Session 3: Insurance Bonus

What we will cover An explanation of the Healthcare Reform Bill. How you will know if you will have to provide insurance to your employees. How to calculate the fee if you do not offer insurance or it is not affordable to your employees. An explanation of the Health Insurance Marketplace. Some facts about the Employer Mandate.

It requires certain businesses to offer employees health insurance or pay a shared responsibility payment. Effective January 1, 2015 applicable large employers will be required to offer minimum essential coverage that is affordable to their employees. If you fail to meet the requirement, be prepared to pay a “penalty” on your tax return. What is the Healthcare Reform Bill?

Are you an applicable large employer? Do you have 50 or more full time equivalent employees? Yes Did you employ them for more than 120 days during the previous calendar year Yes You are an applicable large employer No You are NOT an applicable large employer No You are NOT an applicable large employer

The definition is a calculation of: The ratio of the total number of paid hours during a period (part time or full time) by the number of working hours in that period Monday through Fridays. What is a Full Time Equivalent Employee

How do I calculate FTE?

How do I determine if an employee is full time or part time? FULL TIMEPART TIME Work at least 120 days per year XX Work 30 hours per week X Work 31+ hours per week X Work less than 130 hours a month X Works more than 130 hours a month x

The minimum amount of health insurance coverage an applicable large employer must make available to avoid paying the maximum penalty. You must offer each employee the ability to enroll in minimum essential coverage through an eligible employer- sponsored plan through one of three ways: Any plan or coverage offered in the small or large group market within a State Coverage under a grandfathered health plan A qualified governmental plan A penalty will only be paid if at least ONE employee enrolls in a health insurance exchange and also qualifies for premium subsidies and/or other tax credits from the federal government. What qualifies as “minimum essential coverage”

Subsidies are only available through the marketplace and are used to help people save money on premium or out of pocket expenses. Subsidies are based on income. In most states anyone making less than 400% of the federal poverty level can get some type of subsidy on marketplace plans. What are subsidies and how will I know if my employee qualifies for one?

What If I did not offer insurance, how do I calculate my penalty? * FTE is used to determine if an employer must comply with the mandate. Fees are based on full-time workers and not FTE.

What If the insurance I offer was not affordable for all, how do I calculate my penalty? * FTE is used to determine if an employer must comply with the mandate. Fees are based on full-time workers and not FTE.

How the Employer Mandate Works In general the fee is only triggered if at least one employee shops on the marketplace and is eligible for a federal premium subsidy. The fee does not apply if a dependent shops on the marketplace and receives a subsidy. – Rules only apply to employee-only coverage

How the Employer Mandate Works The Health Insurance Marketplace is a resource where individuals, families, and small businesses can: – Compare health insurance plans for coverage and affordability – Find out if they are eligible for tax credits for private insurance or health programs like Medicaid or the Children’s Health Insurance Program (CHIP) – Enroll in health insurance plan that meets their needs – It is Healthcare.gov

Employer Mandate Facts Employers have to offer coverage to 95% of their full time employees. Coverage must be offered to dependents up to age 26. Once a dependent turns 26, coverage no longer needs to be offered. – Spouses do not count as dependents. – Coverage does not have to be offered to spouses.

Employer Mandate Facts Employers must offer coverage, but employees do not have to take it. – Employees can’t get marketplace subsidies if coverage meets affordability and minimum value guidelines. – Since the employee was offered qualifying coverage, the employer doesn’t owe the fee. Employers use a measurement period and look back 3-12 months to find out if they have to comply with the mandate or if an employee is considered full-time. Coverage offered to employees must be affordable – Can not cost more than 9.5% of employee’s household income – Must provide minimum value – Must have an average cost sharing of 60%

Employer Mandate Facts Employers with over 200 FTE must auto-enroll full- time new hires and provide an opt-out. Employers must have a 90 day or less waiting period for required sign up or opt out Employers must offer at least a 30 day Special Enrollment Period for employees or qualifying employee family members losing coverage from another source. – An employee must be given 30 days to enroll in an employer plan after loosing non-employer minimum essential coverage for any reason other than non- payment.

What We Covered Use the calculation to determine how many Full Time Equivalent (FTE) employees you have. If you have LESS than 50 FTE employees you are not required to offer insurance to employees. If you have more than 50 FTE employees, make certain that you offer it to 95% of all of your full time employees and that it is affordable to them. There is a LOT of details to these laws and they change frequently. If you are uncertain, contact your insurance agent or your lawyer.