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The Affordable Care Act (ACA) has a long list of requirements for small businesses. To help you keep track, we created an ACA Compliance Checklist.


Budget Considerations


Health Plan Administration


Employee Documents

While not all of the items apply to every small business, this Checklist may be useful in determining how you can stay in compliance with the ACA.


More Help Available

If you have additional ACA compliance-related questions, talk with your employee benefits agent.


Despite Congressional efforts and numerous lawsuits, the Affordable Care Act (ACA) is still the law of the land. This means your business may be subject to the ACA employer mandate. If so, there are several requirements for your business to stay within the law.


Where Do You Stand?

First, find out if the law requires your business to provide health benefits. Currently, if you own or manage a business with 50 or more full-time employees or full-time equivalent (FTE) employees, you are an Applicable Large Employer (ALE). That makes you subject to the ACA employer mandate. If you are unsure if your business is an ALE, visit the IRS website to help determine your status.


What You Need to Do as an ALE

Under its employer shared responsibility provisions, the ACA requires ALEs to either offer minimum essential coverage that is “affordable” and provides “minimum value” to full-time employees and dependents or pay a penalty to the IRS. ALEs can require employees to share in the cost of their health coverage. However, as of 2019, the employee cost cannot exceed 9.86 percent of an employee’s household income. The ACA further requires ALEs to report annually on coverage offered (or not offered) to employees using forms 1094-C and 1095-C.


Determining the Penalty

If an employer does not provide adequate coverage to at least 95 percent of employees and eligible dependents, and one full-time employee receives a premium tax credit to enroll for health coverage through a state health exchange (like Covered California), the IRS imposes a no-coverage penalty. In 2019, the no-coverage penalty is $2,500 ($208.33 per month) times the total number of full-time employees minus the first 30. There is no penalty for not offering health insurance to part-time employees. A greater penalty, $3,750 for 2019, applies if coverage is not affordable and does not provide minimum value.

The IRS calculates your penalty separately for each month during which you offer no coverage. Therefore, if you offer coverage for some months during the year, but not all, you pay for only those months you offer no coverage.


Non-ALE Employers

Businesses with fewer than 50 full-time equivalent employees in 2018 are not subject to the ACA’s employer mandate in 2019. That doesn’t necessarily mean you shouldn’t provide coverage. Many small businesses offer employee benefits, including health insurance coverage, to support recruitment and retention efforts. Keep in mind, your contributions to group health are tax deductible. Moreover, when you set up a Premium Only Plan (POP), your employees can pay their share of the premium with pre-tax dollars. A POP also means reduced payroll taxes for your business.


Controlling Health Care Costs

Cost is a huge factor for employers looking at options for health insurance. CaliforniaChoice allows you to control costs and offer employees more health care choices. With Defined Contribution, you choose the amount you want to contribute toward benefits and your employees apply those dollars toward the health plan they like best.

You can contribute a Fixed Percentage (50% to 100%) of a specific plan type, OR you can choose to contribute a Fixed Dollar Amount. If an employee selects a plan that costs more than your contribution, he or she simply pays the difference.

At renewal, you have the option to adjust your Defined Contribution – up or down – and lock it in for another 12 months.


Proposed California Legislation

In January, the state legislature introduced California Senate Bill (S.B.) 175 imposing a penalty on any California resident without health insurance. This proposed measure is working its way through the State Senate and is before the Committee on Governance and Finance. If it becomes law, we’ll outline the implications for your business.


How to Learn More

For specific details about selecting employee health benefits for your business, consult a health insurance agent. An agent will educate you about the process and provide information to help you choose what’s right for you and your employees.


If you’re considering health insurance and employee benefits for the first time, you may not know what to expect. Here are five of the most common questions that employees ask about employee benefits and insurance coverage. Knowing how to respond can make a big difference in successfully attracting and retaining employees.


1. Who selects my plan?

Traditionally, you (as the employer) select the health plan you want to offer to employees. However, let’s face it, the chances of one health plan satisfying the needs of every employee are not likely.

CaliforniaChoice offers a different approach to employee benefits. With our program, you no longer have to select one health plan; instead, you can offer eight different health plans from which employees can choose.

