Get Familiar With Health Insurance Terminology
You might encounter some jargon that you are unfamiliar with as you look over your plan.
Luckily, HealthCare.gov provides a great glossary of terms! Here are a few of the big ones that youll want to know.
This is the amount you pay for your health insurance every month. Your employer may cover a portion or all of your premium each month.
Keep in mind that a lower premium doesnt necessarily mean more savings. Depending on your healthcare needs, paying a little more each month may translate to a better plan and more savings at the doctors office.
Your deductible is the amount you pay for covered health care services before your insurance plan starts to pay. For example, with a $3,000 deductible, you pay the first $3,000 of covered services.
After you pay your deductible, you usually pay only a copay or coinsurance for covered services and your insurance company pays the rest.
Your out-of-pocket max or out-of-pocket limit is the most you have to pay for covered services in a plan year. After you spend this amount on copays, deductibles, and coinsurance for in-network care and services, your health plan pays 100% of the costs of covered benefits.
Copayment or copay
A copay is a flat fee that you pay each time you go to your doctor or fill a prescription. The remaining balance of your visit is covered by insurance.
Family And Medical Leave Act Protections
The Family and Medical Leave Act entitles eligible employees of covered employers to take unpaid, job-protected leave for specified family and medical reasons. A covered employer is a private-sector employer with 50 or more employees, and all public employers. The FMLA provides eligible employees with up to 12 weeks of job-protected, unpaid leave during a 12-month period for qualifying family and medical reasons, and to handle qualifying exigencies, as well as up to 26 workweeks of unpaid, job-protected leave in a single 12-month period under the Military Caregiver Leave. Qualifying reasons would include the birth of a child, dealing with a serious or chronic personal illness, or caring for an immediate family member with a serious or chronic illness.
Note: In addition to benefits under the FMLA, some states and local jurisdictions require paid/unpaid family leave and/or paid/unpaid sick and safe leave. Employers must review their obligations under applicable state and local laws.
Under The New Aca Law Rules A Company With 50+ Full Time Equivalents Has Tooffer Aca Compatible Coverage To Full Time Employees Or Face A Penalty
The penalty for not offering coverage is $2K per eligible employee.
What if you offer a scaled down health plan, sometimes called a MEC plan?
In this case, there’s a $3000 penalty for each employee that gets a taxcredit from the Exchange since your plan is not ACA compliant.
What makes the most sense…offer a MEC, ACA health plan, or no coverage ?
It completely depends on your company’s situation.
We can run the quote for your situation here:
What we consistently see as the best outcome financially and in terms ofemployee morale is the following.
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Small Businesses And The Affordable Care Act
If you are a small business owner considering whether to purchase health insurance for your employees, here is a summary of considerations as they pertain to the Affordable Care Act:
- The ACA established the SHOP marketplace, allowing small employers a way to cost-effectively offer coverage to their employees.
- If you offer health insurance to employees, it must be offered to all employees similarly situated when they become eligible.
- You must provide a summary of benefits and coverage form describing the health plan, what it covers, and what it costs.
- You may choose to offer flexible spending accounts , but employees cannot contribute more than a limited amount.
- The ACA offers additional incentives for workplace wellness programs, which can reduce costs by up to 30%.
- Once you have more than 50 FTE employees, you will be subject to employer shared responsibility payments if you dont offer health insurance.
- If you provide self-insured health coverage, you must file an annual return with the IRS, reporting information for each covered employee. If you offer coverage through an insurance policy, the policy issuer will file the return.
- You may qualify for the small business health care tax credit if you cover at least 50% of premium costs for your employees, have fewer than 25 FTE employees, meet certain wage payment requirements, and purchase the coverage through the SHOP marketplace.
Aca Requirements For Employers
The ACA requires that applicable large employers offer affordable coverage to their full-time employees and their dependents up to age 26. However, the law makes no requirement for spousal coverage, nor does it mandate that employers pay for any portion of the premium for dependents.
So in short employers are not required to offer family health insurance. That being said, many employers choose to offer coverage for spouses and families, regardless of whether dependents are older or younger than 26 years of age. In addition, most choose to subsidize a portion of the premium as well.
One trend picking up steam in the past decade is to only offer spousal coverage if the spouse isnt able to obtain health insurance through his or her own employer .
Another common practice is for an employer to levy an additional surcharge for spouses who can obtain insurance through their own employers, but prefer to be on their spouses insurance instead. The reasons for doing so are often wide and varied. Nevertheless, the surcharge is often relatively minimal perhaps around $100.
