Tag Archive | "Affordable Care Act"

Obama Administration Delays Another Health Care Rule for Small Businesses

One of these days, employers will experience the full effects of Obamacare — but not yet, reported the Washington Post.

In the latest in a long string of delays in enforcing the rules under the health care overhaul, the Internal Revenue Service and Treasury Department announced on Wednesday that they will wait until summer to start enforcing financial penalties on small businesses that provide so-called Health Reimbursement Arrangements to their employees.

Under HRAs, employers provide spending accounts that their workers can use to cover a portion of the cost of buying individual health plans. The arrangements, which give employers a tax-free means to help pay for their workers’ health costs, do not comply with insurance standards in the Affordable Care Act, commonly known as Obamacare, according to Treasury guidance issued in the fall of 2013. Consequently, employers who elect to continue offering HRAs could be fined as much as $100 per day per employee.

In a public notice, IRS and Treasury officials announced that those penalties (in the form of excise taxes) will not be levied against noncompliant small businesses until July, giving many employers a little extra time to adjust to the new rules.

“The Departments understand that some employers that had been offering health coverage through an employer payment plan may need additional time to obtain group health coverage or adopt a suitable alternative,” the notice reads. Officials also hinted at the fact that the new online health insurance exchanges set up under the law, which were meant to give small businesses more choices and more affordable health insurance options, haven’t quite delivered.

“The market is still transitioning and the transition by eligible employers to SHOP Marketplace coverage or other alternatives will take time,” they wrote.

In regards to the rules in the health care law, the delay is nothing new for employers. Most notably, the Obama administration has several times pushed back the start of penalties for business that do not provide adequate health insurance to their employees, first pushing the entire deadline back one year and then last year announcing an even more gradual, tiered (by company size) rollout.

A year earlier, the administration instituted a one-year delay in enforcing rules requiring companies to report their health insurances costs on employees’ tax forms. Officials also delayed additional rules requiring owners to provide equal coverage to all of their employees, and they later postponed fines on health plans that don’t meet certain coverage criteria in the law.

At this point, the small business community has had about enough of the temporary reprieves and is calling for permanent solutions.

“This temporary delay serves as an important immediate step to protect small businesses from costly penalties when trying to assist employees with the purchase of health insurance,” Amanda Austin, vice president of public policy at the National Federation of Independent Business, said in a statement responding to the announcement. “However, another delay to Obamacare does not fix the underlying problems – which the administration is conceding with these actions.”

Research by the NFIB, which has staunchly opposed the health care overhaul since it was being debated in Congress, suggests that one in seven small businesses that do not provide health care plans offer some type of reimbursement arrangement.

Katie Vlietstra, vice president for government relations and public affairs at the National Association for the Self-Employed, conveyed similar frustration, calling the short delay “welcome news for our community” but insisting that “a long-term, legislative solution is still urgently needed.” She added: “America’s smallest employers need the stability of a permanent fix in order to continue to utilize this critical tool to help provide health care coverage to their employees.”

Austin’s and Vlietstra’s groups have support in Congress. Reps. Mike Thompson (D-Calif.) and Charles Boustany (R-La.) in December introduced legislation that would do precisely what the small business groups are asking for, requiring the IRS to permit small firms to continue offering HRAs. Theirs is one of many proposed tweaks to the health care law that are expected to be considered and potentially put in front of the president by the new Republican Congress.

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What ACA Has in Store for Entrepreneurs in 2015

Last year employers enjoyed a reprieve regarding the requirement to provide health insurance. The starting date of employer reporting requirements to comply with ObamaCare was pushed back from January 1, 2014 to January 1, 2015 (IRS Notice 2013-45), reported FoxBusiness.

But 2015 is sneaking up on us rapidly, and it’s important to know what your business must do.

