifications for misclassifying employees.

Additionally, employers should familiarize themselves with their requirements under the ACA’s Employer Mandate. For example, employers with 50 or more full-time employees, or ALEs, must:

“Offer Minimum Essential Coverage (MEC) to at least 95% of their full-time employees (and their dependents) whereby such coverage meets Minimum Value (MV); and
Ensure that the coverage for the full-time employee is affordable based on one of the IRS-approved methods for calculating affordability.”

For more information, read on for the full article from the ACA Times.

These Industries are Most at Risk for ACA Penalties From the IRS

The home healthcare, staffing, restaurant, and construction industries are under fire from the IRS for failing to comply with the ACA. Organizations within these industries have been shocked to receive ACA penalty notices from the IRS that are in the millions of dollars.

Of course, all types of organizations – hospitality, manufacturing municipal governments, non-profits, and other industries – are receiving IRS penalty notices too. However, the four industries mentioned above seem to be getting more than their fair share.

Here’s why these industries are so susceptible to receiving ACA penalties:

HR is often a non-centralized function, making it challenging to gather the data necessary for compliance
They have a high percentage of hourly workers with varying schedules, making it difficult to determine who is ACA full-time and requires an offer of health coverage
They employ workforces that disproportionately decline offers of health coverage benefits, creating a heavier employer burden in tracking declinations
Employees come and go during the year with high staff turnover rates, increasing the employer’s burden to track all such employees
Per diem piece work and multiple rates of pay complicate the determination of pay rates and affordability
Reliance on payroll systems (or other software programs) that collate data and submit Forms 1094-C and 1095-C often result in a failure to let you know when the data used is inaccurate, which will trigger ACA penalties

Determining the accurate full-time and part-time status of employees under the ACA is arguably the first, and most important, step for ACA compliance. There are real ramifications for inaccurately classifying employees.

Under the ACA’s Employer Mandate, ALEs, or employers with 50 or more full-time employees and full-time equivalent employees to:

Offer Minimum Essential Coverage (MEC) to at least 95% of their full-time employees (and their dependents) whereby such coverage meets Minimum Value (MV); and
Ensure that the coverage for the full-time employee is affordable based on one of the IRS-approved methods for calculating affordability

ALEs that fail to comply with these requirements can be subject to Internal Revenue Code (IRC) Section 4980H penalties.

For example, let’s look at an employer that improperly classifies an employee as not full-time and does not make an offer of insurance. That employee goes to a government marketplace exchange to purchase health insurance and receives a Premium Tax Credit (PTC) that helps subsidize the cost of the health insurance purchased on the exchange. This can trigger the issuance of an IRS Letter 226J penalty notice under IRC 4980H.

The penalty assessment will be applied to every full-time employee working for that employer during the course of the tax year, not just the employee obtaining the PTC. For the 2022 tax year, that penalty could be as high as $275,000 for every 100 employees.

The first step in the full-time status evaluation is determining which measurement method is best for your organization.

For organizations made up primarily of variable-hour employees, you will want to implement the Look-Back Measurement Method. If your workforce has mostly full-time employees and non-varying schedules, the Monthly Measurement Method will be best.

The most expedient step for employers is to get your ACA Vitals score. This will help determine your risk of receiving IRS penalties by analyzing your unique workforce composition.

Such a review can reap dividends by helping employers avoid significant ACA penalties from the IRS, particularly if those organizations have not been filing ACA-required information annually with the IRS. These organizations should file this information as soon as possible to avoid receiving an IRS penalty notice and to minimize potential penalties.

The IRS is currently issuing warning notices to employers identified as having failed to file and furnish Forms 1094-C and 1095-C for the 2019 tax year via Letter 5699. If you have received one, contact us to have the penalty reduced or eliminated. We’ve helped our clients prevent over $1 billion in ACA penalty assessments.

If you are part of the home healthcare, personnel staffing, restaurant and construction industries, or any industry that relies on a significant mix of full-time and part-time employees, you are at serious risk of being penalized for not complying with the ACA.

We see daily how the IRS is enhancing its methods for identifying employers that are not complying with the ACA and sending them penalty notices.

We regularly see the surprise and shock expressed by organizations that receive these penalty notices, many of them containing significant penalty assessments.

We also see how these organizations could have avoided these penalty assessments by receiving help from experts that understand ACA and IRS regulatory requirements and know how to successfully meet those regulatory requirements.

