ACA, ALEs, and MEC – Oh My!
We’ve officially been in 2017’s fourth quarter for some time now. Besides all the end of year work that needs to be done, it’s time to start thinking about 2018 and what that means from a health insurance perspective.
Jaime Zuder of Journey Employer Solutions presents Journey’s position with ACA clearly. “ACA has never been a walk in the park for any business owner. As reporting and fines seem to be a moving target, we urge our clients that are close to being an Applicable Large Employer to turn on Journey ACA monitor for your business. At the same time, we counsel our clients to work with an insurance broker they trust puts their business first. If you currently do not have a health broker for your business, or you’re interested in a second opinion, please let myself or my partners know. We will direct you to a health broker that we trust will put your business needs first and guide you through these waters.”
Is the Affordable Care Act Changing?
With offices in both Greeley and Fort Collins, Colorado, Michael works with many businesses and individuals helping them to determine the best solutions for their insurance needs.
“Even though there have been attempts to change the Affordable Care Act, nothing has passed [in Congress]. The stance we are taking with our clients is don’t pay too much attention to what you hear in the news,” Shirazi says. The ACA is still the law of the land and companies must continue to follow that in order to stay in compliance. We stay on top of the issues, and will advise them of whatever changes may come, but for now, that is still what is guiding everything.”
The President’s Executive Order
That being said, President Trump signed an executive order on October 12th. The order probably won’t have much impact on people whose health insurance is provided by a large employer. It might even make it easier for the employer to give employees pretax dollars to purchase their own policies. Small businesses, however, may see bigger changes stemming from the executive order. The order loosens rules imposed by the ACA that allow smaller companies to buy into association plans. This allows similar companies to form into a group or business association that enables them to increase their purchasing power. Instead of being governed by state insurance regulations, they will govern by federal employment laws. That could boost the cost.
Amy Bona, a benefits consultant with Fort Collins based concurs. She points out that the “”—an excise tax imposed on employers who offer high-cost plans to their employees (defined as health plans with premium costs above $10,200 for individuals and $27,500 for family coverage) is still in play. Just last week, President Trump’s administration , which required employers to provide plans that cover birth control. It’s an issue to keep an eye on, she says.
With most policies still in place and few in flux, what do you, the employer, need to be aware of? At least, until things do change.
Is your company an ALE?
You need to know, because not knowing can land you in a deep pot of hot water. Being an ALE—or Applicable Large Employer —means you have employed an average of at least 50 full time employees on business days during the preceding year. Keep in mind that “full time” includes full time equivalent (FTE) employees. An FTE employee is a combination of employees, none of whom work full time (at least 30 hours of service per week during the calendar month or 130 hours during the calendar month), but whose combined hours of service are equivalent to a full time employee. The IRS has a quick guide that outlines the criteria in a fairly simple format.
ACA Requirements and ALEs
If you determine that your company is indeed an ALE, then you are subject to the Employer Shared Responsibility (Section 4980H of the Internal Revenue Code) provision. ALEs must offer Minimum Essential Coverage (MEC) that meets ACA requirements to at least 95% of full time employees and their eligible dependent children. Employers must offer coverage that is affordable or provides minimum value to a certain percentage of employees.
And yes, it’s complicated. At least one of the offered medical insurance plans must meet minimum actuarial value requirements. This means the plan should pay for at least 60% of the cost of covered benefits, or the employee’s portion of the employee-only premium is no greater than 9.69% (for plan years beginning in 2017) based on the following IRS criteria:
- Rate of Pay (not permitted for tipped or commissioned employees)
- Form W-2 wages from the prior calendar year
- Federal Poverty Level
If the employer fails to meet these requirements, penalties may apply. All it takes is one employee enrolling for health insurance through the Exchange for the employer to be subject to a penalty. f your company has seen enough growth that you may find yourself living in ALE territory, now is the time to meet with a benefits professional who can guide you into compliance. Penalties can rack up quickly.
Make sure you stay on top of your reporting. Missing deadlines can bite you, too. And you just don’t want that. Not at all.
Bottom line: “It’s business as usual,” says Michael Shirazi. “Don’t change anything until you hear from your benefits advisor.”
If your business needs a trusted health broker that can understand your business needs, please ask Journey for a recommendation.