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Employee Health Insurance – Living with the Affordable Care Act

Employee Health Insurance – Living with the Affordable Care Act

By Dan Fisher, CPA, CGMA

As an employee benefits broker and human resource consulting firm, we get many questions from Not for Profits (NFPs) trying to decipher what the Patient Protection & Affordable Care Act (ACA) means to them. First of all, the ACA is the law and compliance is not optional. The political winds have shifted since enactment, and there are a couple of upcoming key events in 2015 that may change an employers’ tactics, but nothing suggests that we can ignore the ACA now or anytime in the future.

Secondly, when it comes to NFPs, the ACA does not treat you any differently than for-profit organizations except in a couple of instances:

Small business health care tax credits. If you have fewer than 25 employees, you’ve probably heard that you may be eligible for a small business health care tax credit. But before you get too excited, there are rules that prevent all but a few NFPs from taking advantage of this. If you are not buying your employees’ health insurance through the State’s SHOP program (and very few employers are), you are ineligible for the credit (see IRS Form 8941 if you are still curious). (An exception applies to a small number of employers in Washington and Wisconsin because the marketplace did not have plans available in 2014.) It’s unfortunate because small employers are the ones most in harm’s way; the health insurance market does not treat you very kindly.

Non-deductible Pay or Play Penalties. If you incur penalties, they are non-deductible. This actually hurts for-profits a bit more than NFPs, though that’s of little comfort. Remember: the ACA does not require any employer of any size to offer health insurance; it only says that if you have more than 99 FTEs this year (make sure you understand the definition of full-time employee) and more than 50 next year, you will be penalized if you don’t offer coverage that meets the ACA requirements.

The recommendation is that you proceed as any other employer would when addressing the ACA’s requirements. Although those requirements are too many and complex to address in detail here, let’s highlight a few of the most pressing 2015 ACA issues:

Health Plan Reporting Requirements (IRS Code Section 6055). This requirement applies to Applicable Large Employers (ALEs) (you have more than 50 FTEs this year). If you are an ALE, you will need to file an annual return with the IRS that reports coverage for your employees, plus provide statements to the covered individuals. The first returns are due in 2016 for 2015
health plan coverage, so this information tracking needs to be happening now. The reporting requirement applies to both self-funded and fully-insured plans.

If you don’t know whether or not you’re an ALE, please get help immediately because you are subject to the ACA employer reporting requirements in 2015 and penalties may already be accruing. Ready or not, here they come. Employer Penalty Rules. These apply only to ALEs. (Non-ALEs, heave a sigh of relief and skip this!) In summary, if you’re an ALE that does not offer health coverage to FTEs and their dependent children that meets both “affordable” and “minimum value” guidelines, you will be penalized if even one FTE gets coverage through our Exchange, WashingtonHealthPlanFinder, and gets a government subsidy. Work closely with your benefits advisor to assure you are in compliance or be prepared to pay the penalties.

For a comprehensive checklist, I’ve provided this link to a download on our website, that goes into detail about these tasks:

  • Determine if you’re an ALE (Applicable Large Employer)
    • If yes, then prepare for reporting requirements and designing an affordable, minimum value benefits plan.
    • If no, then don’t worry about penalties; focus on what type of plan, if any, makes sense for your organization.
  • Review your health plan design.
  • Are you a grandfathered plan? Check status. (General recommendation: move away from the grandfathered plan.)
  • Check your plan’s cost sharing limits.
  • Update your Health FSA contribution limit.
  • If your plan is self-funded, check to see if it’s subject to reinsurance fees.
  • Is your health plan a CHP (controlling health plan)? Add HIPAA certification to your to-dos.

If you are just starting to get your ACA compliance tactics in order, I suggest you start with the ACA resources at the National Council of Nonprofits. It’s okay to not be totally confident that your ACA compliance house is in order. However, you do want to do a little research before asking questions, otherwise you’ll scare off the better CPA advisors and benefits consultants. Particularly if you start with “we were hoping this would all go away.” Fortunately, most dedicated benefits brokers are well equipped to help you with ACA and ERISA compliance.

About the Author
Dan Fisher, CPA, CGMA, is CEO of EmSpring, an employee benefits broker and HR consulting firm that works with organizations with as few as 20 covered employees, to large companies with multiple locations. The firm specializes in creative, compliant employee benefit plans, particularly self-funded medical plans. A past president of the Washington Society of CPAs, Dan is a popular presenter on health care reform to WSCPA chapters, professional HR groups and attorneys, due to his real-world insight into how the complex law affects employers and consumers in both the for-profit and not-for-profit sectors. Dan and the EmSpring team can be reached at 877-550-0088. EmSpring has offices in Bellevue, Yakima and Spokane, Washington.

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