Since its inception, the Affordable Care Act (ACA) has been subjected to debates. The main intention behind this act was to improve the overall healthcare system — make healthcare affordable, accessible and improve its quality. In its wake, organizations had to implement changes in their health plans that they offer to better healthcare provisions to the employees.
Impact of the Affordable Care Act on Large Employers
According to the Affordable Care Act, certain employers must offer essential coverage to the full-time workers and their dependents or pay the IRS the “ESRP” payment (Employer Shared Responsibility Payment). The size of the workforce determines whether the employers are accountable for these payments or not. Applicable large employers (ALEs) also have reporting responsibilities toward the IRS and the employees. The qualification criteria for ALE for a particular year depend on the number of employees in the previous year. The company should have 50 full time employees or full time equivalent employees in the previous year before it can be subjected to ESRP.
Penalties for Not Providing Coverage
Even though the act doesn’t compel businesses to provide health benefits to the employees, larger employers may face penalties for not providing affordable coverage. Penalties do not apply to employers with fewer than 50 full-time employees. If the employer has at least 50 full time employees, then penalties will be imposed on not providing coverage to 95% of the employees and their dependent children. The penalty amount is computed monthly.
Multiple Employers
In case ALEs comprise of multiple employers, then all the individual members are responsible for their own shared responsibility payment.
Minimum Value for Essential Benefits
To avoid paying ESRP, large employers should provide affordable coverage or essential benefits to the workforce. In order to comply with the ACA, the employers have to provide “essential benefits” for which the employers have to buy insurance that pays at least 60% of the incurred costs on healthcare. These benefits include the price of the prescription drugs, substance abuse services, maternity, emergency medical assistance, hospitalization, pediatric services, and even preventive services for the management of chronic diseases. Pediatric care is inclusive of eyesight care and oral care. It should also be kept in mind that for the plans in 2017, the employee’s contribution towards the plans should not be more than 9.69%.
Premium Tax Credit
Organizations that procure the healthy insurance policy from Health Insurance Marketplace may receive premium tax credit. This tax credit can be used to deduct the amount from the monthly insurance premiums.
We have ACA certified and trained experts who will make sure that you remain on top of the industry laws and latest trends. Our professionals will help you understand how the Affordable Care Act continues to affect the employers. For expert assistance and to learn more about ACA and make your business profitable call JS Benefits Group on 877-355-6070.