Beginning in 2015, certain employers with 50 or more full-time employees, or full-time equivalents, must offer health insurance to full-time employees and their children up to age 26 or be subject to penalties. This is known as the employer mandate. Employees who work 30 or more hours per week are considered full-time.

We spoke with Missy Jaeger of Keas, a health management firm specializing in advising on health benefits for businesses. Their main focus is wellness and prevention, however they advise their clients on health insurance and on the impact of the Affordable Care Act (ACA).

“The Affordable Care Act has created many challenges for employers. Everything done so far has increased their cost,” says Jaeger.

Setting up and administering plans and checking compliance levels can be very time consuming, not to mention costly, for business owners.

It would behoove small business owners not facing the employer mandate to consider providing health insurance plans to employees. It’s a form of pay that is free from taxation and therefore very attractive for employers and employees as well. Jaeger says, “The biggest tax break is health care. Employers spend $250 billion on health care benefits each year. Of that, $180 billion goes as tax breaks to the employee population. This is a bigger deduction than mortgage interest and any other tax breaks Americans enjoy.”

Consider the tax breaks when analyzing your costs. If your business is required to provide health insurance, then you will be thinking, ‘how do I fulfill ACA requirements cost effectively?’ Jaeger believes employers should explore consumer directed health plans with high deductible and low benefits. The premiums would be lower, and those covered would end up paying more at the point of service.

“Otherwise employees can go to a private exchange to seek benefits, go to a public exchange through the state or the federal government. Employees may even have the option to apply through Medicaid,” she says.

Jaeger adds, “Health care costs will continue to rise as technology increases unless we do things differently. What will help the ACA become effective is for each individual to participate in prevention by living healthy lifestyles – exercise, weight control, proper diet.”

It is anticipated that there will be a 4.5% to 5% increase in costs of health care for 2015. Even with these premium increases, the number of small employers threatening to terminate plans decreased from 23% in 2013 to 16% in 2014.

Small employers who provide health care may enjoy the Small Employer Health Insurance Credit, which increased in 2014 to 50% of premiums paid. Check with your tax professional as there are plenty of rules surrounding the ability to take this credit.

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Minn. Dealer Wins Affordable Care Act Challenge

MINNEAPOLIS, Minn. — The U.S. District Court ruled in favor of the owner of a Minnesota car dealership who challenged the federal mandate to provide contraceptive coverage to his employees. Because of his faith-based objections, Hastings Automotive owner Doug Erickson is no longer required to provide coverage.

“I am grateful that the court’s ruling today allows me to remain obedient to the convictions of my faith without compromising my beliefs to obey government,” said Erickson.

Earlier this year, Erickson was granted a temporary exemption from the mandate until a ruling had been made in the Hobby Lobby case. The mandate is part of the Affordable Care Act and requires employers to provide employees with health insurance that includes coverage for “contraceptive methods, sterilization procedures and related patient education and counseling.”

District Court Judge Paul A. Magnuson granted permanent exemption to Erickson in light of the Supreme Court Ruling in Burwell v. Hobby Loby which allowed for-profit corporations to be exempt from a law if the owners have religious objections to it.

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Steering Clear of Obamacare’s Hidden Hurdles

The Patient Protection and Affordable Care Act, better known as Obamacare, does not have to be a bitter pill for small-business owners to swallow. But as we enter the second year under the main provisions of the law, there some critical things to keep in mind, reported The Washington Post.

For starters, companies with fewer than 50 full-time equivalent employees – the majority of small businesses – are not required by the law to offer health insurance to employees. Still, attracting the best employees often requires offering much more than a hefty salary; benefits such as health insurance can make the difference when recruiting top candidates and building an elite team.

So, even if a company has fewer than 50 employees, many employers may still want to provide an employee health benefits program — and if so, that plan will have to be in harmony with the new rules under Obamacare. What are those new rules?