September 11, 2022

ACA Penalty A and B Breakdown

All applicable large employers (ALEs) must comply with the Affordable Care Act (ACA), which requires employers to offer minimum essential coverage to all employees.

If an employer does not comply with this employee coverage requirement could lead to penalties for the employer and potentially an IRS audit.

Below is a breakdown of ACA penalties A and B, and how they could affect your company.

Who is Considered a Large Employer?

First, who is considered a large employer?

Any company or organization that has an average of at least 50 full-time employees or “full-time equivalents (FTEs) is considered an applicable large employer.

*For the purposes of the ACA, a full-time employee is someone who works a minimum of 30 hours a week.

What Are ACA Benefits?

The ACA was created in 2010 to offer more affordable health benefits to a wider range of people. Any ACA-compliant benefit plan must cover these 10 health benefits:

“Ambulatory services
Emergency services
Hospitalization
Pregnancy, maternity, and newborn care (before and after birth)
Mental health and substance use disorder services
Prescription drugs
Rehabilitative and habilitative services and devices
Laboratory services
Preventative and wellness services and chronic disease management
Pediatric services”

Additionally, ACA benefits cover birth control and breastfeeding support.

The Employer Mandate (Penalty A)

Employers must offer at least Minimum Essential Coverage (MEC) to any benefit-eligible employee. Non-compliance will generally result in a penalty of $2,500,000 PER eligible employee.

The Employer Mandate (Penalty B)

Employers must offer a minimum value plan that meets 60% actuarial value including hospitalization services.

The MV plan must be offered at a maximum contribution of 9.86% of the employee’s income – YOU pay the difference.

For example, take a California minimum wage employee: A $10.00/hour employee working a minimum of 30 hours per week has a maximum employee contribution of $128.18 per month.

If the plan cost is $300, YOU pay the difference of $171.82 per month.

Non-compliance will generally result in a $3,750.00 penalty PER employee who enrolls in coverage through the state exchange AND receives a premium subsidy.

The Individual Mandate

The individual mandate went away starting January 1st, 2019 for the majority of Americans.

Those individuals living in the District of Columbia, Massachusetts, or New Jersey will continue to be penalized for the individual mandate.

These penalties can add up to a lot of expenses for your business. At Innovative HIA, we want to help you avoid any potential penalties for lack of proper insurance. Contact our team at Innovative HIA for more information regarding your employer benefit needs.

August 29, 2022

Affordable Care Act

Affordable Care Act vs. Obamacare: What’s the Difference?

Although you’ve likely heard of Obamacare, you may not know that Obamacare is synonymous with the Affordable Care Act. This healthcare law that passed in 2010 goes by a few different names. You may also see this law referenced as PPACA or ACA (the acronym for Affordable Care Act).

Below, let’s discuss what Obamacare or the ACA covers, its goals, when you can enroll, and more.

What Do Obamacare and the Affordable Care Act (ACA) Cover?

The Affordable Care Act was designed with three primary goals. To:

“Make affordable health insurance available to more people…
Expand the Medicaid program to cover all adults with income below 138% of the FPL
Support innovative medical care delivery methods designed to lower the costs of health care generally.”

Additionally, there are sections of the ACA designed to help patients have access to affordable benefits. These sections include:

Quality, Affordable Healthcare for All Americans
The Role of Public Programs
Improving the Quality and Efficiency of Healthcare
Prevention of Chronic Disease and Improving Public Health
The Difference Between the ACA and Obamacare
Healthcare Workforce
Transparency and Program Integrity
Improving Access to Innovative Medical Therapies
Community Living and Assistance Services and Supports Act (CLASS Act)
Revenue Provisions
Reauthorization of the Indian Healthcare Improvement Act

From these sections came the 10 essential benefits that are included in minimum essential coverage (Minor Medical), which is defined as “any insurance plan that meets the Affordable Care Act requirement for having health coverage.”

These 10 benefits include:

Prescription drug coverage
Pediatric services
Preventative, wellness services, and chronic disease management
Emergency services
Hospital-stay coverage
Mental health and addiction services
Pregnancy, maternity, and newborn care
Ambulance patient services
Laboratory services
Rehabilitative and habilitative services and devices

Why Was This Healthcare Law Created?

Obamacare was designed to provide basic and affordable coverage for all Americans. Before Obamacare, those with pre-existing conditions could be refused coverage or charged more for their plan.

