Health Care Reform Update – 4th Quarter 2013
By Chuck Kiskaden, CHC
A lot has happened regarding the Affordable Care Act (ACA) since our last report. In this column, we will look at the roll out of Covered California and touch on the key points that will affect California employers.
1. Employers with 50 or fewer full time equivalent (FTE) “benefits eligible” employees know they do not have a requirement to provide benefits or pay a penalty. What they may not be aware of is the responsibility to provide a notification to each employee of the availability of the insurance exchange. There is a federally approved letter of notification that must be used for this communication and beginning in 2015, a financial penalty if the employees do not receive this communication. It is important to educate the employees now (instead of waiting for late in 2014) because of the possibility that the employees will qualify for tax subsidies to help them pay for their insurance plans. Tax subsidies are available to individuals who meet defined family income levels and if they buy their plans through Covered California.
2. Employers with 50 or fewer FTEs that do provide health benefits for their employees need to be aware of the following points.
a. The employers may qualify for a tax deduction on their health care premiums if they meet certain criteria regarding average compensation per full time employee and if they have 25 or fewer FTE employees for specified periods of time. These tax deductions on premiums are only available if the plans are purchased through the Covered California insurance exchange.
b. If the employer provides coverage that meets two tests established by the ACA, their benefits eligible employees and the employees dependents do not qualify for tax subsidies. The tests relate to offering plans deemed to be “affordable” by the ACA and plans that provide coverage for “essential benefits” as defined by the ACA.
c. It is important to educate all of your employees now (instead of waiting for late in 2014) because of the possibility that your part time employees will qualify for tax subsidies to help them pay for their insurance plans. Tax subsidies are available to individuals who meet defined family income levels and if they buy their plans through Covered California.
3. Employers that are having difficulty meeting insurance carriers “employee participation underwriting guidelines” have a limited window for enrolling and the participation guidelines are waived until next year.
For more information on any of the above points, you can contact me at via email at email@example.com.