Here are some of the less-discussed provisions to know about:

By far the biggest impact of Obamacare on small group health plans is the new provision for age-based rates. Individuals are now charged differently according to their age; the younger you are, the less you pay. For example, a 23-year-old employee might be charged $275 per month while a 63-year-old employee is charged $825 for the same coverage.

Premiums for spouses and dependents are also age-based. Fortunately, though, certain carriers are now offering small group policies with composite rates in both the single and dependent categories.

Another potential stumbling block for small businesses is a shorter waiting period for employees to become eligible for health-care benefits. Employers can be fined if their waiting period for coverage is longer than 90 days.

In addition, Obamacare dusted off a rarely enforced, 40-year-old compliance requirement from the 1974 Employee Retirement Income Security Act, which requires employers to provide certain information to workers about their health and retirement accounts.

In a nutshell, the Labor Department, which enforces the law, now plans to audit employers to make sure health benefit plans are in complete compliance with requirements of ERISA. Employers who are not in compliance are subject to fines ranging from $110 a day to more than $1,000 a day. To step up Title I enforcement, the department has added 1,800 new auditors.

How do steer clear of these potential stumbling blocks?

Here are my top five suggestions for small businesses to help minimize Obamacare-related headaches:

Make sure that your new hire eligibility period is less than 90 days following the date of hiring. By making the eligibility date the first of the month following 60 days on the job, for example, you can avoid any risk of being fined. That’s a simple step every employer should take immediately.

Consider moving to a high-deductible plan using an employer-sponsored health reimbursement arrangement or health savings account. Not only will this minimize costs to the company, but it will also make employees more accountable and aware of the cost of their health care.

If possible, to simplify the administrative work for your human resources team and to increase the likelihood of obtaining composite rates from insurance carriers, place all of your employees in one health plan. In most cases, if you can get a composite rate from a carrier, it will not change during the year when you hire an older worker.

Make sure you’re complying with ERISA by asking your broker to create what’s known as a Wrap Plan Document and Summary Plan Description for all of your company’s benefit plans. These documents essentially outline participants’ and beneficiaries’ rights and obligations under your health plan.

Finally, to reduce health risks, cut costs and improve employee productivity in the long term, consider implementing a variety of annual or year-round wellness opportunities for your employees. These could include health classes, health coaching, wellness challenges, smoking cessation programs and “de-stressing” activities such as yoga classes. These programs can help you build a happier, healthier and more productive workforce.

Joseph Appelbaum is founder and president of Potomac Cos., an employee benefit brokerage and consulting firm based in Rockville.

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Mid-Sized Businesses Still Very Concerned About (and Unprepared for) Obamacare

Health care costs and the Affordable Care Act represent the biggest concerns right now for owners of mid-sized businesses, a newly released survey shows, reported The Washington Post. In part, that may be because, now four years after the legislation was passed, most of them are still uninformed about and unprepared for the rules in the health care law.

More than two-thirds (69 percent) of mid-sized business owners say they are very or extremely concerned about the costs of health coverage and other benefits, while more than half (54 percent) say they are particularly concerned with the health law, according to an annual study conducted by the research institute at payroll firm ADP.

Some of that concern, the authors of the study note, may stem from that fact that fewer than half of mid-size businesses (firms that have been 50 and 999 employees) have put formal plans to manage the changes implemented under the health care law. Additionally, more than three-fourths of their owners say they aren’t confident that they completely understand the new rules.

On the whole, confidence among mid-size business owners is lacking. Only half of the roughly 750 respondents expect the industry in which they work to strengthen in coming year, while far fewer — 15 percent — believe the broader economy will improve.

In their report, the researchers point out that owners of mid-sized businesses often find themselves in a difficult position, in that they are “expected to operate with the agility of smaller businesses but abide by many of the same regulations that govern larger enterprises.” And perhaps nowhere is that more evident than in the health law.