Obamacare ensures that insurance companies allow those with pre-existing conditions to receive the same care as those without.

Now, minimum essential coverage plans exist that provide the services required by the ACA while simultaneously being affordable for employers and employees.

These plans help both parties stay healthy while also avoiding the fines and penalties that come along with not having health insurance (especially for Americans living in states with individual mandates).

After all, minimum essential coverage isn’t a one size fits all service. There are different options and levels to choose from to create a plan best suited for your specific needs.

Learn more by reading our article, “What is Minor Medical and What Does It Cover?”

When Can I Enroll in Obamacare?

Open enrollment is the one time of the year when employees can sign up for health insurance or change their health insurance plans.

If you choose not to enroll during the open enrollment period, your options to purchase coverage become limited. Why? You cannot purchase ACA-compliant coverage unless a qualifying event occurs.

Qualifying events include:

Loss of a job
Move to a new coverage area
Birth of a child
Loss of existing coverage
Family event (i.e. marriage, divorce, or death)

Depending on state requirements, employees can take advantage of open enrollment for the following year starting November 1 until approximately January 15th. Again, open enrollment varies on a state-by-state basis. States like California, for example, extend their open enrollment dates to January 31.

Read on to learn what happens if your employee misses open enrollment.

How does the Individual Mandate Affect Obamacare?

When Obamacare was first implemented, it contained a clause that required Americans to have health insurance. Those who didn’t have health insurance were required to pay a tax penalty. This tax penalty was repealed in 2017.

However, the individual mandate is still in effect for some states in the U.S.

Residents living in the following states have implemented individual mandates.

California
The District of Columbia
Massachusetts
New Jersey
Vermont
Rhode Island

This means that people living in the states mentioned above must have health insurance or face state-mandated tax penalties. Read on to learn more about ACA employer penalties.

At Innovative HIA, our goal is to provide affordable ACA-compliant benefits to our clients. For more information about the plans that we offer or to enroll, get in touch with one of our brokers today.

August 15, 2022

Affordable Care Act

The Individual Mandate: What Employers Need to Know

The California Individual Mandate, originally signed into law in 2019, was a response to the federal individual mandate being struck down by the Trump administration.

This state law requires all California residents to obtain Minimum Essential Coverage (MEC) for a minimum of nine months, or they may face a tax penalty unless exempt.

Let’s discuss the individual mandate and what employers need to know, starting with a shorthand list of exemptions.

MEC Exemptions

According to the State of California Franchise Tax Board, some exemptions include:

An individual’sincome is below the state tax filing threshold
A coverage gap consists of three consecutive months or less
Coverage is not affordable based on the income reporting in your state income tax return
If the cost of the lowest plan, whether marketplace or employer-sponsored, is more than 8.09% of income on an individual’s tax return
The cost of the lowest employer-sponsored family plan, including dependents, is more than 8.09% of the household income
Non-citizens who are not lawfully present in the state
Those who are living abroad or are residents of another state
Members of a health care sharing ministry
Enrolled in limited or restricted-scope Medi-Cal or other similar coverage
Those in federally recognized tribes are eligible for services through an Indian health care provider or the Indian Health Service
Those in jail, except for incarceration, pending the disposition of charges

These exemptions typically must be claimed on your state income tax return.

While the individual mandate went into effect “to reduce the number of uninsured individuals and families,” it also has implications for employers in California. Moreover, the law requires additional reporting from specific organizations.

Employer Reporting Required by the Individual Mandate

Employers must report insurance information to the Franchise Tax Board (FTB) of California by March 31. The data reported includes the enrollment participation of employees and their dependents.

Employers with an insurance provider who reports to the FTB are not required to report in addition to their provider.

What are the Penalties for Not Reporting Insurance Information to the FTB?

Employers who do not meet the filing deadlines of the FTB are subject to a $50 penalty for every employee receiving coverage.

Individually, there is a flat penalty per household member or 2.5% of the gross household income, whichever is higher. If an individual does not obtain coverage for the entire year, they would be subject to a minimum fine of $800.

Why Are There ACA Reporting Requirements for Employers?

For applicable large employers (ALE), the FTB introduced these reporting requirements to help enforce the state’s healthcare mandate.

Employers who offer self-insured or employer-sponsored plans must report individual enrollment through Form 3895C unless their insurer reports via Form 1095-B.

These reports allow the FTB to verify an individual’s coverage and identify who must pay an individual shared responsibility provision (ISRP).

