ACA: Employer Deadline Approaching

While mid-size employers (those employing 50-99 full-time employees) have another year of breathing room, employers with 100 or more employees are quickly closing in on a large Affordable Care Act deadline.

The ACA’s Employer Shared Responsibility provision goes into effect on January 1, 2015 for large employers. By that date, those employers must offer a qualifying health insurance plan to at least 70 percent of their employees and dependents. A qualifying policy must:

  • Be affordable – cost less than 9.5 percent of an employee’s salary
  • Provide “minimum value” – cover the benefits considered by the ACA to be “minimum essential coverage”

The threshold for policy offerings rises to 95 percent of eligible employees in 2016.

Employers that do not offer a qualifying policy will be subject to fines: for non-coverage, they will owe $2,000 per full-time employee after the first 30. In addition, employers will be assessed a fine of $3,000 per full-time employee who qualifies for a subsidy on the healthcare marketplace. MI Health Answers offers a simple graphic to break down the Employer Shared Responsibility provision.

While consultants studying the implementation of the ACA estimate that most employers will eventually comply or do already, there are still many business owners nationwide who are weighing the costs of alternatives to providing qualifying policies. Options include cutting personnel and employee hours to remain exempt or paying applicable penalties.

Some employers fear that they will face penalties if their employees choose other, more affordable coverage; however, the benchmark for determining whether a policy qualifies as affordable is the law and not the actions of eligible employees.

Is your company facing the healthcare deadline, and are you prepared to offer the required coverage to your employees? If cost is keeping you from complying with the employer mandate, healthcare factoring can provide the necessary cash flow to cover the expense. PRN Funding has more than a decade of experience navigating the healthcare industry and can help you access the working capital you need to cover all of your employees. Visit us to learn more about healthcare factoring and apply today.

ACA: The Cost of Non-Enrollment

With the March 31 enrollment deadline looming, the Obama administration is working overtime to encourage uninsured Americans to purchase coverage in state or federal marketplaces. Approximately 50 percent of uninsured consumers plan to remain uninsured for a number of reasons, raising the important question: what is the cost of not enrolling in a valid healthcare plan?

Required Coverage

ACA-compliant health insurance policies must meet the law’s requirements for minimum essential coverage, which includes all government-administered plans as well as new and grandfathered employer plans and coverage offered by universities. While other plans may also meet the minimum essential coverage standard, consumers who hold non-compliant policies will be subject to the same penalty as uninsured consumers. Vision and dental-only plans, workers’ compensation, and healthcare savings accounts do not qualify as compliant policies.

Most consumers are required to carry a compliant healthcare plan; however, the ACA provides a number of exemptions for consumers who are unable to afford a qualifying plan or who fit other criteria.

How does the penalty work?

The 2014 penalty for uninsured consumers is the greater of $95 per adult/$47.50 per child, up to $285 per family, or one percent of your family’s gross adjusted income above the tax return filing threshold. (If your income is not high enough to require a tax filing, you are exempt from the individual mandate.)

Despite the focus on the $95 flat fee, more consumers earn more than the $19,650 that matches the $95 fee and will be required to pay a higher amount. For example, a family earning $50,000 annually would have to pay $297, or one percent of their eligible AGI – $12 more than the flat fee maximum. Though penalties are capped at approximately $9,800, many families do not make enough to meet this cap and will be on the hook for their entire penalty.

Can I enroll after the March 31 deadline?

Your ability to enroll in the federal marketplace after the deadline depends on a number of conditions. Currently, consumers who have attempted to purchase a healthcare plan prior to March 31 will be granted a limited extension to complete their enrollment. Once extensions have ended, you must wait until the next open enrollment period unless you have a change in life situation that qualifies you to enroll.

If you signed up for a policy before March 31 that features a gap in coverage (i.e. does not start immediately), you will not have to pay the penalty. Also, if you are without insurance for less than three months after the deadline you will not have to pay the penalty. For periods longer than three months but less than a year, you will be responsible for each month’s portion of the annual penalty for as long as you are uninsured.

For questions about your specific healthcare needs and plans that are available, visit Healthcare.gov.