How to Handle the Looming Employer Mandate
Becoming Effective Very Soon
Much of the conversation swirling around Obamacare involves the penalty individuals will face at the end of the year if they do not pick up qualifying health insurance – a part of the law known as the individual mandate.
But there’s another mandate that’s received much less coverage and is set to kick in on January 1, 2015 – the so-called ‘employer mandate.’
Under this part of the Affordable Care Act, employers with 50 or more full-time workers must offer affordable health coverage to at least 95 percent of their full-time workforce and any dependents up to age 26, or face a penalty of $2,000 per worker – minus up to 30 workers.
Companies have complained about this part of the ACA and mid-sized companies, those with between 50 and 99 workers, will have until 2016 to comply, thanks to an executive order by President Barack Obama. While ‘large’ companies with 100 or more workers must comply starting in 2015 – they will be allowed to ramp up coverage, mandated to cover at least 70 percent in 2015 and at least 95 percent in 2016.
Employers can’t just offer any old coverage either. The ACA mandates that an employer plan must offer “minimum value” – defined as covering at least 60 percent of deductible, co-pays and other costs. Employer coverage must also be affordable – defined as not more than 9.5 percent of a worker’s household income.
If coverage does not provide “minimum value” or is not “affordable” under the law and an employee gets subsidized coverage through the health care exchanges, the company will be penalized either $3,000 per worker getting subsidized coverage or $2,000 per full-time worker, whichever is less. Once an employee is awarded subsidized coverage, their employer will receive a notice from the IRS and be allowed to contest a potential penalty.
Are There Loopholes?
There are several elements of the law that employers may be able to work around. One quirk in the law is that a “full-time” worker is considered someone who works at least 30 hours per week. This presents employers with the option of scaling down their full-time workforce and having people who used to work 40 hours cut back to 30.
However, companies should take note that that multiple part-time workers can add up to full-time workers under the ACA. For example, two employees who each work 15 hours per week would be considered one full-time, 30-hour-per-week worker under the ACA.
Another potential loophole for employers to look at would be helping their workers sign up for Medicaid, since they are not required to sign up employees who are on the federal health coverage plans.
With the law’s many attributes in a seemingly constant state of flux, these ACA loopholes may be closed up or others may open. We here at Health-Dental-Life Insurance.com are well-versed in the many aspects of the ACA and can let employers know their options as they presently stand.
If you're a business owner, call us today to speak with one of our agents with decades of insurance experience: 1-800-257-1723 or view our website.