For example, one might choose an HMO plan from Kaiser Permanente, while another finds a PPO from Anthem Blue Cross is a better fit for the needs of his or her family. It’s their choice.

If your workforce is scattered across California, your employees can choose from three of the state’s leading regional health insurers: Sharp Health Plan in the San Diego area and Sutter Health Plus and Western Health Advantage in Northern California.

With CaliforniaChoice, you can offer your employees access to one, two, or three Affordable Care Act (ACA) metal tiers:

Your decision does not affect your costs, since you’re able to lock-in your benefits budget using Defined Contribution. (See below.)

Because CaliforniaChoice offers eight health plans statewide and both full and limited networks, our program offers your employees more choice when it comes to doctors, specialists, and hospitals than any single health plan.


2. How much will my coverage cost?

The cost of health insurance for your employees ranges quite a bit, depending on the type of coverage you offer. Typically, you base what you spend on a percentage of the cost of the insurance or you pay a fixed amount.

One of the advantages of the CaliforniaChoice program is you get to choose what you want to spend. You define what you can contribute toward employee benefits, then each employee can take those dollars and use them toward the health plan they like best. Employees aren’t forced to choose something.

We call this budgeting approach Defined Contribution:

If an employee selects a plan that costs more than your contribution, he or she simply pays the difference. At renewal, you have the option to adjust your Defined Contribution up or down, giving you complete control over what you spend on your employees’ benefits.

If you contribute only to employee coverage, enrollees will pay more if they choose to add dependent coverage. If you contribute to employee and dependent coverage, employees will pay less when enrolling eligible family members.

It is important to note, though, that if your company is what the ACA defines as an Applicable Large Employer (ALE), you must include dependent child coverage (through age 25) for children of full-time or full-time equivalent employees. You are not required to offer spouse coverage, nor do you have to include coverage for a stepchild, foster child, or a child who is not a U.S. citizen. For more information, refer to the Q&A on the Healthcare.gov website. (Note: rules could change if there’s a future ruling in the pending court challenge to the ACA.)


3. When am I eligible to enroll?

You, as the employer, determine when your employees are eligible for health insurance and other benefits. Under ACA guidelines, for plan years beginning on or after January 1, 2015, employers cannot apply a waiting period exceeding 90 days for group health insurance. More information is available in the archives of the Federal Register.

Many employers choose to have coverage on the first of the month following 30 days of employment. For example, if an employee began work on February 10, 2019, he or she would be eligible for benefits on April 1, 2019. Other businesses might choose the first of the month following 60 days of employment. Using this same hypothetical new hire, who starts on February 10, 2019, he or she would be eligible for benefits starting May 1, 2019.

Consider what other employers in your area or your industry are using as a standard for benefits eligibility when establishing your waiting period.


4. Is my current doctor in the network?

If you offer CaliforniaChoice to your employees, there’s a good chance their current doctors are part of one or more of the provider networks offered by the eight health plans that are part of CaliforniaChoice.

It’s easy to determine your doctor’s network status by using the Provider Search tool on the CaliforniaChoice website. It allows you, your employees, and their dependents to look up California medical providers by name, gender, city or ZIP Code, distance from your home or office, affiliated health plans, language(s) spoken, hospital, or medical group. The Provider Search is one of several online tools from CaliforniaChoice to help you and your employees compare plans and find the one that’s right for your health care needs.


5. Can I get Dental, Vision, and other coverage?

CaliforniaChoice offers a comprehensive array of optional employee benefits, including Dental, Vision, Chiropractic & Acupuncture, and Life Insurance. CaliforniaChoice also offers discounted health care services, human resources support, COBRA billing services, Rx Discounts, and more available to you and your employees at no added cost through the Member Value Suite and Business Solutions Suite.


Get a Custom Quote

If you and your employees have questions of your own, your employee benefits agent can provide you with answers. He or she can also deliver a custom CaliforniaChoice quote for your business.


It’s tax season, so it’s a good time to look at some known and lesser-known ways to reduce the tax burden on your business. You may be able to take advantage of one or more of these tax benefits.


