Large Employers

UPDATE: The Obama administration has delayed implementation of the employer mandate (employer shared responsibility) until 2015. Originally scheduled to take effect in 2014, the mandate will require businesses with 50-plus full-time equivalent employees to offer health insurance or pay a penalty.

How does the ACA’s W-2 Safe Harbor work to determine affordability?​

The IRS requires that the employee contribution toward the self-only premium for the employer's lowest cost coverage that provides minimum value (the employee contribution) not exceed 9.5 percent of the employee's Form W-2 wages for that calendar year.

If an employee of a 50+ group – a group whose employees are not eligible for the Exchange – buys coverage through the Exchange, does the employer have to pay a penalty even though they were not aware? How is the exchange tracking whether or not a person is truly eligible for group coverage?

The employer is not automatically imposed a penalty if an employee wrongfully buys insurance through the Exchange. Awareness of whether an employee buys through the Exchange is not a factor in whether the penalty is applied or not. Tracking of employer eligibility will be done through information gathered in the individual’s application for coverage on the Exchange as well as possibly cross-checking tax returns from that member.

Does the provision still apply that states an employer can no longer discriminate in their plan (i.e. management-only plan designs)?​

The mandate dealing with the prohibition on discrimination in plans has been indefinitely delayed. No known date of reinstatement of the mandate is known at this time. ​

Are trust funds, alimony, and other financial documents considered in the 9.5 percent threshold when calculating the affordability of insurance under an employer’s plan?

The Affordable Care Act does not specifically address additional financial considerations for household income or W-2 calculations. Employers should seek advice on these calculations from their legal advisor and/or tax specialist.

When does employer shared responsibility begin?​

January 1, 2014. However, the latest regulations allow fiscal year plans, i.e., non-calendar year plans as of Dec. 27, 2012, some transitional relief to employer responsibility requirements. If employees under these fiscal year plans are offered affordable, minimum value coverage no later than the first day of the 2014 plan year, no assessable payment will be due to that employee for the period before the first day of the 2014 plan year.

Additional rules apply to employers with more than one non-calendar plan. More information:​

Will qualified health plans (QHP) be offered outside of the Exchange (also called Marketplace)?​

Plans sold outside the Exchange must meet Actuarial Value metallic levels. Technically, these plans will not be certified QHPs. But if a plan mirrors a QHP sold on the Exchange (also called Marketplace), it could be considered a QHP outside the Exchange as well.

Do businesses need to inform their employees of the availability of a Health Insurance Exchange (also being called “Health Insurance Marketplace”)?

Yes, employers need to inform all employees by Oct. 1, 2013. The Affordable Care Act originally placed a deadline of March 1, 2013, but extended this notice requirement.

Do the Essential Health Benefit requirements apply to large groups in 2014? For example if I’m a large employer, do I have to implement EHB?​

No you are not required to implement Essential Health Benefits as a large employer. However if your plan covers any of the EHBs the requirements do state that large groups are not allowed to impose annual or lifetime limits on those EHBs.​

What is the actuarial value of our plan?​

The proposed Essential Health Benefit (EHB) regulations provide guidance pertaining to the calculation of minimum value (MV) for employer-sponsored health plans for the purposes of the premium tax credit and employer shared responsibility (pay or play) provisions. For this purpose, MV is expressed in the same general manner as Actuarial Value (AV), i.e. the plan’s share of the total allowed costs of benefits.

The proposed regulations provide that a group health plan may calculate MV using one the following methodologies: (a) a MV calculator that HHS and the IRS has made available; (b) any safe harbor method established by HHS and the IRS (yet to be determined); or (c) an actuarial certification by a member of the AAA, based on an analysis performed in accordance with generally accepted actuarial principals and methodologies.

Does our plan meet minimum essential coverage?​

Minimum essential coverage is the type of coverage an individual needs to meet the individual responsibility requirement under the Affordable Care Act. Minimum essential coverage does not include coverages such as accident-only coverage/disability insurance, liability insurance, worker’s compensation, etc.

Are large groups required to comply with the Actuarial Value calculation of the metallic option plans? For example, do large groups have to comply with the 60, 70, 80 percent, etc. requirements?

No, but applicable large employers must offer “minimum value” plans, which can be met by offering plans with 60 percent of actuarial value. However, the calculations for minimum value are slightly different than actuarial value, and the federal government has rolled out a minimum value calculator to help with those determinations.

If applicable large employers (50+ full-time equivalents) do not offer minimum value, they may be subject to a penalty if at least one employee receives a subsidy through the Exchange (also called Marketplace).

If I’m a large ASO employer, am I still subject to the 60 percent minimum value rule and potential employer penalties?

Yes. All applicable large employers could potentially be subject to employer shared responsibility penalties for not offering affordable health insurance that meets minimum value.

Are foster children covered under employer group plans?​

The employer-shared responsibility proposed regulations (play-or-pay) require large employers (50+) to offer coverage to full-time employees and their dependents, defined as children under the age of 26 (which includes adopted and foster children). This is still a proposed rule, so the definition of dependent is subject to change. A final rule is expected in May.

If a group has a plan year on 9/1, but makes benefit changes on 1/1, do they have to implement health care reform on 1/1 or only on their plan year of 9/1?

The majority of health care reform changes are tied to plan year, so changes need to be made in conjunction with the plan year, regardless of when previous benefit changes may have occurred.

Does an employer need to do anything on January 1, 2014, if its plan year isn’t up for renewal until later in the year?

All of the 2014 market reforms and essential health benefits are effective with the first plan year following 1-1-2014. If, for example, the group has a July plan year, the changes would need to be made by July 2014.

Is the $2,000/$4,000/ maximum deductible for 2-50 sized groups, 50+ groups or both?

In 2014, the annual deductible for a health plan in the small group market may not exceed $2,000 for self-only coverage or $4,000 for family coverage. Small employers are defined as 2-50 in Nebraska until 2016, when the definition will change to 2-100.