Attention business owners: It is 2016 and you should have group health insurance coverage available to all of your fulltime employees. Beginning in 2014, the Patient Protection and Affordable Care Act instituted the Employer Mandate, which basically states that large companies must offer their fulltime employees group health insurance. Here are some of the questions that we at OMNI hear most often regarding the Employer Mandate:
What companies are considered “large”? Companies with over 50 fulltime or fulltime equivalent employees are considered large employers.
How many hours is considered “fulltime”? An employee who works 30 or more hours per week or more than 130 hours each month is considered a fulltime employee under the Employer Mandate. There are few exceptions to this. For instance, seasonal employees are not eligible for fulltime status, and any hours that an employee worked overseas does not count towards their fulltime status either.
What kind of coverage do you have to provide? As a large employer under the Employer Mandate, you will be required to offer the “minimum essential health coverage.” This coverage must be considered affordable and have a minimum value. In other words, if as an employer you are offering health coverage but your employees are still paying 60% or more of their medical expenses out of pocket, this coverage is likely not going to be considered adequate for purposes of this particular regulation.
What if I don’t participate? There are two ways that an employer won’t participate in the Employer Mandate provisions requiring coverage for all of its fulltime employees. In the first, the employer does not offer coverage to all of its employees. In the second, the employer provides coverage that is deemed insufficient through affordability or the coverage is not valuable enough. Both scenarios do carry weighty penalties.
What are the penalties for an employer not participating? In most cases, an employer that does not participate will pay a fee. In the event that an employer neglects to provide coverage at all, the penalty is $2,000 per year per employee. In a company with over 50 fulltime employees, it is not difficult to calculate. The penalty is significant. If the employer offers coverage but it is inadequate, the fee shoots up to $3,000 per year per employee.
Who is eligible for coverage? Under the Employer Mandate, all employees and their dependents under 26 years old are eligible for health coverage under the company’s group health insurance plan.
Of course, some of these questions really just make room for other questions. For instance:
What is considered “affordable”? The government has different standards of affordability than you do and most businesses do as well so a standard needed to be set. Coverage is considered affordable as long as it is less than 9.5 of the employee’s household income.
If you are an employer and have any questions about which of your employees are considered fulltime, whether your health plan is adequate to avoid penalty under the Employer Mandate, or just need someone to look over your coverage to ensure you are doing the best for your employees and getting the best products for your business, give us a call.