Health Insurance Benefits: What You Need to Know

Understanding the Employer Mandate

Under the ACA, organizations that have 100 or more full-time equivalent employees need to insure their workers by the end of 2016. This standard also applies to small businesses with 50 to 99 FTE, but does not apply to employers with fewer than 49 FTE.

This coverage must be offered to all FTE and their dependents who are 26 years-of-age and younger. After a dependent reaches this age, the plan does not need to cover them any longer. However, spouses are not considered dependents, and employers are not required to provide health insurance benefits to the spouses of their workers.

Although employers are required to offer health care coverage to their employees, this does not mean their workers have to take it. As long as employees are offered qualifying coverage under the ACA, employers will not be penalized for the decisions of their workers.

Penalties and Fines

Employers with more than 50 employees who decide not to provide their workers with health care benefits are required to pay an annual fine of $2,000 for every full-time employee. However, businesses are only fined for 31 employees and onward since the first 30 workers are ‘free.’

Employers need to remember that even if they do offer coverage, they may be penalized if they do not pay for at least 60 percent of the value of the benefits. Additionally, employers can be fined if they do not offer a voucher to their employees who have an income that is less than four times beneath the federal poverty level. This also applies to employees who would have to devote more than eight percent of their income to purchase health insurance benefits provided by their employer and employees who decide to purchase insurance plans from the state exchange.

Tax Credits for Small Businesses

Small businesses, or those with 25 full-time employees who earn an annual salary of $50,000 or less, are eligible for a tax credit if they decide to offer health insurance benefits to their workers. In order to qualify for this credit, at least half of the premium for the individual worker, not her or his family, must be covered.

When employers take advantage of this incentive, they can receive a tax credit of up to 35 percent of the amount in premiums they paid for their workers. However, the largest credit is available to small businesses with fewer than 10 employees who earn an annual salary of $25,000 or less.

Rules for Existing Plans and New Plans

Employers who offered their employees health care benefits that began on October 1, 2010 or later must meet certain requirements. These requirements include some of the following:

• No lifetime dollar limits are allowed to be placed on the care provided for essential benefits. This list of essential benefits includes things like laboratory services, preventive care, newborn care, maternity care and emergency care.
• Insurers are able to apply annual benefit limits to their plans, but if they do this, certain restrictions apply to ensure that those who have a health care plan under them still have access to needed services.
• Children who are under the age of 26 who do not have benefits through their own jobs must be allowed to enroll in the plan of a parent.
• Children who are under the age of 18 are not allowed to be denied health insurance coverage due to a preexisting condition.

These same rules apply to new plans, in addition to other requirements. For example, new plans must completely cover preventive care without the payment of a co-pay or a deductible. Group health plans are also not allowed to favor highly compensated employees, and employees must be permitted to attend OBGYN visits or the emergency room without any prior authorization.

Requirements for Notice and Reporting

Employers are subject to several new informational requirements under the ACA. First, employers are required to report the value of the health benefits they offer to their workers on every employee’s W-2. Second, employers must give their workers information about the insurance exchange program in their state. Finally, larger organizations are required to report specific information about the health care benefits they give to their workers.

Employers will do well to ensure they’re always in compliance with the latest health benefits requirements. Doing so is best for them and their employees.