This sounds like a lot, but don’t worry. At SBMA, we take care of all ACA reporting required for the ALEs we work with. We submit Forms 1095-B and 1095-C to ensure you comply with ACA requirements.

Individual Mandates in Other States

Individual mandates are becoming a more common practice in states other than California. The current states who have individual healthcare mandates include:

California
The District of Columbia
Massachusetts
New Jersey
Rhode Island, and
Vermont

Read this article “What are the Advantages of the Affordable Care Act?” to learn more.

A Final Word

As an employer, it is essential to understand the individual mandate to ensure you remain compliant with reporting requirements and avoid hefty fines.

The best way to stay on top of these requirements is to partner with an insurance provider who handles your reporting. Learn more about benefit plans, here.

August 7, 2022

Affordable Care Act, Minor Medical

Preventative Services Covered by Minor Medical

Minimum essential coverage is health insurance that meets the Affordable Care Act requirements. Employers have a requirement to offer at least Minimum Essential Coverage to any benefit-eligible employee. Non-compliance can result in a penalty of $214.17 PER eligible employee per month without coverage.

At Innovative HIA, we aim to offer affordable, flexible, and compliant coverage for all employers.

What Does Minor Medical Cover?

Our Minor Medical plans cover 100% of preventive services and wellness visits to the doctor. In addition, all members have access to 24/7/365 telehealth services and discounts on generic and brand prescriptions.

These plans are the most affordable option under Minimum Essential Coverage.

What Does Major Medical Cover?

Major Medical covers the preventative services and wellness visits mentioned above, as well as primary care and specialist visits with a $15 copay. As well as urgent care, labs, and X-rays with a $50 copay.

24/7/365 telehealth services are included under this plan, along with access to behavioral health telehealth services

Prescriptions under the Major Medical plan are covered based on your coverage tier.

*$50 fee max 3 per year

Preventative Services Covered Under Minor Medical

Both plans cover preventative services and wellness visits. The services covered depend on age and gender. Here’s a look at the coverage offered under preventative services:

Covered Preventative Services for Adults

Abdominal aortic aneurysm one-time screening for men of specified ages who have ever smoked
Alcohol misuse screening and counseling
Aspirin used to prevent cardiovascular disease in men and women of certain ages
Blood pressure screening for all adults
Cholesterol screening for adults of certain ages or at higher risk
Colorectal cancer screening for adults over 50
Depression screening for adults
Diabetes (Type 2) screening for adults with high blood pressure
Diet counseling for adults at higher risk for chronic disease
Falls prevention (with exercise or physical therapy and vitamin D use) for adults 65 years and over
Hepatitis B screening for people at higher risk
Hepatitis C screening for adults at increased risk, and one time for everyone born 1945 –1965
HIV screening for everyone ages 15 to 65, and other ages at increased risk
Immunization vaccines for adults — doses, recommended ages, and recommended populations vary: Hepatitis A, Hepatitis B, Herpes Zoster, Human Papillomavirus, Influenza (flu shot), Measles, Mumps, Rubella, Meningococcal, Pneumococcal, Tetanus, Diphtheria, Pertussis and Varicella
Lung cancer screening for adults 55 – 80 at high risk for lung cancer because they’re heavy smokers or have quit in the past 15 years
Obesity screening and counseling for all adults
Sexually Transmitted Infection (STI) prevention counseling for adults at higher risk
Statin preventive medication for adults 40 to 75 years at higher risk
Syphilis screening for all adults at higher risk
Tobacco use screening for all adults and cessation interventions for tobacco users
Tuberculosis screening for certain adults with symptoms at higher risk

