The Affordable Care Act (ACA) is a complicated piece of legislation that, even though it was passed in 2010, has had a timeline of implementation which has been “ramping up” over the past few years. Beginning in 2016, the ACA is considered to be fully-implemented in terms of the employer mandate. But, over the past five years, there have been changes, repeals and moratoriums on other sections of the Act.
Before we get into specific employer mandate changes in 2016, it’s important to distinguish that even though ACA does not require employers provide health care, if they do not, they may be subject to monetary penalties – known as the “Play-or-Pay” Penalty (POP) or Employer Mandate.
Large Employers are required to offer health care coverage to full-time employees or be liable for substantial “assessable payments” if they fail to offer the opportunity to enroll in MEC (Minimum Essential Coverage) under an eligible employer-sponsored plan. Plus, plans must meet Minimum Value standards (the plan’s share of the total allowed costs of benefits must be at least 60% of those costs) and be considered “affordable.”
See Below for Important Employer Mandate Changes in 2016.
Coverage Requirements – Businesses with 50 or more full time employees or full-time equivalents (FTE) must offer at least 95% of full time employees insurance to avoid penalties.
Affordability Requirements – The threshold of affordability for the plan was raised from 9.5% of an employee’s total household income to 9.66%. Aside from actually calculating numbers for each employee, employers can utilize 3 “safe harbors” as proxies for defining affordability: form W-2 wages, employee’s rate-of-pay and using Federal Poverty Line.
Penalty Changes – Even if employers offer health coverage, the coverage must meet Minimum Value and affordability requirements or they may be penalized if an employee receives a tax credit for the purchase of health insurance on a state exchange.
Minimum Essential Coverage Changes – The penalty increased from $2,080 x number of FTEs in excess of 80 employees in 2015 to $2,160 x number of FTEs in excess of 30 employees in 2016.
This focus on the changes to the employer mandate are just one small piece of the ACA puzzle. In fact, the article that inspired this blog actually addresses NINE more changes in 2016.
Is your head spinning yet? Contact QBS. Our experts are here to provide guidance and help ensure compliance in 2016 and beyond.
Read more about the 10 Changes to ACA in 2016: http://www.benefitspro.com/2016/07/01/aca-in-2016-10-changes-to-the-affordable-care-act