What’s Ahead for Small Business Health Care

The future of the Affordable Care Act (ACA) is still up in the air at this time, and that’s prompting some employers to wonder whether they still have to comply with requirements of the health reform law. In a word, yes – at least for now. For the foreseeable future, it is important employers ensure they are aware of (and still complying with) the ACA. Until Congress and the White House work out repeal, repair, or replacement, the ACA is still the law of the land, and there are important guidelines employers must continue to follow.

Waiting Period

A group health plan offering coverage to eligible employees may not have a waiting period that exceeds 90 days. A waiting period is the period of time that must pass before coverage for an employee or dependent who is otherwise eligible to enroll under the terms of the plan can become effective. Being eligible for coverage means having met the plan’s substantive eligibility conditions (such as being in an eligible job classification or achieving job-related licensure requirements specified in an employer’s plan terms). An employer can choose any waiting period up to, but not exceeding, 90 days. Many firms choose first of the month following 30 days of employment, while others may elect first of the month following 60 days of employment or coverage from day one.

Reporting

Applicable Large Employers – those with 50 or more full-time employees, including full-time equivalents, during the prior calendar year – must report to the Internal Revenue Service (IRS) on their offer (or lack of offer) of health insurance to full-time employees and their dependents. The forms used to report employer-provided health insurance are:

• IRS Form 1094-C: The transmittal form used by ALEs to report the aggregate sum of coverage offered to employees.
• IRS Form 1094-B: The form used by non-ALE groups sponsoring self-insured coverage with the similar reporting purpose of Form 1094-C.
• IRS Form 1095-C: The reporting form for employer-offered health insurance used for each individual employee. It contains information on the coverage offered, or not offered, to any full-time employee who averaged full-time hours for at least one month of the previous calendar year.
• IRS Form 1095-B: This is used by non-ALE groups sponsoring self-insured coverage with the similar reporting purpose of Form 1095-C.

The ACA and IRS also require employers to report the cost of employer-sponsored group health coverage on employee W-2 forms annually if the employer files 250+ W-2 statements. Reporting on the W-2 does not mean the coverage is taxable. The value of the employer’s contribution to health coverage, generally, continues to be excludable from an employee’s income and is not taxable. Link here to read the IRS guidelines on reporting employer-sponsored coverage.

SBC Disclosure

Employers offering health insurance, regardless of market segment or employer size, must provide employees with a Summary of Benefits and Coverage (SBC) that explains available health plan coverage. (The SBC and related required Uniform Glossary must be distributed to employees as soon as they are eligible, and, again at annual Open Enrollment. The SBC and Uniform Glossary are intended to provide enrollees (or prospective enrollees) with simple means to comprehend benefits, understand co-pays/coinsurance, and to enable purchasers to compare differences between multiple plans in order to make more-informed health insurance decisions. The format and language used in the SBCs are the same for all carriers and all health plans, across the board, including the Exchange/marketplace. For a plan effective or renewing 4/1/2017 or later, a new SBC format is required.  The improvements to the documents include an additional coverage example and language and terms to improve consumers’ understanding of their health coverage. While responsibility to deliver SBCs to eligible employees is the employer’s, the burden of creating SBCs for all plans is the responsibility of carriers. The exception to this, however, is for self-insured plans, where a carrier does not exist to create the SBC documents. Employers sponsoring self-insured plans are required to create SBCs and supplemental Uniform Glossaries using the same format; many self-insured employers use TPAs for this service. If you want to stay up to date on changes to the ACA or replacement legislation – and the impact on small business – talk with your employee benefits broker. If you don’t already have a broker, we’ll help you find a CaliforniaChoice broker to speak with about your group health insurance needs.