Covered Preventative Services for Women

Anemia screening on a routine basis for pregnant women
Breast Cancer Genetic Test Counseling (BRCA) for women at higher risk for breast cancer (counseling only; not testing)
Breast cancer mammography screenings every 1 to 2 years for women over 40
Breast cancer chemoprevention counseling for women at higher risk
Breastfeeding comprehensive support and counseling from trained providers, and access to breastfeeding supplies, for pregnant and nursing women
Cervical cancer screening
Chlamydia Infection screening for younger women and other women at higher risk
Contraception: Food and Drug Administration-approved contraceptive methods, sterilization procedures, and patient education and counseling, as prescribed by a health care provider for women with reproductive capacity (not including abortifacient drugs). This does not apply to health plans sponsored by certain exempt “religious employers.”
Diabetes screening for women with a history of gestational diabetes who aren’t currently pregnant and who haven’t been diagnosed with type 2 diabetes before
Domestic and interpersonal violence screening and counseling for all women
Folic acid supplements for women who may become pregnant
Gestational diabetes screening for women 24 to 28 weeks pregnant and those at high risk of developing gestational diabetes
Gonorrhea screening for all women at higher risk
Hepatitis B screening for pregnant women at their first prenatal visit
HIV screening and counseling for sexually active women
Human Papillomavirus (HPV) DNA Test every 5 years for women with normal cytology results who are 30 or older
Osteoporosis screening for women over age 60 depending on risk factors
Preeclampsia prevention and screening for pregnant women and follow-up testing for women at higher risk
Rh Incompatibility screening for all pregnant women and follow-up testing for women at higher risk
Sexually transmitted infections counseling for sexually active women
Syphilis screening for all pregnant women or other women at increased risk
Tobacco use screening and interventions for all women, and expanded counseling for pregnant tobacco users
Urinary tract or other infection screening, including urinary incontinence
Well-woman visits to get recommended services for women under 65

Covered Preventative Services for Children

Alcohol and drug use assessments for adolescents
Autism screening for children at 18 and 24 months
Behavioral assessments for children at the following ages: 0 to 11 months, 1 to 4 years, 5 to 10 years, 11 to 14 years, 15 to 17 years.
Bilirubin concentration screening for newborns
Blood pressure screening for children at the following ages: 0 to 11 months, 1 to 4 years, 5 to 10 years, 11 to 14 years, 15 to 17 years
Blood screening for newborns
Cervical dysplasia screening for sexually active females
Depression screening for adolescents
Developmental screening for children under age 3
Dyslipidemia screening for children at higher risk of lipid disorders at the following ages: 1 to 4 years, 5 to 10 years, 11 to 14 years, 15 to 17 years.
Fluoride chemoprevention supplements for children without fluoride in their water source
Fluoride varnish for all infants and children as soon as teeth are present
Gonorrhea preventive medication for the eyes of all newborns
Hearing screening for all newborns, and for children once between 11 and 14 years, once between 15 and 17 years, and once between 18 and 21 years
Height, weight, and Body Mass Index measurements for children at the following ages: 0 to 11 months, 1 to 4 years, 5 to 10 years, 11 to 14 years, 15 to 17 years.
Hematocrit or hemoglobin screening for all children
Hemoglobinopathies or sickle cell screening for newborns
Hepatitis B screening for adolescents ages 11 to 17 years at high risk
HIV screening for adolescents at higher risk
Hypothyroidism screening for newborns
Immunization vaccines for children from birth to age 18 — doses, recommended ages and recommended populations vary: Diphtheria, Tetanus, Pertussis, Haemophilus influenza type B, Hepatitis A, Hepatitis B, Human Papillomavirus, Inactivated Poliovirus, Influenza (Flu Shot), Measles, Meningococcal, Pneumococcal, Rotavirus and Varicella
Iron supplements for children ages 6 to 12 months at risk for anemia
Lead screening for children at risk of exposure
Maternal depression screening for mothers of infants at 1, 2, 4, and 6-month visits
Medical history for all children throughout development at the following ages: 0 to 11 months, 1 to 4 years, 5 to 10 years, 11 to 14 years, 15 to 17 years.
Obesity screening and counseling
Oral Health risk assessment for young children Ages: 0 to 11 months, 1 to 4 years, 5 to 10 years.
Phenylketonuria (PKU) screening for this genetic disorder in newborns
Sexually transmitted infection (STI) prevention counseling and screening for adolescents at higher risk
Tuberculin testing for children at higher risk of tuberculosis at the following ages: 0 to 11 months, 1 to 4 years, 5 to 10 years, 11 to 14 years, 15 to 17 years.
Vision screening for all children.

Read on for more information on minor medical insurance plans and what they cover.

July 31, 2022

Affordable Care Act, Minor Medical

Understanding the Affordable Care Act Individual Mandate

The Affordable Care Act (ACA) implemented an individual mandate, also known as the “individual shared responsibility provision” that requires that most Americans have qualifying insurance.

Until 2018, those who did not prove themselves to have health insurance when filing taxes were penalized. The Tax Cuts and Jobs Act of 2017 eliminated that requirement. Now, however, the financial penalty is repealed, but Americans are still required to have health insurance.