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Medical Loss Ratio Rebates
Insurance companies must generally spend at least 80% of premium dollars on medical care. Insurance companies that don’t meet this requirement must provide rebates to policyholders usually an employer who provides a group health plan. Employers who get these premium rebates must allocate the rebate properly. Learn more about federal tax treatment of Medical Loss Ratio rebates from the IRS.
What Is An Applicable Large Employer
An ALE is any company that has at least 50 FTEs. According to the ACA, an FTE is someone who works at least 30 hours a week, or 130 hours of service per month.
Your organization is defined as an ALE on a calendar year basis. For example, you could be an ALE in one year but not the next year if you lost some employees. Typically, if an employer has a monthly average of at least 50 full-time equivalent employees during a calendar year, the employer is considered an ALE for the next calendar year.
Your organization doesnt qualify as an ALE if:
- You employed fewer than 50 full-time employees on average during the previous calendar year.
- You employed more than 50 full-time employees no more than 120 days during the previous calendar year due to a seasonal workforce.
Due to the employer mandate, ALEs are required to provide health coverage to their FTEs and their dependents or else pay a tax penalty.
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Pros And Cons Of Cobra Coverage
An individual who opts for COBRA coverage is able to continue with the same physician, health plan, and medical network providers. COBRA beneficiaries also retain existing coverage for preexisting conditions and any regular prescription drugs. The plan cost may be lower than other standard plans, and it is better than remaining uninsured as it offers protection against high medical bills to be paid for in case of any sickness.
Nonetheless, it’s important to keep in mind the downsides of COBRA. Some of the most prominent of these include the high cost of insurance when it is borne entirely by the individual, the limited period of coverage under COBRA, and the continued dependency on the employer. If the employer opts to discontinue the coverage, an ex-employee or related beneficiary will no longer have access to COBRA.
If the employer changes the health insurance plan, a COBRA beneficiary will have to accept the changes even if the changed plan doesn’t offer the best fit for the individuals needs. A new plan may change the coverage period and number of available services, for example, and it may increase or lower deductibles and co-payments.
For these reasons, individuals eligible for COBRA coverage should weigh the pros and cons of COBRA against other available individual plans to select the best possible fit.
Offers Of Coverage By Applicable Large Employers
The ACAs employer shared responsibility provision requires ALEs to offer minimum essential coverage that is affordable and provides minimum value to substantially all of its full-time employees. To avoid a potential penalty, an ALE should offer coverage to any full-time employee who it anticipates will work 30 or more hours of service per week. An hour of service includes all hours paid and hours entitled to payment. Because unpaid interns and unpaid temporary workers have no paid hours or hours entitled to payment, they are not full-time employees under the ACA and require no offer of coverage. Likewise, non-employees such as 1099s/independent contractors are not “employees” under the ACA definition and require no offer of coverage.
Generally, however, no later than the maximum 90 day waiting period, an ALE should make an offer of coverage to paid interns or temporary workers who the employer anticipates will work 30 or more hours per week. For some employers, this requirement may pose challenges as it can be administratively cumbersome to offer coverage to an employee whose employment may be short-term. Yet, the ACA does not permit an employer to take into account the employees anticipated length of service with respect to eligibility. So, what options are available to ALEs with interns and other temporary workers?
Does Employer Have To Offer Health Insurance In Arizona
Arizona Healthcare Insurance: What you need to know There is no state law requiring employers to offer group healthcare insurance to their employees, but most employers do provide this benefit. An employers health plan is self-insured if the risk of paying claims is on the employer and not on an insurance company.
Employers’ Benefits From Workers’ Health Insurance
Most nonelderly Americans receive their health insurance coverage through their workplace. Almost all large firms offer a health insurance plan, and even though they face greater barriers to providing coverage, so do the majority of very small firms. These employment-based plans cover two-thirds of nonelderly Americans and pay most of working families expenses for health care and about one-quarter of national health spending. Despite employers role in the health insurance market, however, very little attention has been paid to employers motivations for providing health insurance to workers. Why do employers offer health insurance to workers? Is it because workers want it? Because their unions demand it? Or do employers offer health benefits to workers because their productivity and profitability depend on it?
This article makes a case for reassessing the theory. A key flaw in the standard theory is that it ignores the benefits accruing to employers from offering health benefits. According to the conventional view, employees pay the full cost of coverage presumably because they believe that the benefits of health coverage are entirely for themselves. The alternative view that I am investigating posits a business case for employment-based health coverage, acknowledging that employers may want to offer coverage because offering a compensation package composed of both wages and health insurance is more profitable than providing wages alone.
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Small Employers In Ohio Do You Have To Offer Health Plan Coverage
Small Employers in Ohio Do You Have To Offer Health Plan Coverage?