Employer-Sponsored Health Insurance

Generally, business owners can deduct most (if not all) of the cost of employee health insurance. The Internal Revenue Service (IRS) says if an employer pays for accident and health insurance – including an employee’s spouse and dependents – the employer’s payments are not considered wages and are not subject to Social Security, Medicare, and FUTA (Federal Unemployment Tax Act) taxes or federal income tax withholding. This exclusion also applies to qualified Long Term Care Insurance.

Unfortunately, for employees of S (or Subchapter) corporations, which are taxed in much the same way as partnerships, the cost of health insurance benefits must be reported as income if the employee owns more than two percent of the corporation. More information can be found on the IRS “Employee Benefits” web page.

Health Insurance Tax Credit: The Affordable Care Act (ACA) allows small businesses that provide health benefits for employees to take advantage of a tax credit as long as they contribute at least 50% toward employees’ health premiums.

For most employers, the maximum available tax credit is 50% of the cost of health coverage. Tax-exempt employers are permitted a 35% tax credit.

Generally, the Small Business Health Care Tax Credit is available to employers that:

Employers with fewer than 10 FTE employees with wages averaging less than $25,000 annually are eligible for the maximum tax credit.

To claim the Small Business Health Care Tax Credit, you are required to purchase a qualifying health plan through the Small Business Health Options (SHOP) marketplace. In California, that means you have to purchase coverage through Covered California for Small Business. More information is available on the state exchange website.


Paid Leave Tax Credit

One of the added benefits of the Tax Cuts and Jobs Act of 2017 is a provision that allows employers to receive a tax credit if they provide 50% or more compensation to employees taking leave in 2018 or 2019 under the Family and Medical Leave Act (FMLA).

To take advantage of the tax credit, an employer must:

The government offers a 12.5% credit of the cost of the leave benefit to businesses when an employee receives at least 50% of his or her normal wages while on leave. The maximum tax credit is 25% of the benefit’s cost when an employee receives full compensation while on leave.

More information on the paid leave tax credit is available in this article from the Society for Human Resource Management (SHRM).


Qualified Business Income Deduction

Also enacted as part of the 2017 Tax Cuts and Jobs Act, the Qualified Business Income Deduction permits taxpayers to deduct up to 20% of qualified business income (QBI) for a business operated as a sole proprietorship or through a partnership, S corporation, trust, or estate. (The deduction is not allowed for C corporations.)

According to the Journal of Accountancy, the deduction is generally available to business owners whose taxable income is below $315,000 for joint returns and $157,500 for other taxpayers. The IRS offers a Q&A on the Tax Cuts and Jobs Act and the Qualified Business Income Deduction.


Find Out If You Qualify

Your accountant, auditor, or tax advisor can offer you guidance about whether any of these tax benefits might be available to you and your business. Your employee benefits agent can also provide you with information on the tax advantages of providing employee health insurance.


6 Things to consider when Choosing an Insurance Agent for Your Business

If you’re a small business owner, health insurance can be a tough nut to crack. But you don’t have to go it alone. There are licensed professionals available to walk you through the process. Using an employee benefits expert doesn’t cost you anything. In fact, it could actually save you money because your agent helps you shop and compare plans. The right insurance agent will find a balance between coverage to address your employees’ needs and a plan that fits your budget.

Here’s what you should consider when selecting a health insurance agent:

Shopping for health insurance without help from an agent can result in you overpaying for your benefits. A skilled agent will provide products that offer comprehensive health coverage for your employees, while still helping you control your costs. If you need help finding an agent in your area, we can help. Click here and simply enter your ZIP Code.

If you’re a small business owner and you’ve spent some time shopping for health insurance for your employees, you’ve likely encountered the terms “Group Health” and “Blanket Health.” Here’s an overview to help you understand how each type of coverage works and how they apply to your business.


What is a Group Health Insurance Policy?

A Group Health Insurance policy offers health benefits to your employees as well as spouses or other eligible dependents. It provides employees with medical benefits when they visit a health care provider like a doctor, urgent care facility, or hospital. A Group Health Insurance policy may also include coverage for prescription drugs and other health and wellness benefits – like discounts on Vision, Dental, or the option to purchase Life Insurance.


