The major impact of the Affordable Care Act will take effect on January 1, 2014. Do you know what the health insurance mandate will mean to you as an employer or an employee? In this article, we will discuss what we know so far.
All employers will be affected by this legislation, but the key is to determine in what capacity your company will be affected.
As an employer, the first step you need to consider is whether or not you are considered a “large employer.” The Act’s definition of a large employer is any entity or group of entities that has 50 or more full-time equivalent employees (FTE’s). For purposes of this test, you need to include both full and part time employees in the determination.
If you are considered a large employer, then you are required to maintain “affordable minimum essential coverage” for all full time employees or pay a penalty.
The Act considers an employee to be full time if they average 30 hours or more per week. The penalty is $2,000 per year per full time employee. It can be higher if certain conditions are met.
It is possible that your current health insurance plan may not be “affordable” to your employees or that the policy doesn’t meet the “minimum essential coverage” standard, so it is important to review your situation now and plan for 2014. In addition, the testing period to determine if you are a large employer for the 2014 calendar year is happening right now in 2013. It is critical for employers who are at or near the 50 FTE employee threshold to begin their planning now, as the penalties for not maintaining the necessary coverage are severe.
For those employers who don’t meet the criteria of a “large employer,” the Act still carries some requirements.
First, all employers are going to be required to comply with certain notification requirements. Although not yet identified, these requirements will most likely be required by the fall of 2013. In addition, penalties could apply for “cadillac” plans, credits could be available for certain plan premiums, and employees could qualify for certain premium and cost subsidy credits if the proper plan is maintained.
Lastly, it should also be noted that although employers are affected by this legislation, every individual is also personally affected, regardless of age. Every individual is required to maintain the same “minimum essential coverage” or personally pay a penalty. There are very few exceptions to the required coverage.