Under some of most important provisions of the law, companies with more than 50 employees are considered large businesses, even though many would be considered small by other federal standards (the Small Business Administration’s definition generally includes firms with up to 500 workers). For example, they are not permitted to apply for small-business tax credits, shop for coverage on new employer insurance marketplaces or seek a small-business exemption to rules requiring companies to offer health coverage.

“A changing landscape, coupled with heightened responsibility, can take a toll on the confidence of mid-sized business owners,” the authors of the study wrote. “In 2014, they seem to be struggling to find it.”

It isn’t just health care concerns that are weighing heavily, though. More than half of respondents said they are very or extremely concerned with the number of government regulations. A third said they have been hit by unexpected fines or expenses in the past year resulting from noncompliance with government rules.

“In 2013 alone, there were more than 19,000 proposed changes to laws and regulations that impact how businesses manage employees,” Anish Rajparia, an ADP executive, said in a statement about the report. “So it comes as little surprise that the level and volume of government regulation made our list of top concerns three years running.”

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How Small-Business Owners Are Coping With the Health Law (So Far)

Via The Wall Street Journal

The health-care law is changing the way many small employers run their businesses, for better or worse. Some are curbing hiring plans or making staff cuts, while others are revamping benefit plans.

As part of its “Face of the Affordable Care Act” multimedia feature, the Wall Street Journal in April asked small-business owners to share how they’re coping with the law. Below, excerpts from some of the responses:

As a solo business owner who has a service-oriented business, I have been helped immensely by the Affordable Care Act. I had a spinal fusion in 2013 and was out of work for more than two months. I still had to pay rent, bills, health insurance premiums, business phone and YellowPages ads, and all other business and personal expenses, while receiving no income. I am still thousands in the hole and wouldn’t be able to afford health insurance now without the ACA! It came not a moment too soon! — Cynthia Hull, Acupuncture and Massage Wellness Center, Flagstaff, Ariz.

Our 440-employee business just received its initial premium from United Healthcare for our July 1 renewal. The renewal premium represents a 29% increase over the current premium. UHC indicated that our premiums are going up 11% to bring our deductibles and out of pocket maximums in line with the provisions of the ACA. In other words, without the ACA, our premiums would be going up approximately 18%, not 29%. Our strategy to this point has been to offer our employees a high-deductible plan and then fund part of the deductible with a company-sponsored Health Reimbursement Arrangement. This strategy no longer works under Obamacare. The premium increase excludes new fees (i.e. taxes) that we will have to pay — $63.50 per member per year. For our company, that’s another $22,797. The impact of bringing our plan design in compliance with the ACA was greater than I expected. — Rod Winter, Specialized Industries, New Berlin, Wis.

My seven-employee business carried top of the line health care, the best money could buy. We were cancelled and had to find new alternatives. There was nothing substandard about my policy whatsoever. The dishonesty behind ‘You can keep your plan and your doctor’ was so apparent after that experience. — Richard Rand, The Northwest Center for Aesthetic Plastic Surgery, Seattle

We are just over the 50-employee mark, with 55 employees. I do not know how we are going to compete when many of our competitors are smaller and already have a pretty big advantage by paying employees off the books. This is just another blow to the already skyrocketing taxes, workman’s compensation, liability insurance, etc. Customers don’t care if our staff has health benefits. In fact, they would rather have a company who doesn’t supply it because it is cheaper. Health premiums continue to go higher and higher. My fear is being able to offer competitive plans to recruit and retain quality people. I am afraid people will just leave our industry. — Scott Neave, Neave Group Outdoor Solutions, Westchester County, N.Y.

We employ fewer than 10 people and have never offered health insurance because we could not easily get a group plan at a reasonable cost. Now with Obamacare, our employees can purchase insurance coverage and we as an employer will make a contribution towards the premium. Employees get to choose the plan they like and contribute towards its cost. Our employees are happy that now they can get an affordable health plan and we finally have our employees covered. — Amir Lakhani, Pediatric Dentistry, Allentown, Penn.

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