What is a Blanket Health Insurance Policy?

Despite its name, a Blanket Health insurance policy is less comprehensive than a Group Health policy. In fact, it is most often an accident-only policy issued to cover a group of individuals engaged in a specific activity. For example, school districts, colleges and universities, and sports teams can purchase Blanket Health coverage to provide health benefits to athletes and cheerleaders. These policies may also be issued to civic, non-profit, or religious organizations for participants in (or employees of) ongoing or one-time events or camps. Volunteer firefighters may be covered by a Blanket Health policy for medical treatment in connection with accidental injury related to their fire-fighting roles.


Most importantly, a Blanket Health insurance policy typically has limits on the types of covered tests, procedures, and services. There may also be a maximum covered benefit – ranging from $5,000 to $50,000 of eligible expenses – for treatment of individuals under this type of policy.


More on How the Policies Differ

In contrast to a Blanket Health insurance policy, a Group Health insurance policy – particularly one that includes the Essential Health Benefits (EHBs) mandated by the Affordable Care Act (ACA) – does not have a dollar limit on what it will pay for care received by you and your employees while you are insured. The ACA actually prohibits health insurers from limiting your annual or lifetime coverage expenses for EHBs under a Group Health plan.


In addition, a Group Health policy typically covers you for a full plan year (12 months). If you want coverage long-term, a Group Health policy may be a better choice for you, since a Blanket Health policy may have a limited term duration.


Choosing What’s Right for You

Taking the time to educate yourself on the differences between Group Health insurance and Blanket Health insurance policies is an important step in choosing coverage that’s right for you. To find out if your business qualifies for Group Health insurance, click here or talk with your employee benefits agent. To explore this subject further, consider reading 7 Things to Know About Offering Group Health Insurance.


Your employee benefits agent can also provide you with a quote for health insurance for your employees. If you’re not currently working with an agent, go here to find a licensed expert in your area.

A new year is here and with it come several changes to health care, insurance requirements, and costs. Here’s what you need to know for 2019.

The State of the ACA

In December 2018, a Texas judge ruled that the Affordable Care Act (ACA) is unconstitutional. However, it will still take time for the case to play out. It is now being considered by the Fifth U.S. Circuit Court of Appeals in New Orleans. Even after that court rules, further appeals are expected, and the case could wind up before the U.S. Supreme Court in 2020.


New for 2019, the U.S. Department of Health & Human Services (HHS) – the federal agency that administers the ACA – announced updated payment and cost-sharing provisions, risk adjustment program changes, and increased flexibility in the operation of the federal and state-based exchanges. The latter includes Small Business Health Options Program (SHOP) exchanges, such as Covered California for Small Business.


In proposed rules, the ACA’s risk adjustment program, which mitigates potential adverse selection for participating insurers, would be updated. The goals are to reduce regulatory requirements and empower both consumers and employers. Among the measures designed to grant states increased flexibility is the ability to modify Essential Health Benefits (EHBs), which could increase affordability of coverage for individuals and small businesses.

Large Employer Mandate

The federal employer mandate, which affects businesses with 50 or more full-time or full-time equivalent employees, continues in 2019. It requires Applicable Large Employers (ALEs) to offer “affordable” health insurance that provides minimum value to 95% of full-time employees and their children up to age 26, or to face penalties. For help determining whether your business is an ALE, ask your employee benefits agent, or visit the IRS ALE web page.


Smaller employers – those with fewer than 50 full-time equivalent employees – are not subject to the ACA employer mandate and are not required to provide employees with health insurance coverage. Those businesses that elect to offer employee health insurance may qualify for a Small Business Health Care Tax Credit, subject to certain federal qualification guidelines.

Health Insurance Reform in California

California Gov. Gavin Newsom announced in his inaugural address on January 7, 2019, that he wants the state to adopt its own individual mandate. He also called for new state-funded subsidies to help middle-class Californians afford health insurance. Whether Congress will act to give the state greater authority to implement its own health care programs, while still receiving federal funding, remains uncertain.