In order to stabilize the healthcare marketplaces, some states took it upon themselves to create state-wide individual mandates. This helps balance the marketplace because when healthy individuals have health insurance, it spreads the cost of care so those with chronic conditions do not end up paying as much.

States with Individual Mandates

Not all 50 states have individual mandates.

Only the following states participate:

California
The District of Columbia
Massachusetts
New Jersey
Vermont
Rhode Island

There are benefits and drawbacks to state individual mandates. According to the ACA Times, “These states’ individual mandates have resulted in greater healthcare participation but have also created challenges for employers and their ACA compliance efforts.”

For example, in 2022, a record number of people (over 15 million people) enrolled in health insurance coverage.

States Considering Implementing Individual Mandates

The states mentioned above with individual mandates may increase in number. A handful more states are considering implementing their own state-wide individual mandates.

Those states include:

Hawaii
Connecticut
Minnesota
Washington
Maryland

Are There Financial Penalties in States with Individual Mandates?

In short, yes. The states with individual mandates do impose financial penalties to those without health insurance despite the Tax Cuts and Jobs Act of 2017.

California

California residents are required to have health insurance or provide an exemption to health insurance. In 2021, the penalty for not having health insurance is:

A flat fee of $800 per adult and $400 per child
2.5% of gross income that exceeds the household’s state filing threshold

District of Columbia

In the District of Columbia, residents must have health insurance or face a penalty of the following:

2.5% of family income over the federal tax filing threshold
$695 per adult and $347.50 per child under 18, with a cap of $2,085 per family

Massachusetts

Massachusetts residents are only penalized if they are over 18 years of age and do not have health insurance. Exceptions include those who make less than 150% of the federal poverty level. Their penalty for not having health insurance is based on a sliding scale that ranges from $276 to $1,704.

New Jersey

Residents of New Jersey are penalized for not having health insurance based on the number of months uninsured. The penalty can range from $695 to $3,492

Vermont

Residents of Vermont do not have a financial penalty if they do not have health insurance. They do, however, have to indicate if they have insurance or not when filing taxes.

Rhode Island

Residents of Rhode Island must pay the following penalty if they do not have health insurance:

2.5% of annual household income
$695 per adult and $347.50 per child under 18

Complications of the Individual Mandate

The individual mandate makes it more difficult for companies providing health insurance to keep up with state-by-state regulation and reporting requirements. For example, employers with an employee in Massachusetts must make sure that the company complies with state and federal regulations.

Companies providing health insurance to employees in states that have individual mandates must make sure they comply with federal and state regulations in order to avoid penalties or fines.

For more information on maintaining ACA compliance, read our article on 1094/1095 Compliance: What You Need To Know.

July 10, 2022

Uncategorized

What Business Owners Should Know About ACA Benefits in 2022

Applicable Large Employers (ALEs) are businesses that have at least 50 full-time, or full-time equivalent employees in one calendar year. Under federal law, they must provide at least 95% of their employees and their children up to age 26 with Affordable Care Act (ACA) compliant coverage.

Why? Because the ACA was designed to make healthcare services affordable to more people.

Businesses that are considered ALEs that fail to meet ACA requirements will end up paying fines and penalties by the Internal Revenue Service (IRS). These fines can range from $300 – $4000 per employee who is not offered ACA compliant benefits.

Minimum Essential Coverage (MEC) is one of the most comprehensive and affordable ACA-compliant plans employers can provide to their workforce. Basic benefit plans meet the minimum ACA requirements while simultaneously supporting a healthy workforce.

As we look to the next year, it’s important to understand how changes in insurance and federal law may affect their ACA compliance. What does a business owner need to look out for in 2022 to remain ACA compliant?

Look out for Increased Insurance Premium Costs

First and foremost, health insurance premium costs are increasing for business owners this year. The baseline for affordability percentage, or the maximum percentage of an employee’s income they can contribute to their employer-sponsored self-only coverage, has lowered, therefore there is a greater cost to the business owner.

In 2021, the affordability percentage was 9.83%, however, the threshold for 2022 is decreased to 9.61%.

What does this mean for business owners?

Business owners who provide ACA-compliant benefits to their employees will now have to cover the difference between last year’s and this year’s affordability threshold.

If an employee makes $40,000 a year, they could only contribute a maximum of $3,932 towards health coverage plans in 2021. That same employee can now only contribute $3,844 per year in 2022. The employer is now responsible for the $88 difference.

