Do you ever feel like your employee benefits are set up on an assembly line? Are you wondering how you can continue to attract and retain quality employees while controlling what you spend on employee benefits? At Employers Benefit Group, we work with you to bring about the greatest value to your entire benefit program.
Medical, Dental, Life, Disability, Vision, Long Term Care, Voluntary (employee-funded), & Worksite
Fully-Insured, Level-Funded/Self-Insured, Reference Based Pricing, Health Reimbursement Arrangements, Health Savings Accounts
The world of health insurance has many terms that can be confusing. Understanding your costs and benefits—and estimating the price of a visit to the doctor—becomes much easier once you are able to make sense of the terminology.
We highly recommend you read our Blog Post that goes over these terms!
The Affordable Care Act (ACA) requires "applicable large employers" (ALEs) to offer affordable, minimum value health coverage to their full-time employees or pay a penalty. This employer mandate provision is often referred to as the “shared responsibility” or “pay or play” rule. An applicable large employer is one with 50 or more full-time employees (including full-time equivalent employees).
There is no requirement to offer coverage to your employees if you have fewer than 50 full-time equivalent (FTE) employees. For purposes of the law, full-time employees are those working an average of 30 or more hours per week.
Penalty for Employer Not Offering Coverage
An employer will be subject to a penalty if any of its full-time employees receives a premium tax credit or cost-sharing reduction toward an Exchange plan. The penalty is equal to the number of full-time employees (minus 30) multiplied by 1/12 of $2000 for any applicable month.
Penalty for Employer Offering Coverage
Employers that offer coverage to full-time employees may still be subject to penalties if at least one full-time employee obtains a premium tax credit or cost-sharing reduction in an Exchange plan (either because the employer doesn’t offer coverage or because the coverage offered is unaffordable or does not provide minimum value). The monthly penalty assessed for each full-time employee who receives a premium credit will be 1/12 of $3,000 for any applicable month.
Self-funded Plans are required under IRS Code Section 105(h) to test their plans for discrimination using an eligibility and benefits test.The ACA allows includes legislation that requires fully-insured non-grandfathered plans to follow rules similar to 105(h).
The law was originally to take effect in 2010 but has been postponed; the rule will apply after regulations are issued.
Federal subsidies in the form of premium tax credits and cost-sharing reductions are available to low-income individuals who purchase health insurance through an Exchange. To be eligible for a premium tax credit, you:
The amount of the premium tax credit varies based on your household income.
Some individuals who are enrolled in coverage through an Exchange may also be eligible for cost-sharing reductions to help them pay their medical expenses. Only those individuals with household incomes of up to 250 percent of FPL are eligible.
All group medical benefit plans fall into one of two categories: self-funded or insured. The choice of one over the other should not be made arbitrarily. Each type carries its own set of administrative rules and legal constraints.
Under an insured health plan, an insurance company assumes the financial and legal risk of loss in exchange for a fixed premium paid to the carrier by the employer. Employers with self-funded plans assume the risk and responsibility of medical claims instead of contracting with an insurance carrier to pay claims
.A third option to consider is “level funding.” Level funding can accompany a self-funded plan to aid employers in their health coverage budgeting. With level funding, employers pay a set amount each month to a carrier. This amount includes the cost of administration and other fees and the maximum amount of expected claims based on underwriting projections, as well as embedded stop-loss insurance. The carrier facilitating the level funding will pay your employees’ claims throughout the year. At the end of the year, if your payments exceeded claims, you may receive a refund from the excess you paid in monthly claim allotments. If the claims exceeded what you paid into the program, in most cases your stop-loss insurance will cover the overage amount.