Premium and Deductible Forecasts

Experts at HR consultant Mercer expect an average group health insurance premium increase per employee of 4.1 percent in 2019 for employers making plan changes. For those not making plan changes, the expected increase is 5.3 percent. Over the past decade, health care cost increases have ranged from 2.1 percent (in 2013) to 6.9 percent (in 2010) for employers making plan changes, based on research by the Society for Human Resource Management (SHRM).


In 2018, employees paid nearly a quarter of their premium for single coverage (23 percent) and one-third (31 percent) of their family coverage premium. Those amounts are up less than one percent from the previous four years, according to a report by the International Foundation of Employee Benefit Plans (IFEBP). A similar trend is expected in 2019. Mercer research last year found the average cost of employee health coverage was $12,666 for all employers, $12,148 for employers with 10-499 employees, and $13,018 for employers with 500 or more employees.


For workers with employer-sponsored health plans, deductibles have gone up, too. Those with individual health coverage, nearly half (46 percent), now have a deductible between $1,000 and $2,999. For employees with family coverage, roughly one-third (29 percent) have a similar deductible, while 26 percent have a deductible of $3,000 to $4,999, and nearly a quarter (23 percent) have a deductible of $5,000 or more.

What Does It Mean for Your Business?

To understand what these changes mean for you and your business, it’s important to consult an expert. Your employee benefits agent can walk you through your options and provide a health insurance quote based on your budget and needs. If you’re not currently working with an agent, you can search here for one in your area.

If you’re shopping for insurance for your small business, you may have come across the term “health insurance package.” While the term may be foreign, the concept should be familiar.

Think of a health insurance package in the same way you can “bundle” your phone, cable, and wi-fi services. Three different services in one package that make it easier for you to manage.

Health insurance packages are similar. They bundle a variety of health insurance and other employee benefits into a single program. The goal is to help you meet your employees’ individual and family health care needs, while also minimizing administration for your business.

Health Insurance + More

The core insurance offered is typically Health Insurance and may include HMOs (Health Maintenance Organization), PPO (Preferred Provider Organization), EPOs (Exclusive Provider Organization), or HSA (Health Savings Account) compatible plans.

Besides Health Insurance, what really makes it a “package” is the additional coverage you have access to, such as:

Value-Added Extras

Your Health Insurance package may be further enhanced by value-added benefits like the following:

Advantages of a Small Business Health Insurance Package

Like with telecommunications services, one of the biggest advantages of packaging your employee health care with other benefits is convenience. When you bundle your services, you have just one contact for your benefits – your agent. You also have one administrator responsible for billing all of your organization’s benefits for employees. That way, you only have to write one check each month for all of your employees’ coverage – and you have one website and one toll-free number for service-related questions.

It’s Easy to Learn More

Your employee benefits agent can provide more information on a Health Insurance Package to suit the needs of your business and employees. If you do not already have an agent, you can search for one in your area here


Good News for Groups!

CaliforniaChoice recently made two big announcements, both of which are a net positive for California small business owners and employees.
Oscar Health is now available to small groups in Los Angeles County and Orange County for coverage beginning December 1, 2018, or later. That means, CaliforniaChoice now offers eight different network options.

CaliforniaChoice Health Plans

The Oscar provider network offers employees access to more than 3,500 physicians across 140 medical specialties and sub-specialties. It gives employees access to many of the region’s top hospitals and medical centers, including:

Oscar brings a consumer-centric approach to health insurance with nine affordable Exclusive Provider Organization (EPO) plans across all four Affordable Care Act metal tiers. While many health plans require members to visit a primary care physician before seeing a specialist, Oscar does not have such a requirement. Your employees enrolled in Oscar have the freedom to go directly to any in-network specialist – saving them time and money.

The Oscar “Doctor on Call” program lets insured employees and their dependents talk to a board-certified doctor free and get a prescription over the phone. No copay is required and no office visit is needed.

Oscar also offers a no-cost Concierge Service, which gives members access to a personalized care team with a comprehensive knowledge of their health history. The Oscar mobile app makes it easy for participating employees and dependents to manage benefits, look up doctors, view lab results, send messages to their Concierge team, and access a digital ID card.