The lowered affordability threshold makes healthcare more affordable for employees but will be an additional financial responsibility for employers.

Understand the American Rescue Plan (ARP)

The American Rescue Plan (ARP), created by the Biden Administration, was built to lower insurance premiums for lower and middle-income families. It temporarily reduced the affordability threshold to 8.5%.

These lowered premiums contributed largely to this enrollment season’s record-breaking number of people enrolling in health insurance.

Evaluate Grandfathered Group Health Plans

Health plans are considered grandfathered plans if they existed and have covered at least one person as of March 23, 2010. These plans do not have to comply with certain ACA rules. Some plans may lose their grandfathered status if specific changes are made to reduce benefits or increase costs to employees or dependents.

As a business owner, it’s important to look for those grandfathered plans that may have lost their grandfathered status. Ensure all elements of the plan design remain ACA-compliant. One specific area that grandfathered plans may not include in the latest ACA requirements is preventative services without cost-sharing.

It’s also important to keep records that document the plan’s terms that were in effect on March 23, 2010. This helps to verify existing grandfathered plans.

Review Plan Documents for Changes

Plans undergo changes over time. Review any changes to make sure your plan documents are aligned with any changes– new and old.

All group health plans must:

Ensure waiting periods are met

The waiting period is a period of time that must pass before coverage is effective for an employee or their dependents. This waiting period must not exceed 90 days.

Confirm annual dollar limits are not covering essential health benefits

The essential health benefits are the services that must be covered under the Affordable Care Act. If the plan you’re using limits the number of visits to health providers or limits the days of treatment, you must verify that the visit/day limit does not amount to a dollar limit.

Verify there are not any pre-existing condition exclusions

Exclusions for pre-existing conditions cannot be imposed on any individual, regardless of their age.

Unless there are certain HRAs, make sure there is not an employer payment plan in place.

Lastly, as an employer offering ACA-compliant benefits, it’s important to ensure that there are not any employer payment plans in place. These payment plans are used by an employer to reimburse employees for some or all of the premium expenses for their health insurance policy.

Non grandfathered group health plans must:

Make sure out-of-pocket costs for essential health benefits don’t go over $8,700 for individuals and $17,400 for family coverage.

Give Employees and Dependents Required Notices

Be aware of the required notices employees and their dependents might receive so you are prepared to submit these notices appropriately.

Employees and their dependents must receive the proper notices such as:

Health insurance exchange notice: written notice related to the Health Insurance Marketplace for all new employees within 14 days of their start date.
Summary of benefits and coverage: Confirm the contractual arrangement with your carrier to a third-party administrator and any notice of plan changes no later than 60 days prior to the effective date of the change.

Be Aware of “Pay or Play” Responsibilities

ALEs, as mentioned before, are responsible for providing employees with healthcare benefit coverage options. Make sure you know your business’s status as an ALE, and that you are complying with the rules and regulations.

If you know your status as an ALE, revisit the type of group health plan coverage you’ll offer your full-time or full-time equivalent employees

Prepare forms 1094 and 1095

Each year, the IRS requires ALEs to send their employers 1094 and 1095 documents to fill out to make sure their employers are complying with ACA requirements. It also helps the IRS ensure ALEs are offering coverage, and verify the type of coverage they are offering.

The forms for the 2021 calendar year are due in early 2022. Fill them out early and accurately to avoid missing any information.

Learn more about forms 1094 and 1095 here.

Other Updates to Review

Depending on the employer and the health plan, other action item updates might need to be reviewed. The list below outlines certain actions employers might need to take to continue being compliant with ACA regulations in 2022.

Medicare Tax for High Earners should be withheld (0.9%) from employees who make $200,000 or more in a calendar year
Monitor the coverage of preventative services guidelines
Distribute the medical loss ratio rebate as appropriate
Employers who have certain self-insured health plans must report and pay Patient-Centered Outcomes Research Institute (PCORI) fees by July 31st, 2022
Report health coverage costs on W-2 forms
Confirm compliance with Section 1557 Nondiscrimination requirements if applicable.

For more information about ACA compliance, and how to avoid the fines and penalties associated with being uncompliant, read our article, here.

Article originally published on SBMA Benefits.

March 27, 2022

Affordable Care Act, Minor Medical, News

What Are the Advantages of the Affordable Care Act?

