HomeExclusiveWhen Do I Have To Offer Health Insurance

When Do I Have To Offer Health Insurance

What Contribution Level Or Premium Cost

Small Business Solutions Series: Do I have to offer health insurance to my employees?

Group health insurance plans are a form of employer-sponsored coverage. This means that a business is required to share the cost of group health insurance with employees. Typically, this cost-sharing element of health insurance requirements refers to a small business splitting monthly premium costs with workers. If you opt for a group health insurance plan, in most states, employers are required to contribute or pay at least 50% of each employees health insurance premium, although this may vary, depending upon the state in which your business is located.

Do Small Businesses Need To Offer Health Insurance

Small businesses dont need to offer health insurance to employees under the ACA. In fact, no business is forced to pay insurance in the US instead, large businesses that dont comply with insurance coverage stipulations in the ACA have to pay a no-coverage penalty to the IRS on their tax filing.

In 2018, only businesses with fifty or more employees are required to provide full-time equivalent employees and their family members or other dependents with minimum essential health care coverage. Of the services covered, its the employers responsibility to pay for at least 60 percent of the insurance coverage.

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What Is The Aca And How Does It Impact Health Insurance Requirements

The ACA has transformed the group health insurance industry over the years and it continues to evolve. Originally, the ACA had three main objectives:

  • To reform the private insurance market especially for individuals and small-group purchasers
  • To expand Medicaid to adults with an income at or below 133% of the federal poverty level
  • To change the way that medical decisions are made by all impacted, including the insured, employers and insurers
  • The real goal was that all people, or many more anyway, would have access to health insurance benefits than they did before the ACA. Before the ACA, no employer was ever required to offer health insurance of any kind to employees.

    The ACA includes premium tax credits and cost-sharing reductions to lower costs for lower-income employees and their covered dependents. The ACA tax credit also encourages smaller employers, who are not required to provide health insurance, to offer the benefit through SHOP. That, in turn, offers the employer tax credits that reduce the cost of an employer-sponsored benefit that employees want.

    Key takeaway: The ACA was designed to reform the private health insurance market to provide health insurance access to more employees who previously did not have access. Additionally, there is a tax credit for employers who offer health insurance benefits, which is designed to reduce the overall costs of ACA-related programs.

    Things To Consider About Small Business Health Insurance In Massachusetts

    Do I have to provide health insurance to offer my employees voluntary ...

    If youre struggling to navigate small business health insurance in Massachusettswhat is required, what plans are available, and where to find helpyoure in the right place. In this article, well answer three questions about Massachusetts small business health insurance requirements. Well also discuss how partnering with Genesis HRs Professional Employer Organization may be the best way to ensure quality health insurance coverage for your employees.

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    Employer Mandate Penalty Amounts And Processes

    Examples of employer penalties

    1,200 full-time employees

    Employer offers coverage, but coverage is not affordable and/or doesn’t provide minimum value

    The penalty is triggered if one employee purchases coverage on the Marketplace and receives a federal premium subsidy

    250 employees purchase coverage on the Marketplace and are eligible for a subsidy

    Lesser of $2,570 per full-time employee, minus the first 30 employees, or $3,860 per full-time employee receiving a federal premium subsidy

    1,170 x $2,570 = $3,006,900 penalty

    250 x $3,860 = $965,000 penalty

    Here is a snapshot of the penalty assessment process:

    Employer offers health coverage compliant with the employer mandate

    • The Marketplace should notify the employer if an employee receives subsidized coverage during this same plan year
    • Employer may gather facts for response or file an appeal within 90 days of Marketplace notification

    Employer reports coverage offer and respective data during the applicable tax season

    IRS sends Letter 226J, with an Employer Shared Responsibility Payment assessment based on the data they have processed

    • Employer sends Form 14764 with Form 14765 and any updated or corrected data to previously reported Forms 1095-C

    IRS sends Notice 220J, confirming the final penalty amounts owed, which could state no amount is owed after final audit review.

    Read more about employers’ options on the IRS web page, Employer Shared Responsibility Payment Q& As, questions 55-58.

    • I want to…

    Adding Families May Lower Rates For Everyone

    Depending on the makeup of your workforce, adding employees families may diversify your coverage group in a way that lowers rates for everyone. For instance, if you own a hair salon and you employ primarily women in their 20s, your healthcare premiums may be higher due to the potential of pregnancy-related costs.

    Including their spouses and children adds diversity to the group, helping to spread out the healthcare cost risks. When you have employees with similar risks in the same pool, diversification is going to give you a better financial advantage, Dutta says. For that reason, its a smart move to obtain quotes both ways before making a decision.

    Finally, consider that employees consider health insurance more important than any other benefit.2 Offering group health benefits is one of the best ways to show employees that you value them and their families an important factor when it comes to retention.

