Healthcare Q&A

Affordable Health Care Act (Obama Care) Deadlines

Here are some answers to the most frequently asked questions on the impending October healthcare law deadlines.

Question: What is the most important item that small businesses need to account for with regards to the October deadline?

Answer: The most thing to do is distribute a Notice of Exchange Coverage Options document to all employees prior to October 1, 2013. Any employee hired after the October 1st deadline must be given the notice within 14 days of hire. See the letters below for your particular situation.

Notifications for Employers who provide insurance: http://www.dol.gov/ebsa/pdf/FLSAwithplans.pdf
Notifications for Employers who do not provide insurance: http://www.dol.gov/ebsa/pdf/FLSAwithoutplans.pdf

Question: I own a small business of only 2 full-time owners and one part-time employee. What am I responsible for doing by October 1st?

Answer: Similar to all other small business with less than 50 employees you must distribute the forms to all full-time and part-time employees. Employees should sign a verification form for your records indicating that they received the form.

Question: What are the requirements for the January 1st, 2014 deadlines?

Answer: As the individual mandate begins on January 1st, 2014 all individuals (with a few limited exceptions), must purchase “minimum essential coverage”. Therefore all of the insurance market reforms will go into effect at that time in which case any new insurance policies that are issued after January 1 must comply with all new insurance regulations.

Question: Do I have to provide a Notice of Coverage Options to part-time student employees?

Answer: Yes, it is required for all employees.

Question: As a seasonal employer with less than 50 employees, are we required to meet the October 1st deadline for the “Notice of Coverage” even though the workers won’t start until December?

Answer: Yes, you are required to distribute the Notice of Coverage Options document to employees, however you have 14 days from the day they start working to distribute the document.

Question: Is a company still allowed to require a waiting/probationary period before new employees can be added to the health insurance? If so, how long?

Answer: Yes, a company may still require a waiting period, however it may not exceed 90 days from the employee’s start date for a full-time employee.

Question: Are there copies of the notices available in Spanish? Do we need to supply employees with both the English and Spanish versions?

Answer: Notices of Employees Coverage Options are available in Spanish at http://www.dol.gov/ebsa/healthreform/. You are not required to provide an English and Spanish version however you should be sure to get a signed receipt of notice from each employee for your records.

Question: The model notice has an area to state whether we offer a plan to all employees or some employees. If we only offer a plan to qualified employees, do we need to give a separate notice to those that are not eligible versus those who are? If so what needs to be changed on the notice?

Answer: Use the model notice for businesses that offer to some or all employees (http://www.dol.gov/ebsa/pdf/FLSAwithplans.pdf). Use the box on page 2 of the form: to check “Some Employees” and then fill in employee qualification details.

Question: I own a small business with less than 20 employees. Several of my employees purchase health insurance on their own — what happens to them when they don’t participate in our group health program?

Answer: If they choose not to participate in your company’s plan, they may get coverage in the exchange. Based on the affordability of your plan, they may or may not be eligible to receive tax subsidies in the exchange.

Question: My company has 2 separate corporate entities with some similar board representatives and are all under one group insurer. Each entity has less than 50 employees, however together they have over 50 full-time employees. Are we considered as the over 50?

Answer: Businesses that are considered a “controlled group” need to be aggregated together when considering their responsibilities under the healthcare law. There are basically three tests to determine whether your businesses are considered a “controlled group”: a brother/sister text, a parent/subsidiary test, or a hybrid.

If 5 or fewer people own 80% of a business then it is considered to be a controlled group. Therefore if 5 or fewer people own multiple businesses then they will be aggregated.

We recommend that business owners consult with a benefits attorney to work out if their businesses need to be aggregated.

Question: I’m confused about this new healthcare law. My company only has 8 employees, some with medical insurance and some taking care of it from other sources. What companies are NOT required to do this?

Answer: Companies with fewer than 50 full-time employees are not required to offer health insurance to full-time employees, however you are still required to provide the notice of healthcare coverage options. With regards to employees’ insurance, Medicare insurance is an acceptable method of coverage with regards to the individual mandate.

Question: Wait…I thought the deadlines were delayed another year. What do we need to do now with our employees under Obamacare?

Answer: While some provisions have been delayed others are continuing on schedule. The employer mandate that requires businesses with 50+ full-time or full-time equivalent employees to offer health insurance to full-time employees or pay penalties has been delayed one year (until 2015). In most states, businesses with less than 50 employees with have more limited offering options under Obamacare’s small business exchanges (SHOPs) and will only be able to enroll their employees in a single health insurance plan.

All businesses must still distribute a Notice of Coverage Options document to employees by October 1, 2013. The health insurance exchanges will open for enrollment on that date. The individual mandate will begin on January 1, 2014 — requiring nearly all Americans to purchase health insurance or pay penalties. All health insurance requirements will take effect on January 1, 2014 which will potentially cause individual and small business health insurance costs to increase.

Question: Are any more delays expected for the individual mandate?

Answer: The House of Representatives has passed legislation that would delay the individual mandate for one year to match the year delay in the enforcement of the employer mandate that was issued by the Obama Administration. Unfortunately the President opposes this legislation and has threatened to veto any legislation that would delay the individual mandate, therefore we do not anticipate a delay at this time.

Question: Since the deadline for offering healthcare to 30+ hour employees was pushed back to 2015 but individuals are required to purchase in 2014, will we have to pay a penalty on those that are on the exchange in 2015 or will they have the option to come on our plan at that time? If they chose to stay with the exchange (because of rebates from the government) will we still have to pay a penalty?

Answer: Final regulations regarding the employer mandate have not been made as of yet. The Exchange is supposed to be capable of prohibiting employees who have the offer of affordable health insurance coverage from their employer from accessing subsidized coverage, even in 2014.

Question: When does the exchange open and when does it close? If you miss the enrollment period when it be open for enrollment again? Will qualifying events allow for a change?

Answer: Open enrollment begins October 1st, 2013 – March 31st, 2014. While open enrollment for exchanges will begin on October 1st of every year they may not last as long in the future however that is not known for sure at this time. Individuals will be able to change benefits or enroll after a qualifying event, likely within 60 days.

Question: Can an employee drop their coverage through their employer and enroll in coverage through the exchange? If so, could they get a tax credit if they qualified and did so?

Answer: Employees can only drop their employer sponsored health insurance and obtain a tax credit if the coverage is inadequate or unaffordable. Inadequate is defined as the coverage has a plan generosity measurement below 60% (meaning health insurance premiums must cover at least 60% of expected health costs and the employee is responsible for the remaining 40% in cost-sharing through deductibles, co-pays, and/or coinsurance. Affordable is defined as having the employee’s contribution to the policy at less than 9.5% of the employee’s income (Box 1 of the employee’s W-2 form). If an employer offers multiple plans, it would be he employee’s contribution to the lowest cost option. As long as the employer-sponsored insurance meets the requirements of being affordable and adequate, then an employee is prohibited from receiving tax credits on the individual exchange to help purchase coverage.

Question: Is it my responsibility as the employer to track what insurance my employees have?

Answer: If your employee elects something other than your plan it is not your responsibility to track their insurance coverage.