In 2010, The Affordable Care Act (ACA), aka Obamacare, was enacted to provide reform to the health insurance industry.

Overall, the Affordable Care Act aimed to accomplish 3 main strategies: make insurance affordable, emphasize prevention, and improve how health care is delivered.

Over a decade later, it’s challenging to ignore the new standards that were derived from the original push to pass this legislation. While the act originally caused disagreements nationwide, there are clear advantages to be noted that have resulted from ACA.

Make Insurance Affordable

The first of the strategies that Obamacare aimed to accomplish was to make health insurance affordable for all Americans.

Oftentimes many assume that they have a clear understanding of the finances of their insurance coverage. However, after landing in the hospital or experiencing a need for emergent care, they would find themselves slapped with high deductibles, unexpected bills, and low maximum coverage. ACA was responsible for making changes to such events.

ACA was able to lower insurance costs for Americans in a variety of ways. The first of which was the provision of tax credits for insurance to middle-class Americans. By limiting out-of-pocket expenses to a maximum of $8,150 for individuals and $17,100 for families, in addition to extending the accessibility of Medicaid beyond 100% poverty level, health insurance became more affordable for many.

In addition to these initial cost caps, ACA allowed parents to keep their children on their medical plans until they reached age 26. It also established the Small Business Health Care Tax Credit, which serves to benefit businesses with less than 25 full-time employees. It provides such businesses with a tax credit that covers up to 50% of their contribution to their employees’ health insurance coverage.

Emphasis on Preventative Care

The second strategy that ACA addressed was putting emphasis on preventive care. Prevention focuses on the promotion of a healthy lifestyle and frequent check-ups to attempt to identify and target potential health issues before they escalate.

The ACA enacted a list of 10 essential benefits that all insurance plans must cover. They include:

Preventive and wellness visits, including chronic disease management
Maternity and newborn care
Mental and behavioral health treatment
Services and devices to help people with injuries, disabilities, or chronic conditions
Diagnostic lab tests
Pediatric dental and vision care
Prescription drugs
Outpatient care
Emergency room services
Hospitalization

In addition to establishing these initial benefit requirements, ACA was responsible for expanding treatment for mental health, addiction, and chronic diseases. From an insurer’s perspective, these are often the most expensive patients for whom to provide ongoing care. ACA put emphasis on programs to combat and prevent this prolonged treatment including those that focus on smoking cessation and combating obesity.

ACA also eliminated lifetime and annual coverage limits and denial of coverage due to pre-existing conditions. Insurance companies are not able to drop or deny you coverage because you have a pre-existing condition, made a mistake on your application, or because you’ve been recently diagnosed with a life-threatening disease. Additionally, they are not allowed to require new members to wait more than 90 days before coverage starts.

Lastly, ACA changed the way that insurers spend premium dollars. It declared that 85% of premium dollars paid by insured members must be spent on healthcare services and quality improvement. If these requirements are not met, insurers are required to provide covered members with a rebate.

Improve Health Care Delivery

The final strategy that Obamacare aimed to tackle was improving how health care is delivered by doctors and hospitals.

One example of such was the establishment of Accountable Care Organizations. Rather than ACA paying for each individual test, procedure, and visit, these organizations were designed to receive coverage payments based on the care and well-being of patients. So far, these organizations have shown significant results. As such, the ACA has continued to encourage them.

Additionally, ACA encouraged the transition to digital medical records. Traditionally, medical records were kept on paper and transferring them required doing so be done by mail or fax. Now, keeping electronic medical records provided a safer, more secure filing system that provided ease of transfer.

ACA also targeted the reduction of fraudulent doctor/supplier relationships. It provided guidance to states reviewing excessive insurance rate hikes and required background checks of all nursing home staff to prevent abuse of seniors.

Overall, the Affordable Care Act, or Obamacare, provided significant advantages to the healthcare industry. The Act was designed to best benefit both insurance suppliers and recipients to ensure that patients in need receive the best care possible without breaking the bank while still ensuring that the insurance industry was not crippled in the process.

While few fully recognize the benefits that were established as a direct result of the Affordable Care Act, many of the implemented changes have since become a recognized standard across the healthcare industry.

Innovative HIA provides a complete solution for ALE employers who want to provide affordable, ACA-compliant benefits to their workers. Our streamlined technology and personal services provide a complete solution for our clients and their employees. Learn more about what we do, here.

March 11, 2022

News

Tag Archive for: ACA