The health care law will affect employers differently depending on the size of your company, how much your employees are paid and the type of coverage you currently provide, if any. The law does not mandate that employers provide health care coverage to their employees. But companies may be subject to penalties in certain circumstances.
Businesses with fewer than 50 full-time equivalent employees will not be required to offer health insurance. In fact, some businesses with fewer than 25 employees and annual average wages of less than $50,000 may be eligible for health insurance tax credits if they offer their employees health insurance.
Employers with 50 or more employees who currently do not offer health insurance may be assessed penalties if at least one of their employees receives tax credits to help pay for their health care costs. Companies that offer health insurance plans that do not pay for at least 60 percent of covered health care costs and the employee does not contribute more than 9.5% of their family income will be assessed penalties for not providing minimal or affordable coverage. The employer will be charged penalties based on the number of employees who receive tax credits.
Companies with 50 or more employees will not be assessed penalties if:
- They offer health plans that cover 60 percent or more of the cost of covered health care services.
- None of their employees pays more than 9.5 percent of their family income for their health care coverage.
Other provisions of the health care law will have an effect on employers. For example, employers whose existing health plans are not "grandfathered" under the new health care law must include in their plans beginning on January 1, 2014, the 10 new essential health benefits. Also, they must offer 100 percent coverage of certain preventive care services, give parents the option of covering adult children up to age 26 and meet other requirements of the law.
If employers offer plans that existed on March 23, 2010, the plans may be eligible for grandfathered status. They would not have to comply with all provisions in the health care law. Employers could lose that status, however, if they make significant changes to the plan, such as the benefits it includes or the amounts employees pay in cost-sharing fees (deductibles, premiums and copayments).
As part of the health care law, employers are required to notify all employees in writing by early fall of 2013 and all new hires about the new Marketplace – an online shopping tool administered by the federal government. Specifically, employers must:
- Provide a description of the services the Marketplace offers
- Provide instructions about how to contact the Marketplace and request assistance
- Let employees know that they may be eligible for premium tax credits if the plans offered through the employer cover less than 60 percent of the costs of covered services
- Explain that if employees purchase a qualified health plan through the Marketplace they may lose any employer contribution to any health plan offered by the employer. In addition, some or all of that contribution may be excluded from their income on their federal income tax returns.
For more information about the notification requirements, visit the U.S. Department of Labor website at http://www.dol.gov/ebsa/faqs/faq-aca11.html.
IBC is helping you comply
IBC has already begun making changes to implement the new health care law. For more information about what we're doing that will help you comply with the health care law, refer to the following business segments: