The Twelve Health Care Reform Questions Every Employer Needs to Know


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We are proud to announce the release of a new e-book this week answering twelve important health care reform questions that will directly affect businesses in the coming years.

The e-book, entitled “The Twelve Health Care Reform Questions Every Employer Needs to Know,” simplifies complex health-care concepts and addresses many of the unanswered questions troubling employers. The answers are written in a light, easy-to-read format, using clear and simplified language and terminology. Download a copy today!

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The Twelve Health Care Reform Questions Every Employer Needs to Know

  1. 1. The 12 Health CareReform Questions EveryEmployer Needs to Know CPEhr | 9000 Sunset Blvd. LA, CA 90069 | 2
  2. 2. Introduction:The UnknownWith over 2500 pages and some 450 provisions, the PatientProtection and Affordable Care Act (otherwise known asHealth Care Reform) is one of the most complex pieces oflegislation ever signed into law. The Act touches everysector – from individual citizens, to small businesses, tolarge corporations, to the Federal government itself.With numerous unansweredquestions, employers areunderstandably overwhelmed:• What laws apply to them?• What do they need to do?• How will it impact their bottom line?• How can they prepare for the impending legislation?In this report, we discuss twelveimportant Health Care Reform questions,with simple, easy-to-understandanswers, explaining their impact onsmall employers. 3 CPEhr | 9000 Sunset Blvd. LA, CA 90069 |
  3. 3. The 12 Health Care Reform Questions Every Employer Needs to Know Each state is charged with establishing, as a governmental agency or nonprofit entity, an American Health Benefit Exchange. These Exchanges have two functions: 1. To facilitate the purchase of qualified health plans 2. To provide for the establishment of a Small Business Health Options Program (referred to as a “SHOP Exchange”). A SHOP Exchange will assist employers in enrolling employees in small group qualified health benefits plans. States may establish a single Exchange that performs both functions, or create separate Exchanges. Grants will be made available to states by the Department of Health and Human Services (HHS) for planning and establishing an Exchange. However, by 2015, Exchanges must be self-sustaining and may generate revenue through assessments or fees. The HHS will also provide technical assistance to states on facilitating participation of small employers in SHOP exchanges. If a state chooses not to establish an exchange, the Federal government will set up federal health insurance exchanges. CPEhr | 9000 Sunset Blvd. LA, 4 CA 90069 |
  4. 4. The 12 Health Care Reform Questions Every Employer Needs to Know An employer who offers minimum essential coverage and pays any portion of the premium will be required to provide free choice vouchers to each qualified employee. A qualified employee is defined as an employee: • Whose required contribution to the employer plan, for self-only coverage, is greater than 8% and less than 9.8% of the employee’s household income for the taxable year • Whose household income is not greater than 400% of the FPL for the relevant family size • Who does not participate in the plan offered by the employer. The voucher will be equal to the monthly amount that the employer would have contributed toward the plan. The employer pays the largest portion of plan costs, for either the employee or, if elected by the employee, family coverage. CPEhr | 9000 Sunset Blvd. LA, 5 CA 90069 |
  5. 5. The 12 Health Care Reform Questions Every Employer Needs to KnowAn Exchange will credit theamount of a voucher to themonthly premium of anexchange plan in which thequalified employee is enrolled,and the employer will pay theexchange the credited amount.If the amount of the voucherexceeds the premium, theexcess will be paid to theemployee.An individual receiving a freechoice voucher will not beeligible for the exchangepremium credits or cost-sharingsubsidies. No penalty will beimposed on an employer withrespect to any employee who isprovided with a voucher. CPEhr | 9000 Sunset Blvd. LA, 6 CA 90069 |
  6. 6. The 12 Health Care Reform Questions Every Employer Needs to KnowBeginning in 2014, an employerwith 50 or more full-timeequivalent employees duringthe preceding calendar year, willbe penalized if any of their full-time employees are not offeredcoverage (and obtains apremium credit through theexchange). PPACA provides aformula to help employers Example:calculate full-time equivalent, An employer with 80according to its definition (see employees will bequestion #6 below). In 2014, the subject to a penalty ofmonthly penalty per employee $8333 per monthwill be equal to the number of (80-30 = 50 X $166.66).full-time employees, minus 30, After 2014, the penaltymultiplied by $166.66 ($2,000 payment amount wouldper year, divided by 12) for any be indexed by theapplicable month. premium adjustment percentage for theThe amount of the penalty will calendar year.increase in subsequent years. CPEhr | 9000 Sunset Blvd. LA, 7 CA 90069 |
  7. 7. The 12 Health Care Reform Questions Every Employer Needs to Know Even in some circumstances, employers with 50 or more full-time equivalent employees that offer insurance may still be subject to a penalty. This applies when the employer’s plan does not meet PPACA’s definition of “affordable” (see question #8Even in some below), or if the employer’s plan pays for less than 60% ofcircumstances, the covered expenses. If anemployers with eligible employee then obtains50 or more full- a premium credit in an exchange plan, the employertime employees is subject to a penalty.that offerinsurance maystill be subjectto a penalty. CPEhr | 9000 Sunset Blvd. LA, 8 CA 90069 |
