Unum Insurance has put out a benefits decision guide to advise consumers and businesses on the upcoming healthcare reform implementation starting in January 2014. Our agency would like to give an overview of the recommendations given in this informative roadmap guide.
1. Are you a large or small employer?
Do you have more than 50 FTE's? If yes, you are a large employer, and PPACC requires you to provide health insurance to your full time employees or potentially pay a penalty.
Do you have few than 50 FTE's? If so, you are a small employer. You are not required to provide insurance, but you can do so, and you may have additional options through the Small Business Health Options Program (referred to as "Shop" exchanges). If you provide insurance through SHOP, you could be eligible for tax credits.
2. Which of your employees are considered full time?
Under PPACA, employees who work 30 hours per week are considered full time. If you have employees with variable schedules, or season or hourly workers then see information at the bottom of these post.
3. Is the coverage you offer affordable?
Do any of your full-time employees spend more than 9.5% of their W-2 earnings for the lowest cost, employee-only coverage plan available to them?
If so, those employees eliglble may be eligible for tax credits to purchase coverage through the Health Care Exchanges. If even one employee accesses such subsidized coverage, your business may be subject to a penalty.
4. Does the plan you offer meet the 'acturial value' standard?
The plan must cover at least 60% , on average, of the plan population's health care costs in a given year. For example, if an employee incurs $1,000 in health care expenses, the plan must cover at least $600, with the employee responsible for the balance through a combination of deductibles, co-pays and co-insurance.
The plan must also provide all 'essential health benefits' if the employer is fully insured. Feel free to click on The Center For Consumer Information & Insurance Oversight to determine your plan's actuarial value and other resources.
5. Should you pay or play?
If you're a large employer and you don't offer health insurance to your employees, and at least one employee receives premium assistance through the Health Insurance Exchanges, you will be liable for a penalty of $2,000 per full time employee, not counting the first 30 employers. Whether paying the penalty is less costly than providing health insurance will depend on the employer.
But this decision is more complex than just "doing the math." You must account for all the direct and indirect implicants of dropping insurance, including the potential effects on employee morale, loyalty and productivity.
6. Is your total compensation package aligned with your company's goals?
To attract and retain the talent that will allow your company to reach its goals, your compensation package must be competitive. The total value of your compensation package includes the benefits you offer. As you reduce benefits and/or increase cost-sharing, you reduce compensation.
Offering additional non-medial benefits canhelp rebalance your ciompensation package to get and keep valuable employees. For example, disability insurance can create value for employees by shielding them from much of the financial risk of disability.
7. Do your employees understand and value the benefits you offer?
Whether you pay or play, you still need to communicate with employees about the options available to them. If increased financial responsibility is shifted to employees, you must ensure they understand the new risks they face, as well as the other benefits you offer to protect against those risks.
Employees who understand the value of their benefits are more likely to be satisfied at work-and more likely to be happy, productive and loyal.
What is the Penalty? Whether an employer offers coverage or not - no penalty kicks in unless one of more employees receive a tax credit or cost subsidy on the Health Insurance Exchange.
Large employer who doesn't offer health coverage and at least one employee is receiving premium assistance through a health insurance exchange= $2,000 per full-time employee (not full-time equivalent) not counting the first 30 employees. A full-time employee is one who works 30 or more hours/week.
Large employer who offer health coverage, but does not meet quality or affordability standards and at least one employee is receiving premium assistance through a health insurance exchange= the lesser of
-$3,000 for each employee receiving premium assistance
-$2,000 for each full-time employee in the company, not counting the first 30 full-time employees.
We hope this helps your business implement the necessary healthcare reform changes. Please feel free to contact us with any questions.