No More Late Fees

In other news, effective 10/1/18, CaliforniaChoice is no longer charging a late fee if a small business is late on its monthly payment.

If you are interested in learning more about Oscar Health for your small business employees, or if you want to get a quote for any of the eight health plans available through CaliforniaChoice, call or email your employee benefits agent. If you do not already have an agent, we can help you find one.

As an employer considering health insurance for your employees, you have multiple options available to you. You can look for coverage on your own. Or, you can shop for coverage with assistance from an employee benefits broker. You may choose to go directly to an insurance company to purchase coverage. Alternatively, you can shop for health coverage via a public or private health insurance exchange.

So, you may be wondering, what’s a health insurance exchange? A health insurance exchange offers you and your employees access to multiple health insurance plans through a single program. There are both “public” health insurance exchanges and “private” health insurance exchanges. In California, the public health insurance exchange is known as Covered California, which was established as part of the Affordable Care Act (ACA) signed into law by President Barack Obama in 2010. One example of a private health insurance exchange is CaliforniaChoice, which has been serving small businesses in California since 1996.


What Are the Similarities?

Both the state exchange (Covered California) and a private exchange (like CaliforniaChoice) offer you the option to choose from multiple health insurers in a single program. Some of your employees may choose one type of coverage – like a Health Maintenance Organization (HMO) health plan – while others may want to be able to access a certain doctor, medical group, or hospital that is only available through a Preferred Provider Organization (PPO) health plan.

Other health plan options may also be available like an Exclusive Provider Organization (EPO) plan, Health Care Service Plan (HSP), and Health Savings Account (HSA) qualified plan.

Both a public exchange and a private exchange give you choices and allow you and your employees to shop and compare health plans – so you find the coverage that is right for your specific health care needs.


What Are the Differences?

As you might expect, a public health insurance exchange is one administered by the government – at either the state or national level. California was the first U.S. state to establish its own state health insurance marketplace as part of the ACA. Covered California offers medical and dental coverage to individuals and small businesses statewide.

As required by the ACA, Covered California also offers pediatric dental and vision benefits, but vision coverage for adults is not an option on the state exchange.

As of 2018, a dozen states and the District of Columbia operated their own public health insurance exchanges. All other states used the federal marketplace, HealthCare.gov, to offer ACA compliant health coverage to their residents.

A private health insurance exchange – like CaliforniaChoice – is an insurance marketplace established by a private organization such as a Third Party Administrator (TPA). CHOICE Administrators is the TPA that operates CaliforniaChoice, and all plans offered through CaliforniaChoice are ACA compliant. Through the CaliforniaChoice private exchange, small businesses in California can access dozens of health plan options from eight different health insurers that operate in the state. Businesses can also add options for employee and dependent dental and vision benefits as well as other coverage.

While a public exchange generally offers only medical and dental insurance, a private exchange may offer more. For example, CaliforniaChoice offers employers and their employees a variety of discounts (including dental, vision, and hearing services) as well as resources that could help you and your employees save time and money.

These include a free Premium Only Plan (POP), access to HRAnswerLink (human resources support), employee discounts through the Cal Perks program, a no-cost California Rx prescription-drug discount card, an online Health Savings Account (HSA) Resource Center, a free Flexible Spending Account (FSA) for groups of 15 or more employees, COBRA billing services, and other benefits.

Optional services, including payroll, 401(k) integration, and access to other types of insurance, are also often available through a private exchange.

Because Covered California was launched in connection with the ACA, it has been in operation for about 10 years. The CaliforniaChoice private exchange opened in 1996, so it has more than 22 years of experience and expertise in delivering employee choice and multi-carrier exchange services to small businesses in California.


What’s Right for You and Your Business?

If you are interested in learning more about what’s available from a public or private exchange, talk with your employee benefits broker. He or she can help you decide what might work best for your business and your employees’ individual or family health care needs. If you do not have a broker, we can help you find one who will meet with you and provide you with a custom quote for health and other coverage for your employees (and dependents, if you choose).

You might also want to read our posts on Health Insurance Can Help You Better Compete for Employees and 7 Reasons to Use a Broker and a Private Exchange for Your Small Business Employees’ Health Insurance in 2018.