As a business owner or human resource representative, you want to direct your employees to your company’s benefits, so they don’t have to go to the individual marketplace for affordable health, vision, and dental insurance.
Large Businesses
Employers with 50 or more full-time employees, “applicable large employers” (ALEs) are covered under The Patient Protection and Affordable Care Act (ACA).
The ACA requires covered employers to either offer group health insurance to at least 95 percent of their qualifying, full-time employees or choose to pay a penalty fee.
Small Businesses
Small businesses have fewer than 50 full-time employees, so the ACA doesn’t affect more than 95 percent of businesses. However, if your company is a small business, it may be eligible for The Small Business Health Care Tax Credit if you choose to offer group health insurance. You don’t want to overlook this, and it could be worth up to 50% of the costs you pay for your employees’ premiums.
Coverage Explained
ALEs must offer full-time employees health insurance that is “affordable” and that meets a “minimum value” standard to avoid the penalty fee:
- Affordable. Affordability is determined by the cost of the employee’s premium contribution for employee-only coverage under the lowest-cost qualifying health plan offered by the employer.
- Minimum Value. A plan offers minimum value if it is designed to cover at least 60 percent of the total cost of medical services and provides substantial coverage of inpatient hospitalization and physician services.
Understanding Penalties
An ALE that doesn’t provide coverage meeting the affordable and minimum value criteria may face a financial penalty called the employer shared responsibility provisions (ESRP). Since most employers fall below the ALE threshold, they are not subjected to the ESRP. However, if your company is an ALE, be sure to fully understand ACA penalties so you can limit your company’s risk and keep your company ACA compliant.
What Are “Notifications”?
The ACA requires all employers to provide specific notices to employees, including but not limited to:
- Notice of the Health Insurance Marketplace. All employers must provide written notice about the Health Insurance Marketplace to each new employee at the time of hiring, within 14 days of the employee’s start date.
- Summary of Benefits and Coverage (SBC). The ACA requires all plans to provide an SBC to participants and beneficiaries throughout the enrollment process. Upon request, it explains what the health and dental insurance plans cover and what they cost.
- Notice of Material Modifications. Plan participants must be notified of any modification that would affect their coverage at least 60 days before the effective date of the change.
Reporting Requirements
The ACA places specific reporting and fee requirements on employers and insurers providing group health and dental plan coverage to employees, including:
- W-2 Reporting. Employers that sponsor a group health plan and file 250 or more W-2 forms for the preceding calendar year are required to report each employee’s coverage cost on Form W-2 (provided to employees in January), with certain exceptions.
- IRS Information Reporting. Requirements are as follows:
- ALEs are required to report information to the IRS and their employees about their compliance with the “pay or play” provision under Internal Revenue Code Section 6056 using Forms 1094-C and 1095-C.
- Self-insuring employers that are not ALEs, but provide minimum essential health coverage, are required to report coverage information to the IRS and cover individuals under Section 6055 of the Internal Revenue Code using Forms 1094-B and 1095-B.
Stay Up to Date
There’s a lot to know and keep up to date about with the ACA. Fortunately, having Cosmo Insurance Agency as your broker, we will keep you updated and compliant with your all your employee benefits. Call us at 732-363-3888 to get started.
Cosmo Insurance Agency is a full-service independent insurance agency based in Hackensack (Bergen County) and Lakewood (Ocean County), New Jersey that offers an all-encompassing range of insurance options for both individuals and businesses. Cosmo keeps its promise to assure an efficient and creative approach to the services we offer. Each of our clients experience a personalized and long-term relationship with us. Our New Jersey based team of health brokers guides our clients in helping them choose the most cost-effective options. By incorporating our knowledge of the insurance guidelines for healthcare, employee benefits, life insurance, self-insurance, dental, disability, and long term care insurance, we keep our clients up-to-date with affordable plans that cover all their specific insurance needs.