    About Group Health Benefits

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    Legally Required Benefits Protect Workers Health Income Well

    Employee benefits fall into two categories: those required by law and those an employer chooses to offer voluntarily. The U.S. Bureau of Labor Statistics states that egally required benefits provide workers and their families with retirement income and medical care, mitigate economic hardship resulting from loss of work and disability, and cover liabilities resulting from workplace injuries and illnesses. Mandated basic benefits include:

    Note: Some states and local jurisdictions require paid family leave and/or paid sick and safe leave. Refer to your areas regulations to see whether they apply to your business.

    State requirements for these benefits may vary and may provide greater coverage and/or a greater benefit to eligible employees.

    Other job perquisites are at the discretion of the employer. These can include paid vacation life and disability insurance , 401 retirement savings plans, education assistance, wellness programs, and child care assistance.

    From the employees perspective, basic benefits can be invaluable. Although many Americans today may take Social Security, Medicare, unemployment, and workers compensation insurance for granted, these forms of assistance and compensation have been established for less than two generations. Prior wage earners only earned wages, nothing more. In that context, basic benefits are a big deal.

    A previous version of this article was published on Aug. 26, 2014.

    I Am An Employer What Do I Need To Know

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    The Affordable Care Act contains benefits and responsibilities for employers. The size and structure of your workforce small, large, or part of a group helps determine what applies to you. However, if you have no employees, the following information does not apply to you.

    Small employers generally those with fewer than 50 full-time employees may be eligible for credits and other benefits. If you run a small business, you have the option of buying health insurance for your employees through the Connect for Health Colorado Marketplace. Just like individual insurance, the group plans offered there starting in October 2013 may qualify for federal subsidies to reduce their cost. You can also take advantage of the many Assistance Sites throughout Colorado.Find out more.

    A large employer has 50 or more full-time employees or equivalents. Find out more.

    Finally, you may want to consult the health care resources offered by the Small Business Administration. There you can learn about how the Affordable Care Act affects businesses of all sizes.

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    Employers Required To Offer Health Insurance

    Beginning Jan. 1, 2014, employers with 50 employees or more will be required to provide health insurance coverage to full-time employees or face paying a penalty. The requirement does not apply to employers with fewer than 50 employees. The annual penalty for not offering coverage is $2,000 for every full-time employee beyond the first 30.

    Employers that offer coverage to employees may also be subject to penalties if any of their employees choose to buy coverage through the local health insurance exchange instead of participating in the employer’s plan. These employers will be required to pay a $3,000 penalty annually for each of their employees who opt for coverage through the health insurance exchange and receive a premium tax credit for doing so. However, employers will not be subject to penalties if the coverage they offer pays for at least 60% of covered health care expenses for a typical population and employees do not have to pay more than 9.5% of their household income for the coverage. For more information about who can purchase insurance through an exchange and who qualifies for a premium credit, click here. Employers will not be penalized for any employee insured through a spouses employer, Medicaid, or Medicare.

    Is My Employer Required To Provide Medical Benefits To My Spouse Domestic Partner Or Dependent Children

    Much like employers are not required by law to provide health and welfare benefits to employees, they are equally not required to provide those benefits to spouses, domestic partners or dependent children. If, however, an employer voluntarily provides spousal benefits through an insurance provider or health maintenance organizations , the employer must also provide those same benefits to registered domestic partners of the covered employees. Thats because AB 2208 requires equal treatment of spouses and registered domestic partners in all aspects of insurance coverage.

    Note: AB 2208 applies to insurance providers and HMOs who supply insurance to an employers employees, but does not apply to employers who self-insure, who are not required to provide equal domestic partner coverage to their employees.

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    Businesses With Fewer Than 50 Employees

    While small employers are not required to offer health plans to their employees, they are incentivized to do so through the Small Business Health Options Program , which qualifies them for the Small Business Health Care Tax Credit.

    SHOP insurance offers many benefits, including:

    • Plan flexibility
    • The ability to offer health coverage, dental coverage, or both
    • The ability to choose how much to pay toward premiums, including whether to cover dependents
    • The freedom to decide how long the waiting period is for new employees before they can enroll

    Keep in mind that offering health benefits to employees can attract more skilled workers and increase retention.

    Additional Details On The Employer Mandate

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    Employers with 50 or more full-time and/or FTE employees must offer affordable/minimum value medical coverage to their full-time employees and their dependents up to the end of the month in which they turn age 26, or they may be subject to penalties. The amount of the penalty depends on whether or not the employer offers coverage to at least 95% of its full-time employees and their dependents.

    Employers must treat all employees who average 30 hours a week as full-time employees.

