Navigating HCR/ACA

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October 17, 2018

Need-to-know facts about Health Care Reform

Small businesses are the innovators, modernizers, and visionaries that transform today's workplace. When it comes to the changing healthcare landscape, these leaders know the importance of benefits in attracting and retaining the best employees.

Health care reform, also known as the Affordable Care Act (ACA), will have important effects on your small business, even with 50 or fewer full-time equivalent employees. So you don’t have to wade through thousands of pages of “legalese” to get the key facts, Aflac has simplified the key facts and what they mean for your business.

1. Offerings requirements:

Businesses with less than 50 full-time-equivalent (FTE) employees are not required to offer minimum-value health coverage to their workforces and will remain unaffected by penalties. It is crucial to understand the difference between full-time employees and FTEs when determining what your business will be responsible for providing. To quickly calculate your company’s FTEs, visit the Aflac FTE calculator. Even though the law doesn’t require you to offer a health plan as a business with less than 50 FTEs, it’s important to understand how the individual mandate affects your employees’ lives, and in turn, your business.

2. Delivering benefits:

Employers who are not required to offer benefits, but are looking to attract and retain top talent, should remember that 79 percent of workers say their overall benefits package is important to their job satisfaction and 59 percent at least somewhat agree they’d be likely to accept an employment offer with slightly lower compensation but a more robust benefits package.1 Benefits can be offered to employees through four key delivery options:

  • Insurer based: A traditional way of offering insurance, where employee benefits are provided through a single insurance carrier.
  • Private exchange: Online marketplaces where people and businesses can shop for, compare and buy health insurance.
  • SHOP Marketplace: The Small Business Health Options Program is a government-facilitated insurance marketplace where small businesses and their employees have access to health insurance coverage.
  • Self-fund: The employer funds their employee benefits. Employees pay premiums, and the company is responsible for covering all claims in the health care plan and controls any premium reserves. Components of this model are still facilitated by a carrier and/or TPA (third-party administrator).
3.  Reporting requirements:

Starting this year, businesses of all sizes are required to report information about their employee health coverage, including basic employee data, dates and type of coverage, cost-sharing and any other information required by the IRS. Since many employers struggle to make heads or tails of health care reform requirements, they may choose to have a consultant or provider help file the reports. To learn more about exactly what’s required, take a look at these fact sheets:

4. Applicable taxes and credits:

The ACA is primarily intended to apply to group health plans and health insurers offering group or individual health insurance coverage. Because Aflac products are classified under the law as “excepted benefits” and voluntary benefits such as accident, cancer and hospital indemnity insurance can be funded through a pretax arrangement offered by an employer, many of the regulations don’t apply.

5. The Cadillac Tax:

While it’s not going into effect this year, a 40 percent Cadillac Tax (also called the health care law’s excise tax) is scheduled to take effect for applicable coverage with plan years beginning on or after Jan. 1, 2020. Although the tax is still a couple of years away and regulations may evolve before it is implemented, employers should start to consider how their plans may be affected when the tax becomes reality.

6. Out-of-pocket (OOP) costs and limits:

The ACA established out-of-pocket limits to protect consumers from runaway medical costs. The limits, which are $6,850 for individuals and $3,700 for families in 2016, include essential health benefits covered under non-grandfathered plans, but out-of-network procedures or treatments not covered under an individual’s plan can still cost consumers more than the established limits. Make sure to research the important details the ACA has implemented regarding OOP limits that help to protect your workers from excessive OOP costs.

7. Employee communication requirements:

The Affordable Care Act (ACA) requires all employers, small and big, subject to the Fair Labor Standards Act (FLSA) to communicate to their employees about their health care coverage options – regardless of whether the company offers employee benefits or not. While employers were expected to communicate this information to existing employees in the fall of 2013, employers are required to provide new employees with the Notice of Coverage Options within 14 days of hire.

For additional information on regulations and how they affect your business, visit Understanding health care reform, Aflac’s dedicated resource with a wealth of information to help you make smart benefits choices that wisely manage health care dollars and protect your employees.
DISCLAIMER: This material is intended to provide general information about an evolving topic and does not constitute legal, tax or accounting advice regarding any specific situation. Aflac cannot anticipate all the facts that a particular employer or individual will have to consider in their benefits decision-making process. We strongly encourage readers to discuss their HCR situations with their advisors to determine the actions they need to take or to visit (which may also be contacted at 1-800-318-2596) for additional information.
Matt Mittan, District Coordinator
(828) 575-6323



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