Whether you call it the ACA, Obamacare or by the full name of the program, The Affordable Care Act, you’ve probably been witness to the numerous changes and issues with implementing the program. Through these changes, we have seen both positive and negative impacts to the health care industry. For individuals, students and low-income families, the lower premiums have made insurance much more affordable; for others, premiums are on the rise. In each passing year, the Affordable Care Act mandates that an increasing number of businesses must offer coverage to their employees depending on the size of the work force. Make sure you are informed before the next open enrollment date.
So What’s Different?
Starting in 2016, according to the ACA, all small or medium-sized businesses are required to offer health care coverage to their employees. In 2015, only businesses that employed more than 100 persons had to provide health care coverage for their workforce. Now, if a business has 50 -99 full-time employees, insurance must be offered to at least 95 percent of the workforce. The health insurance must be offered to the employees and include an option for each employee’s dependents. For smaller businesses, without an HR department or company lawyer, these regulations could get a bit difficult to maneuver through.
Part-Time vs. Full-Time Employees
A full-time employee is someone who works 30 hours or more per week or 130 hours every month. If your business employs a mixture of full-time and part-time workers you may be subject to the Employer Shared Responsibility provision. This provision states that a combination of working hours can equal or surpass the amount of employees that mandate coverage. For example: If you have 40 workers who work more than 30 hours a week, making them full-time employees, and 20 part-timers who work an average of 15 hours a week, the service hours of the part-time employees make up those of 10 full-time workers. In this situation, you have 50 full-time employees and must offer health care coverage. Pay attention though; seasonal workers who work fewer than 120 days a year are typically not included in this count.
There Will Be Fines
In order to ensure each employer is doing one’s part correctly, you could expect to see an increase in audits. Proper paperwork and records are mandatory. If businesses fail to pass an audit or to provide coverage to their workforce, the fines will come. Employers could be looking at fines of up to $3,000.00 per employee if health insurance isn’t offered.
New Reporting Requirements
To keep companies compliant, the IRS has demanded new reporting requirements.
- If a business employees more than 50 full-time employees per working year, they are required to maintain the forms 1094-C and 1095-C for each employee independent of whether the company provides the employee coverage or if the employee uses a separate provider.
- The filing deadline of these forms is very similar to that of W-2s so keep all the paperwork together and there shouldn’t be a big problem.
- Now is the time to make sure your filing process is in order and that you have the proper storage needed to keep records on hand.
- It might be worth it to consider outsourcing some of your HR services to ensure compliance and avoid severe fines.
Your employees are also sent records of these forms and must indicate on their tax forms what coverage was offered to them throughout the course of the year. If, for some reason, they were not covered throughout the whole year, they can also expect to pay fines – up to $975.00 per person.
High Premiums and Fewer Options
Due to the increase in mandated health care, many owners of smaller businesses are complaining about higher premiums. Since 2014, when the ACA took effect, insurance premiums have increased almost 20 percent and are expected to keep climbing. As an employer, it is possible to shift some of this cost increase to your employer:
- Insured employees can pay up to $6,850.00 per individual in out-of-pocket costs.
- Insured families are limited to $13,700.00 in out-of-pocket costs.
- Employees are responsible for deductibles, copays and coinsurance.
There are some limitations to this shift in costs; therefore, it’s best to discuss the level of transition available in the health care offered.
Reduction in the Market
Small business owners may feel the squeeze of the Affordable Care Act; unfortunately, insurance providers who service small businesses also feel it.
Many insurance providers are now finding it much more difficult to maintain their own business operations while trying to meet more affordable standards.
The best thing today’s business owner can do is be informed. Just as technology and medicine continue to advance and change, we should expect the same from the medical legislation. Take the time to keep yourself informed – for the success of your company and your workforce.