How Are the Exchanges Funded?

February 15, 2013/in Affordable Care Act Tips + Updates/by revel

hscompanies-ppaca_exchange-who-pays One big question many people have is, “who is going to be paying for the exchanges being setup by the states and federal government”. In reality, the burden will fall upon both employees, who receive coverage through a group health insurance plan, and also those who are eligible to purchase through the exchange.

Starting in 2014, all group health insurance plans will be charged a fee of $63 per participant per year. This fee is charged to the insurance company, but the cost will be passed on to the employer, and subsequently to the employee through an increase in their health insurance deduction.

In addition, insurers who wish to participate in the new exchanges will be charged a 3.5% fee on the premium amount for policies sold through the exchange. Once again, this is a fee that will ultimately be passed on to the individuals purchasing through the exchange.

Employers, employees, and those who may be eligible to purchase through the exchange need to be aware of how these fees will increase their share of the cost of obtaining insurance coverage.

To learn more about the PPACA visit the H&S Companies PPACA webpage or download our February newsletter.

Have questions about how the exchanges will affect your business? Contact HR Manager Travis Sinquefield.

Travis Sinquefield
HR Manager
616.735.3088
traviss@hscompanies.com

PPACA Newsletter

January 29, 2013/in Affordable Care Act Tips + Updates, Newsletters/by revel

The Patient Protection Affordable Care Act of 2010 (PPACA) is here to stay. Several provisions have already taken effect, but there are many more to come. Read the Special PPACA Edition of the Bottom Line to learn more.

Click to Download

In This Issue:

2013 & The PPACA: The Patient Protection and Affordable Care Act of 2010, also known as the PPACA, is the single largest health care bill ever passed. It has a monumental impact upon the health care and insurance industry in the United States.
Non-Discrimination Rules to Take Affect for 2014: The PPACA added Section 2716 to the Public Health Service Act (PHSA), which states non-grandfathered health insurance plans, including fully-insured plans, must follow the same non-discrimination testing rules that apply to self-insured health insurance plans as outlined under IRS Section 105(h).
Am I Considered A ‘Large Employer’: Only employers who are considered a large employer are subject to the employer mandate provisions of the PPACA.
Major Changes Effective for 2013
The Confusing World of Penalties: As you may have read, the PPACA will implement fines for employers who are subject to the new regulations but do not comply. It is still possible, however, for an employer to offer insurance and still get hit with the fine.

PPACA Pop Quiz

January 29, 2013/in Affordable Care Act Tips + Updates/by revel

hscompanies-Test

Question 1, C — Minimum value is defined as having an actuarial value of 60%. Each medical health insurance plan will require an actuarial valuation to determine whether the plan is paying out at least 60% of the benefits, including co-pays. Essentially, this means that the plan pays for more than 60% of covered health care expenses.
Question 2, False — The original deadline to publish exchange notices for employees was March 1, 2013. However, on January 24, 2013, the IRS released a notice stating that exchange notices have been pushed back until at least the fall of 2013. Individuals and employers will be able to purchase insurance on the exchange starting October 1, 2013.
Question 3, False — While all large employers are subject to the employer mandate rules and penalties, the key determinant is whether an employee receives a tax subsidy and purchases insurance on the exchange, and that the insurance offered meets the minimum value and affordable cost requirements. An employer can refuse to offer coverage and avoid penalties if no eligible employees receive the subsidy and purchases insurance through the exchange. Likewise, employers who offer insurance that does not meet the minimum value and affordable cost provisions can also avoid a penalty if no employee receives a subsidy. It is important to note that if you do offer insurance, in order to avoid fines, the coverage offered must meet the minimum value requirement and affordable cost requirements. If those are met, eligible employees will not be able to qualify for the subsidy for purchase of insurance on the exchanges.
Question 4, 50 — Per the PPACA, a large employer is defined as having 50 or more full-time and full-time equivalent employees. Employers will need to count not only the full-time employees, which under the new rules are employees that work 30 or more hours per week, but also add up the hours of all part-time individuals and calculate the number of full-time equivalents. This calculation would be done on a monthly basis, so employers will need to look at each month individually, add up the part-time hours, and divide by 120 to determine the number of full-time equivalents. Employers, however, are only required to offer insurance to full-time employees, and not to the equivalents.

Return to PPACA Page

Summary of Benefits and Coverage Due to Employees Soon

September 17, 2012/in Affordable Care Act Tips + Updates/by revel

You will need to provide a Summary of Benefits and Coverage (SBC) to employees with open enrollment periods beginning 9/23/12.

By Travis Sinquefield

Do you have a company sponsored health plan for your employees? If so, then under the Patient Protection and Affordable Care Act (PPACA) you will need to provide a Summary of Benefits and Coverage (SBC) to employees with open enrollment periods beginning 9/23/12. The SBC must outline, in clear language, the costs and benefits of their health plans and must also include a glossary of terms used in the health insurance coverage. As part of the PPACA, the government has provided a template to use for relaying this necessary information.

If you are fully insured, meaning that the insurance is provided by an outside provider (Blue Cross, Priority, etc.), then this document will be provided to you by the insurance company after you sign the renewal forms. If you are self-insured, then you are required to create this document yourself with the help of your third party administrator.

