Affordable Care Act: Are you ready for 2014?
While the Affordable Care Act continues to be 2013’s political hot potato, employers can not afford to wait for some 11th hour miracle fix. The law will impact the 150 million Americans currently covered by employer-sponsored plans. The following highlights important facts every employer should consider in planning for 2014.
- Employers are not required to provide coverage to any employee or dependent.
- Large employers with at least one full-time employee enrolling in subsidized coverage in the Exchange are subject to a penalty, beginning 2014.
- Large employers are those employers with at least 50 full-time equivalent, non-seasonal employees.
- Full-time is defined as at least 130 paid hours of service (including vacation, holiday, illness, incapacity including disability, layoff, jury duty, military duty or leave of absence).
- Penalties are based on the number of full-time employees offered coverage and the cost of such coverage.
- In 2015 employers will be penalized for not offering coverage to children under the age of 26 of full time employees.
- Penalties can be avoided if the employee’s cost of coverage does not exceed 9.5% of the employee’s W-2 income.
- Employers with more than 200 full-time employees must automatically enroll into a plan unless they opt out of coverage. (final regulations pending)
- Employer sponsored plans:
o No lifetime or annual limits
o Dependents under age 26
o Limits on out-of-pocket maximums
o No co-pay or deductible for preventative services
- Stand-alone Health Reimbursement Accounts (HRAs) will no longer be allowed, except retiree-only HRAs
- Contributions for Flexible Spending Arrangements (FSA) for medical expenses are limited to $2500
- Tax credits are available for small employers who contribute at least 50% towards premiums through the exchange for a period of 2 years.
- Grant program for small employers who do not currently have established wellness programs.
- Employers must provide employees with information about the exchange. (final regulations pending)
- Employers providing minimal essential coverage must report to the IRS annually with information about the coverage offered. Large employers with at least 50 full-time equivalent employees must annually file additional information pertaining to fulfillment of employer responsibilities beginning in 2014.