A Digital Benefit Advisors Health Care Reform Handbook for Employers

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1 A Digital Benefit Advisors Health Care Reform Handbook for Employers Health care reform is complicated. Sifting through all the regulations and provisions can be time-consuming and confusing. That s why Digital Benefit Advisors has created this handbook for business owners, which includes a simplified overview and clear, concise answers to the health care reform issues facing employers.

2 Can I Get Tax Credits for Providing Insurance to My Employees? Yes, if you re a small business (fewer than 25 full-time or full-time equivalent employees) you may qualify for the small business health care tax credit, where you can claim up to 35 percent of premiums (25 percent for tax-exempt organizations). Use this IRS worksheet to help see if you qualify. If you do, file form 8941 to claim credit. Your Digital Benefit Advisors consultant can provide further assistance. IRS TAX CREDIT WORKSHEET STEP 1 Determine the total number of your employees (not counting owners or family members) # full-time employees (number of employees who work at least 40 hours per week) + add the number of full-time equivalent (calculate the number of full-time equivalents by dividing the total annual hours of parttime employees by 2,080) = total employees (rounded down to the next lowest whole number) If your total employee count is less than 25 go to step 2 STEP 2 Calculate the average annual wages of employees (not counting owners or family members) $ Total annual wages you pay to employees divide it by the number of total employees from STEP 1 (total wages number of total employees) = average employee wages Are your average employee wages less than $50,000? yes no Do you pay at least half of the insurance premium for your employees at the single (employee only) coverage rate? yes no If you said YES to both of the above, you may be able to claim the credit. Will I Pay Less for My Health Insurance Coverage or More? Unfortunately, this issue will take awhile to shake out and there are different schools of thought here. Health care reform requires insurance companies to add new benefits to all policies, and this could increase costs in the near future. Others argue since more businesses and individuals will be entering the insurance-buying pool, premiums could be lower for everyone. Health Care Reform Timeline 2010 Dependents covered to 26 No lifetime or annual limits No pre-existing condition restrictions for children Tax credits for small employers Preventive services coverage Reinsurance for employers with retirees Pre-existing condition insurance plan 2011 Employer disclosure notices required New restrictions on HSA, FSA and HRA fund use 2012 Summary of Benefits/Glossary of Terms 2013 Medicare tax increase Medicare Part A tax rate on wages rose from 1.45% to 2.3% for certain individuals. Employers must inform employees of health options Employers must provide employees with information on employer plans, Marketplace and subsidies. W-2 reporting for employers Employers who filed 250 or more W-2s in 2012 are required to report the cost of health benefits on W-2s distributed in 2013 for tax year Reporting is informational only (i.e., employees will not be taxed). Pre-tax FSA contributions capped at $2,500 Itemized deductions for unreimbursed medical expenses Threshold increased to 10 percent of AGI (up from 7.5 percent)

3 Will I Be Required to Buy My Insurance From a State Health Insurance Marketplace? No, PPACA requires only that everyone (with a few exceptions) has health insurance. Health care reform doesn t dictate where individuals or groups must purchase it. A Marketplace is simply a new place to buy insurance that will be available to individuals and small businesses. Digital encourages you to utilize licensed health insurance brokers to make sure you re getting the best benefits for your employees and to help you find the best rates. Keep in mind that depending on plan participation, a Marketplace may not offer you the same number of choices and plan designs. Am I Required to Provide My Employees With Health Insurance? Although businesses aren t specifically required to provide insurance coverage, owners could pay hefty penalties if their employees get coverage through the Marketplace. Beginning in 2015, if you have 50 or more full-time employees and full-time equivalents and don t offer coverage, and even one employee receives a government subsidy to purchase insurance through the Marketplace, you ll be required to pay a penalty. Penalties aren t tax deductible. Health Care Reform Timeline 2014 Individual mandate Virtually everyone must have health coverage or pay a penalty. Marketplaces open State and federal Marketplaces up and running by Wellness incentives Employers can offer rewards of up to 30% 50% of premiums to employees who take part in a wellness program and meet health standards. No pre-existing condition exclusions Coverage cannot be denied for those with pre-existing conditions. Comprehensive coverage requirement Individual and small group plans must include essential health benefits. Limits on deductibles Group health plan deductibles are limited to amounts allowed for HSA plans. Ban on all annual limits Plans may no longer impose any annual benefits limits. Do you have fewer than 50 full-time employees? yes no Do you offer health coverage to your employees? yes no If you answered NO to both questions, you may be at risk for a penalty beginning in Penalties for employers who don t offer health insurance $2,000 per year for each full-time employee after the first 30, if at least one employee gets a subsidy to purchase coverage on the Marketplace Penalties for employers for offering unaffordable coverage or a plan that doesn t provide minimum value $3,000 per year for each employee who receives a government subsidy for health insurance or $2,000 per year for each full-time employee after the first 30, whichever is less 2015 Employer mandate Employers with 50 or more full-time or full-time equivalent employees must provide coverage or pay a penalty if any employee receives a subsidy to purchase Marketplace coverage Cadillac plan excise tax Tax on employer plans valued at over $10,200 for individuals and $27,500 for families. For information on affordable health plans for your business, visit