Lyndsey R. BarnettThe short answer is no. But if you offer coverage to some employees, you have to offer it to all eligible employees.
If you have fewer than 50 full-time equivalent employees, you are not subject to the pay or play penalties under the ACA if you fail to offer health plan coverage to your full-time employees. However, if you are a small employer there may still be a state law impacting health plan eligibility. A small employer in Ohio will not be penalized for failing to provide a group health plan for its employees. However, if a small employer offers group health plan coverage to any employee it must offer coverage to all eligible employees. An eligible employee is defined as any employee who works a normal work week of thirty or more hours.
If you are a small employer in Ohio and not currently offering coverage to all employees regularly scheduled to work 30 or more hours per week, you should seek counsel to determine if you are in violation of Ohio law.
Qualifying For Cobra Health Insurance
There are different sets of criteria for different employees and other individuals who may be eligible for COBRA coverage. In addition to meeting these criteria, eligible employees can typically only receive COBRA coverage following particular qualifying events, as discussed below.
Employers with 20 or more full-time-equivalent employees are usually mandated to offer COBRA coverage. The working hours of part-time employees can be clubbed together to create a full-time-equivalent employee, which decides the overall COBRA applicability for the employer. COBRA applies to plans offered by private-sector employers and those sponsored by the majority of local and state governments. Federal employees are covered by a law similar to COBRA.
Additionally, many states have local laws similar to COBRA. These typically apply to health insurers of employers having fewer than 20 employees and can be called mini-COBRA plans.
A COBRA-eligible employee must be enrolled in a company-sponsored group health insurance plan on the day before the qualifying event occurs. The insurance plan must be effective on more than 50% of the employer’s typical business days in the previous calendar year.
The employer must continue to offer its existing employees a health plan for the departing employee to qualify for COBRA. In case of the employer going out of business or the employer no longer offering insurance to existing employees , the departing employee may no longer be eligible for COBRA coverage.
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If My Employer Voluntarily Provides Health Insurance Benefits Is It Obligated To Provide Benefits To All Employees
Maybe, depending on the employer. Employers covered by Obamacare must provide health insurance to at least 95% of their full-time employees and dependents up to age 26. Otherwise, an employer is free to cover some, as opposed to all, of its employees. For example, salespersons can be excluded from an insurance plan while administrators are covered.
Exception: If an employee is entitled to participate in an employer-provided health benefits plan under ERISA, an employer may not wrongfully deny participation. To qualify, an individual must be classified as an employee, not a temporary worker or independent contractor and must be eligible to receive benefits according to the terms of the plan.
How Many Employees Before Health Insurance Is Required
How many employees do you have to have to offer health insurance? Currently, the limit is set at 50 or more full-time employees. This also includes the equivalent in part-time employees. For example, if a business employs 100 part-time employees, they would also need to offer health insurance to those employees despite not working full-time.
Penalties for failing to comply with the ACA provisions are significant and must be paid to the IRS. The penalty stood at $2,570 per employee for the year 2020. However, the penalties under 4980H and 4980H were raised in 2021 to $2,700 and $4,060, respectively.
Healthcare coverage must meet a basic standard and apply to both the employee and their dependents. The ACA doesnt consider spouses, stepchildren, or foster children to be dependents, so these health plans only apply to biological or adopted dependents under the age of 26. Some general basic standards include:
- Out-of-pocket costs are currently capped at $8,550 for individuals and $17,100 for families
- No dollar limit on ten essential health benefits
- Pre-existing conditions are covered, with no waiting periods
- Dependents can remain on their parents plan until age 26
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Penalty If Coverage Isnt Offered
If an ALE doesnt offer coverage to at least 95% of its full-time employees and if at least one full-time employee obtains coverage in the health insurance marketplace and qualifies for a premium subsidy, the employer is subject to a penalty.
In this case, the penalty is calculated by taking the number of full-time employees the ALE has, subtracting 30, and then multiplying by the per-employee dollar amount, which is indexed annually. $2,750 is the amount that applies in 2022.
For example, if an ALE has 100 full-time employees, doesnt offer health coverage to at least 95 of them, and at least one of them obtains subsidized coverage in the marketplace, the ALEs penalty for 2022 would be as follows: x 2,750 = $192,500.
Evidence Of The Effects Of Health Insurance
Are employers perceptions of the value of health and health coverage consistent with the evidence from empirical studies? Is health coverage associated with measurable gains in health and productivity? Is absenteeism reduced? Do the benefits of health coverage justify its costs? The existing empirical research can shed some light on these questions, but it is hardly conclusive. Substantial gaps in research remain.
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