In Disability Claims, Voluntary Benefits

The Affordable Care Act (ACA), or ObamaCare as it’s also known, was officially signed into law back in 2010. This has given employers plenty of time to prepare for the impending changes, but this is the year when employers must legally provide healthcare for full-time employees. The “Pay or play” scheme allows employers to make a decision: offer full-time employees, and their children up to 26 years of age, affordable health coverage that provides minimum value, or pay a penalty to the IRS for failing to provide coverage.

This year, employers with more than 100 full-time employees are subject to “pay or play” penalties if they are not offering compliant coverage to 70% of their full-time employees. By 2016, 95% of full-time employees must have access to compliant healthcare coverage.

All employers with more than 50 full-time employees are required to report for 2015, even if they are not offering health care plans at present. This reporting period allows employers to determine which employees are covered and who are not in the future. As defined by the Act, a full-time employee is any employee who works an average of 30 hours per week.

Under the ACA, the coverage offered by employers must be adequate by set standards, and meet the minimum essential coverage, satisfy a minimum value requirement, and be affordable. If not, penalties will apply.

Enrollment is currently open for individuals and families to purchase minimum essential medical coverage. If no coverage is purchased by February 15th, 2015, penalties will apply. There are different means of purchasing insurance coverage:

  1. Employer provided cover for individuals or families
  2. Directly through an insurance company
  3. Through the marketplace

Group insurance plans allow employers to offer healthcare to all employees at a reduced group rate. This plan gives employers an easy way to provide adequate cover to all applicable employees and their families.

Individuals who are not covered by their employer can purchase healthcare plans directly from insurance companies, although the marketplace gives them access to better rates.

The Exchange marketplace has been organized by the government to provide individuals and families with access to group rates, or to supplement policies for employees with inadequate employer provided coverage.

When employers offer coverage that is inadequate or not affordable they are subject to penalties. The no coverage penalty is $2000 per year for each full time employee, excluding the first 30 employees. The inadequate penalty is $3000 per person, calculated on the number of full-time employees who receive a marketplace subsidy.

2015 is going to be the year when employers need to up their game and provide healthcare coverage for employees. Insurance providers and TPA’s will assist in reporting capabilities, and ensuring the correct percentage of employees are covered to avoid penalties.

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