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HEALTH CARE REFORM

How the Affordable Care Act affects your medical office policies and practices

You’ve heard a lot of talk about Obamacare, officially known as the Affordable Care Act (ACA). There are a lot of changes for healthcare delivery that affect medical offices. But are you up to date on how ACA affects your office as an employer?

The ACA imposes new obligations on employers. Some of these are already in effect and are continuing obligations you should be satisfying, but others don’t kick in until next year or later. Review our summary of the key requirements for employers below to make sure you are compliant with those already in effect and will be ready for future deadlines.

Here are 13 key ACA requirements for employers:

  1. 1.       Notice to employees

Employers subject to the Fair Labor Standards Act should already have provided current employees and must provide new employees at time of hire with notice about the employee’s option to buy health insurance from the new health insurance marketplace. That notice must also advise the employee that if they do purchase insurance through the marketplace, they could lose their employer contribution to cost of health benefits. Finally, it must explain that if the employer’s contribution to cost of insurance is less than 60%, the employee may be entitled to a premium tax credit and cost sharing reduction for a qualified plan purchased from the marketplace. This notice must be given both part time and full time employees. You can get a sample notice and technical release from the Department of Labor website. So while you should have already done this for current employees, make sure you continue to do so for every new hire.

  1. 2.       Summary of Benefits and Coverage

Provide all your employees a summary of their plan coverage and what it costs. You could face penalties if you don’t. See the Department of Labor website for information and model SBC forms.

  1. 3.       Medical Loss Ratio Rebates

If your insurer doesn’t spend at least 80% of premium on medical care rather than administrative costs, you could be eligible for a rebate (80% applies to small group markets; 85% for large group markets). See HHS’s website regarding the rebate.

  1. 4.       Providing health insurance

If you have 50 or more full time employees you must provide health insurance coverage to employees. You can purchase it privately or consider purchasing health care insurance through the new marketplace (also called exchanges).

If you qualify as a small business (50 or fewer employees), you have some incentives to provide health insurance coverage. You are eligible to consider purchasing insurance through the Small Business Health Options Program (SHOP). Employers must have an office in SHOP service area and allow all full time employees to participate. If you cover at least 50% of your full-time employee’s premium costs on a plan obtained through SHOP and you have fewer than 25 full-time equivalent employees with average annual wages of less than $50,000, you are entitled to a tax credit up to 35% for tax year 2013. For tax year 2014 that credit can be up to a maximum of 50%.

  1. 5.       Employer Shared Responsibility Provisions

Employers with 50 or more full time employees must supply affordable health insurance coverage with a minimum level of coverage to its full time employees. If the employer fails to do so, it could owe a fee if at least one employee gets a premium tax credit for buying insurance in the Marketplace. Such businesses originally had until 2015 to provide such insurance or risk liability for the fee. The IRS announced in February 2014 that businesses with between 50 and 99 full time employees have until 2016 to provide health coverage for employees before they face penalties. Employers with 100 employees or more must provide insurance to 70% of their full time employees in 2015 or face penalties and must provide insurance to 95% in 2016. Such insurance must be affordable and provide minimum level of care. If employees pay more than 9.5% of their income for insurance, the insurance is considered unaffordable.

  1. 6.       Automatic enrollment

If you have 200 or more employees, you must automatically enroll new workers in health insurance plan and give the employee notice of same and explain they can opt out. This requirement takes effect in 2015.

  1. 7.       90-Day Wait Limit

Employees can’t be required to wait more than 90 days after they are eligible for coverage. The government just issued guidance in February on this requirement.

  1. 8.       Report insurance coverage on W-2

You should be reporting the annual cost of health insurance coverage that you provide employees on their W-2, unless you issue fewer than 250 W-2s for the prior calendar year.

  1. 9.       Self-insured plans

If you have a self-insured plan, you need to annually report information for covered employees and contribute a fee to the Patient Centered Outcomes Research Trust and to the Transitional Reinsurance Program, a fund that reimburses insurers for high claim costs.

  1. 10.   Annual reporting

Employers with 50 or more employees will have to report to the IRS for 2015 about the insurance they offer employees. The report is required annually but is optional for 2014.The annual report was due the end of February for a report concerning the prior calendar year. Note: Employers who just got the extension to avoid employer shared responsibility until 2016 still must provide this annual reporting for 2015. You also have to provide statements by the end of January to employees whose information appears in the annual report concerning the prior calendar year.

  1. 11.   Additional Medicare Tax (withholding)

As an employer you’ll need to withhold an additional .9% on employee wages or compensation exceeding $200,000 individually or $250,000 for married filers.

  1. 12.   Wellness programs

In 2014, employers can offer discounts to employees up to 30% off insurance premiums for participating in employer-sponsored wellness programs.

  1. 13.   FSA, HSA and HRAs

Your employees may have flexible spending accounts (FSA), health reimbursement accounts (HRA) or health savings accounts (HSA). ACA has requirements applicable to those as well so make sure your plans are compliant and employees understand any applicable limitations. For example, HSAs cannot be used to purchase over-the-counter medication without a prescription). And, employees can’t contribute more than $2,500 to an FSA.

Determine your office size

Many of the ACA requirements depend on the size of your organization. Determining the size of your office may sound simple, but in some cases it may not be as straightforward as it looks. Certain ACA provisions vary depending on how many employees you have. But it’s not simply the number of people you have on your payroll that you count. It’s how many full time employees or full time equivalents that count. Full time is considered 30 hours per week. You may think you just count how many employees you have working 30 or more hours per week. But you can’t just ignore part time workers.

The rules require you count “full time equivalent” employees to determine your size. Your total full time equivalent employees is equal to all full time employees plus the number of part time employee hours worked divided by 30. Also note that when multiple employers are affiliated by common ownership or as part of a controlled group they must aggregate their employees when counting the number of full time equivalent employees.

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