    Dependents include children up to age 26, excluding stepchildren and foster children. At least one medical plan option must offer coverage for children through the end of the month in which they reach age 26. Spouses are not considered dependents in the legislation, so employers are not required to offer coverage to spouses.

    Assume each employer has 1,000 full-time employees who work at least 30 hours per week.

    The regulations allow various calculation methods for determining full-time equivalent status. Because these calculations can be complex, employers should consult with their legal counsel.

    Here are some considerations to help determine how part-time and seasonal employees equate to full-time and FTE employees.

    U.S.-issued expatriate plans meet the employer mandate.

    Effective July 16, 2014, the employer mandate no longer applies to insured plans issued in the U.S. territories . A territory may enact a comparable provision under its own law.

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    What Is Minimum Essential Coverage

    In order to qualify as minimum essential coverage, a plan must be an employer-sponsored plan defined as, with respect to an employee, a group health plan or group health plan insurance coverage offered by an employer to an employee that is any health benefit plan offered in the small or large group market within Nevada or a health plan treated as being grandfathered under the Affordable Care Act that is offered in the group market.

    Medical Loss Ratio Rebates

    Insurance companies must generally spend at least 80% of premium dollars on medical care. Insurance companies that dont meet this requirement must provide rebates to policyholders usually an employer who provides a group health plan. Employers who get these premium rebates must allocate the rebate properly. Learn more about federal tax treatment of Medical Loss Ratio rebates from the IRS.

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    Do I Have To Offer Health Insurance

    Quick-reference chart

    Aren’t sure if your business is legally required to offer health insurance to your employees? Find out in this guide!

    Here’s a sneak peek at what else you’ll learn:

    • What the Affordable Care Act’s employer mandate requires and which organizations it applies to.
    • Potential penalties you may pay if you choose not to offer health insurance.
    • Affordable health plans that satisfy the employer mandate so you can stay compliant.

    Just fill out the form to get these insights and more!

    Calculating Your Annual Average Employee Count

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    To calculate your annual average, add the monthly totals of full-time and full-time equivalent employees from the last calendar year, and divide the total by 12. Round down to the nearest whole number.It is important to note that this calculation takes into account all employees employed by the same person, entity, or group. For example, one individual owning two unrelated businesses, each with 40 full-time employees and equivalents, may be considered a large employer with 80 employees. If you have questions specific to your situation or use an employee leasing or temp company, please consult an attorney.

    For more information about determining whether or not your employees are full-time, visit .

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    Will I Have To Provide Coverage To My Employees

    If you employ 50 or more full-time employees or full-time equivalent employees,and you do not provide affordable minimum essential coverage for your full-time employees , you will be required to pay an assessment to the Internal Revenue Service .

    The law specifically exempts all businesses that have fewer than 50 full-time employees or full-time equivalent employees from this assessment.

    For employers who have 50 or more full-time or full-time equivalent employees and who do not offer affordable minimum essential coverage, the assessment will be calculated in one of three ways:

  • If you do not provide insurance at all, and if at least one full-time employee receives advance premium tax credits to purchase coverage through the Silver State Health Insurance Exchange, also known as Nevada Health Link, the assessment will be $2,000 for each full-time employee you employ after the first 30 employees.
  • If you provide insurance but it does not qualify as minimum essential coverage, the assessment will be $3,000 for each full-time employee you employ that is not offered minimal essential coverage.
  • If you provide insurance that does qualify as minimum essential coverage but that insurance does not meet the minimum value or is unaffordable, meaning that an employees contribution exceeds 9.5 percent of their modified adjusted gross income, the assessment will be $3,000 for each full-time employee that fails the 9.5 percent affordability test.
  • Coverage Unaffordable Or Too Skimpy

    If an employer does offer coverage but its not affordable and/or doesnt offer minimum value, the employer would face a penalty if any full-time employees end up getting a subsidy in the exchange.

    • An employer-sponsored plan is considered unaffordable if the employee contribution for premiums is more than 9.83 percent of household income in 2021 for employee-only coverage .
    • To provide minimum value, an employers plan has to cover at least 60 percent of average expected medical costs, and provide substantial coverage for inpatient care and physician services.

    If an employers plan is unaffordable and/or doesnt provide minimum value, the employer would face the lesser of two penalty options: $4,060 per employee receiving premium subsidies in the exchange , OR the $2,700 per full-time employee penalty described above.

    Consider a business that has 120 full-time employees and offers coverage, but its either not affordable and/or doesnt provide minimum value: If 70 employees get subsidies in the exchange in 2021, the employer would pay a penalty of $243,000 for the year x 2,700 = 243,000, since thats smaller than the alternative penalty calculation .

    But if only 20 of the employees get subsidized coverage in the exchange, the employer would pay $81,200 for the year , since thats smaller than the alternate calculation of x 2,700, which would be $243,000.

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