Useful Links

Full text of the PPACA
Summary of Benefits and Coverage Template – PDF

If you have any questions concerning the PPACA and how it affects your business, please contact Travis Sinquefield.

Travis Sinquefield
HR Manager
616.735.3088
traviss@hscompanies.com

You Could Be Getting a Health Care Rebate

August 10, 2012/in Affordable Care Act Tips + Updates/by revel

12.8 million Americas will be benefitting from the 80/20 rule

Under the Affordable Care Act, if health insurance companies don’t spend at least 80% of premiums paid on medical care, then they must provide those covered with a rebate. According to healthcare.gov 12.8 million Americas will be benefitting from this in one of the following ways:

They will receive a rebate in the mail
They will receive a lump-sum reimbursement to the same account that was used to pay the premium
They will receive a reduction in future premiums
Their employer will apply the rebate in a way that benefits the employee

To learn more read, The 80/20 Rule: Providing Value and Rebates to Millions of Consumers

If you are a small business owner with any questions regarding the best way to apply the rebate in a way that benefits your employees, please contact Mike Farmer.

Mike Farmer
Certified Public Accountant
231.798.6503
mikef@hscompanies.com

Survey Shows 10% of Employers Anticipate Dropping Health Care Benefits

July 27, 2012/in Affordable Care Act Tips + Updates/by revel

With medical costs on the rise, employers are exploring health care coverage alternatives.

According to an article on the Los Angeles Times website, a new survey shows 10% of employers anticipate dropping health care benefits for their employees. The survey, by consulting firm Deloitte, found 81% of employers plan to continue offering health benefits and another 10% weren’t sure what they would do.

According to the article, more employers are exploring new ways to provide health care benefits to their employees. Some are looking into defined contribution plans or trying to negotiate with local health care systems directly.

Source: Nearly 10% of employers to drop health benefits, survey finds, LA Times

Congressional Budget Office Releases New Estimates for Cost of Affordable Care Act

July 25, 2012/in Affordable Care Act Tips + Updates, Articles/by revel

The CBO released their estimation for how much Medicaid will cost under the Affordable Care Act

On Tuesday, the Congressional Budget Office (CBO) released new estimates regarding the cost of the Affordable Care Act’s insurance coverage provisions, which takes into account the Supreme Court decision issued on June 28, 2012.

The CBO estimates that Medicaid will cost $1,168 billion from 2012-2022, rather than the previously estimated $1,252 billion. They believe fewer people will enroll in Medicaid because more people will seek insurance through newly established exchanges and more people will be uninsured.

To view their full decision read, Estimates for the Insurance Coverage Provisions of the Affordable Care Act Updated for the Recent Supreme Court Decision.

You May Keep Your Dependent On Your Insurance for 26 Years

July 20, 2012/in Affordable Care Act Tips + Updates/by revel

Because of changes enacted by the Affordable Health Care Act, health care coverage for an employee’s children, through age 26, is generally tax-free. Employees who are eligible to contribute to cafeteria plans are allowed to make pre-tax contributions to pay for this expanded benefit. The IRS considers a child to be one’s son, daughter, stepchild, adopted child, or eligible foster child.

Additionally, the Affordable Care Act requires that dependents being provided coverage via their parent’s plan be eligible to remain on that plan until they reach age 27.

For more information read, Tax-Free Employer-Provided Coverage Now Available for Children under Age 27

Small Business Health Insurance Tax Credit

July 11, 2012/in Affordable Care Act Tips + Updates/by revel

Stethscope On Thursday, June 28, 2012, the Supreme Court upheld the individual mandate in the Affordable Care Act. This means that small businesses will continue be offered a tax credit of up to 35% (or up to 25% for non-profits) to help offset the cost of providing insurance to their employees that began in 2010. Beginning in 2014, that rate will increase to 50% and 35%, respectively. This is both a credit and a deduction meaning that because the health insurance premium payments are worth more than the credit, some eligible businesses will be able to deduct the amount by which the premium payments exceed the credit.

To qualify you must:

Have fewer than 25 full-time equivalent employees (2 part-time employees = 1 full-time employee).
Pay an average of $50,000 in wages annually. For example, if you have 10 employees, and you pay them $600,000 total, then you would qualify because you pay an average annual wage of $60,000 ($600,000/10 employees = an average wage of $60,000). Even if Steve makes $33,000, Diane makes $45,000, Carol makes $41,000, and so on for a total of $600,000.
Provide health insurance to your employees, and cover at least 50% of the cost.

To determine how much you are eligible to receive from this credit, use Form 8941, Credit for Small Employer Health Insurance Premiums. Small businesses will claim this credit on their tax returns as part of their general business credits; non-profits will include the amount on line 44f of Form 990-T, Exempt Organization Business Income Tax Return.

H&S Companies will publish tips and updates regarding the Affordable Care Act each week, so check back often. If you have any questions, please contact an H&S professional today.

Links + Sources
What You Need to Know About the Small Business Health Care Tax Credit
Small Employer Tax Credits