4 Do Individuals Have to Buy Insurance? Starting in 2014, virtually every U.S. citizen and legal resident will be required to have health insurance. If you aren t covered through your employer and don t purchase coverage on your own, you ll have to pay a fine of $95 per person (maximum of $285 per family) or 1 percent of household income in excess of filing threshold, whichever is greater. Where Can Individuals Find Good Rates on Health Insurance? Digital Benefit Advisors is a great source to find the best rates for individual and group health insurance and all at no cost to you. Better still, we ll take complete care of you and your employees throughout the year, providing you with your own benefits consulting team, a Customer Advocate Center to answer your employees questions directly (so you don t have to), an online Ask the Expert benefits resource center for next-day answers to your HR and legal questions and much, much more. An Employer Checklist: 9 Things to Remember 1. Tax credits for small employers 2. Dependent coverage to age Wellness grants for small businesses 4. W-2 reporting of health benefits 5. Informing employees about their health options; 60-day notice of plan changes 6. Grandfathered plans/nondiscrimination rules 7. Employer play-or-pay penalty 8. Tax on Cadillac plans 9. Breastfeeding accommodations Want to get started? Check us out at

5 Your Guide to Health Care Reform The health care reform legislation signed into law on March 23, 2010 affects everyone. This handbook highlights the areas of health care reform that most impact employers. The guide includes some basic questions and answers to help employers prepare for the upcoming changes, take advantage of new benefits and tax credits and plan for new requirements. A simple timeline showing what happens when is included, along with an employer checklist. Keep in mind that there are many moving parts to this legislation. Several regulatory specifics have yet to be worked out. Digital Benefit Advisors recommends that you stay in close contact with your benefits consultant team to ensure your business is properly prepared and to answer specific questions regarding potential changes to your benefits plan and available options that can keep your employees and your business healthy, happy and strong. Will My Current Benefits Change, and What Does Grandfathering of Health Plans Entail? The law provides for grandfathering of policies that were in effect on or before March 23, 2010, allowing employers to keep their benefits for currently enrolled employees, dependents and new hires. Minor changes to a plan are allowed. Major changes are not. Routine Plan Changes That Won t Trigger a Loss of Grandfathered Status > Cost adjustments to keep pace with medical inflation > The addition of new benefits > Modest adjustments to existing benefits > Voluntarily adopting new consumer protections under the law > Making changes to comply with state or federal laws Changes That Would Cause a Health Plan to Lose Its Grandfathered Status > Significantly cut or reduce benefits > Raise coinsurance charges > Significantly raise co-payment charges > Significantly raise deductibles > Significantly lower employer contributions > Add or lower annual limits Plan Requirements Summary > Dependents covered until age 26 > No lifetime benefit maximums > No pre-existing condition exclusion for children under 19 (all participants 1/1/14) > No annual limits for essential benefits > Coverage can t be rescinded except for fraud > 100 percent coverage for preventive care (N/A if grandfathered) > Ban on discrimination in favor of highly compensated workers (N/A if grandfathered) > Right to designate a primary care provider (pediatrician, OB/GYN, etc.) and access to emergency care without increased cost-sharing (N/A if grandfathered)

6 400 Galleria Parkway, Suite 300 Atlanta, GA Note: This handbook is based on a general review of widely available sources and does not represent legal advice. PPACA changes occur frequently and may not be reflected in this handbook. Up-to-date reform modifications can be found here: (Revised 7/2013)