  8. 8. The 12 Health Care Reform Questions Every Employer Needs to Know Beginning in 2014, PPACA requires individuals to maintain health insurance, with some exceptions. Most individuals will be required to maintain minimum essential coverage. Those who do not comply, and who are not exempt, will be required to pay a penalty per individual and tax dependent equal to the greater of the following: $95 or 1.0% of adjusted income in 2014 $325 or 2.0% of adjusted income in 2015 $695 or 2.5% of adjusted income in 2016 9 2014 2015 2016
  9. 9. The 12 Health Care Reform Questions Every Employer Needs to Know The new federal definition sets the standard of a full- time equivalent at 30 or more hours of actual time worked during a typical week, average over the month. It is based on the prior 12 months, which will be the 2013 year. Seasonal employees working less than 120 days during the Example: prior year are excluded. Additionally, the law takes A company employs 35 full- the hours worked by part- time workers (working on time employees into the aver-age of more than 30 calculation when hours per week) and 20 part- considering the number of timers (working on average full time employees. 24 hours per week, or 96 hours per month). These 20 PTE are the equivalent of 16 FTE. (20 x 96 / 120 = 16). So for calculation purposes, this employer has 35 + 16= 51 full-time equivalents. 10
  10. 10. The 12 Health Care Reform Questions Every Employer Needs to KnowEach employer should begincollecting the necessary information to determineif they have 50 or more full time equivalent (FTE)employees. If an employer has fewer than 50 full timeemployees, the law does not require the employer to offercoverage.If the employer has 50 or more FTE’s then there are severalparts of PPACA that need to be evaluated to determine theimpact to the employer. It is recommendedto consult with aprofessionalfamiliar with thelaw and itsimplications tothe business. 11
  11. 11. The 12 Health Care Reform Questions Every Employer Needs to Know Affordable coverage means the plan has an actuarial value of at least 60% of required health care covered expenses and the employee cost is less than 9.5% of household income.The PPACA imposes a 40 percentexcise tax on “Cadillac” healthinsurance plans. This new tax willapply to health plans valued inexcess of $10,200 for individualsand $27,500 for families. Thosethresholds will grow annually byinflation plus 1 percent. The taxtakes effect in 2018 and isprojected to raise $32 billion by2019. CPEhr | 9000 Sunset Blvd. LA, 12 CA 90069 |
  12. 12. The 12 Health Care Reform Questions Every Employer Needs to Know Yes, PPACA requires small group plans limit deductibles to $2,000 per individual and $4,000 per family. These amounts will be indexed to health care premium inflation. VISUAL This is not clear at this time. COBRA may no longer be needed if individuals have access to coverage through the state exchanges. However, if the state exchanges are higher cost the employee may elect COBRA. CPEhr | 9000 Sunset Blvd. LA, 13 CA 90069 |
  13. 13. The 12 Health Care Reform Questions Every Employer Needs to Know The individual would likely be eligible for premium subsides or the expanded eligibility for Medicaid. What Now? 5 Steps Employers Should Take to Prepare:1. Review the decision with a professional to determine how the law will affect your business.2. Assess the strategic impact of continuing or dropping health benefits3. If you currently offer insurance, determine whether to retain “grandfathered” status if you decide to continue offering a health plan.4. Determine if your existing plan meets qualifying standards for eligibility and affordability.5. Calculate the true costs of either offering or not offering health coverage after 2013. Source: Business Management Daily 14 CPEhr | 9000 Sunset Blvd. LA, CA 90069 |
  14. 14. CPEhr:A Leader in Managing EmployerHealth Care PlansCPEhr, working in closecommunication with our brokers andhealth care advisers, has investedhundreds of hours studying andanalyzing health care reform laws andhow they will impact small employers.As the law continues to evolve, asconditions of the legislation becomeclearer, and as new deadlinesapproach, CPEhr will continueworking diligently to ensure its clientsand small business communityreceive the most up-to-date newsand information. Contact CPEhrs Employee Benefits Department to schedule a no-obligation review of your current benefit plans and health care reform overview. Click Here For More Information CPEhr | 9000 Sunset Blvd. LA, 15 CA 90069 |
  15. 15. About CPEhrFounded in 1982, CPEhr is a California-based HumanResources Outsourcing firm, offering businesses analternative for handling many HR responsibilities.Beyond benefits management, CPEhr specializes in thefollowing key employment areas:• Employment administration• Management training• Employee relations• Payroll and employment tax compliance• Workers’ compensation insurance• Claims and risk management• Safety consulting• Comprehensive employee benefits programs.Headquartered in Los Angeles,CPEhr has been ranked by theLos Angeles Business Journal asone of the “Best Places ToWork”, four years running. It iscurrently one of the largestprivately held HR Outsourcingfirms in the state.CPEhr | 9000 Sunset Blvd. LA, CA 90069 | www.cpehr.com16