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Preventing ACA Penalties

08/18/2016

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How to avoid costly ACA penalties and enroll for health coverage

Since its inception, the Affordable Care Act (ACA or otherwise known as Obamacare) has undergone several updates and regulation changes. Comprehending the ACA and every change it has gone through can be tough, which is why it is always a good idea to seek professional advice to ensure you are compliant when trying to navigate all of its complexities. And, understanding the ACA’s history is important. Here’s a brief timeline:

  • 2010: President Obama signed the ACA into law.
  • 2011: After some controversy involving a Florida judge ruling that the ACA is unconstitutional in 2010, the Supreme Court repealed the ruling and determined that the ACA is, in fact, constitutional, upholding all provisions stated within it. 
  • 2012: Obama is reelected, ensuring that ACA was here to stay.
  • 2013: Health insurance exchanges opened, which began policy writing that would become effective as of 2014.
  • 2014: ACA policies go into effect, including provisions such as prohibiting cost-sharing preventive services and coverage denial for applicants with pre-existing conditions.
  • 2015: In March, an estimated 16 million people, who previously lacked health insurance, are now covered. About 8 million of those people receive subsidies through federal exchanges.
  • 2016: The ACA is revised and updated. Changes include expanding the definition of a small employer, from 1-50 employees, to 1-100 full-time equivalent employees, allowing businesses with 51-100 employees to use the Small Business Health Options Program (SHOP), increasing the out-of-pocket maximum for employees, and increasing the dreaded penalties for failing to provided individual statements to full-time employees, or worse, failing to enroll for health insurance at all. 

The penalties associated with failure to enroll for health insurance seem to be what most employers and employees alike are concerned about and what affects the most people. In 2016, if you didn’t enroll for health insurance, you were hit with a penalty of 2.5% of your income or $695 per adult, which can add up to $34,750 (ouch) for a business of just 50 employees. Children can be included in the penalties, which only make the penalties worse. Furthermore, you still pay penalties if you:

  • Only have vision and dental coverage
  • Only have workers’ compensation
  • Only have insurance that covers a specific disease (like insurance for cancer)
  • Or, your plan only offers discounts on medical services, since these plans don’t count as “coverage.” 

The easiest way to avoid these penalties is to, you guessed it, enroll in a health care plan. Open enrollment in the federal Marketplace for 2017 begins November 1, 2016, and ends January 31, 2017.  

When enrolling for coverage with the federal Marketplace you will need the following:

  • 2015 tax information for you and your family
  • Your projected income for 2016
  • Medical history (pre-existing conditions and gender don’t affect cost, but weight, age, and whether or not you are a smoker will affect coverage and rates)
  • Social security numbers for all those you are seeking coverage for
  • Employer and income information for every member of your household who needs coverage
  • Policy numbers for any current health insurance plans
  • A complete Employer Coverage Tool job you or someone in your household is eligible for
  • Any other important information that your health insurance or coverage options

To enroll:

1. Go to www.healthcare.gov and set up an account with some basic information.
2. Fill out the online application; on this step the information gets more detailed and includes income, household size, current health coverage info, and more, which is why it is necessary to have everything mentioned above on hand.
3. After you fill out the application, compare your options, which include private insurance plans and low-cost coverage through Medicaid and Children’s Health Insurance Plan (CHIP). Take note of all the details for each plan and choose the best one that’s right for you.
4. Finally, enroll and decide how to pay your premiums. 

Just like the 2016 open enrollment period, if you choose not to enroll for 2017, you will face the same penalties, and let’s face it, nobody wants that. It will be cost effective to enroll.

Employers also have many requirements under the ACA regulations in regards to the levels of health insurance coverage offered, the costs of the coverage and annual reporting. Employers who have more than 50 full-time and equivalent employees are required to offer health insurance. If not, you guessed it, they may be penalized.  An employer who is considering offering a group sponsored health plan should first work with their insurance broker to ensure their health plan meets the minimum value requirements and affordability thresholds prior to open enrollment. It is helpful if the employer has an all-in-one enrollment tool in place that also includes ACA functions including employee status tracking, ACA monthly code reporting and form production; however, that is not the case for most employers. 

Another option for an employer whose enrollment tools do not include ACA reporting is to outsource those ACA reporting functions. It is not necessary to have an outsourced ACA vendor in place at the time of open enrollment but it is important to keep meticulous records of general employee information, hire dates, health benefit eligibility dates, coverage offerings, enrollments, benefit waivers and terminations. An employer who must outsource their ACA reporting functions should have their vendor in place by mid-year.

If you need assistance with health plan selection, plan enrollment or ACA reporting, LBMC EP is here to help. LBMC EP can provide the all-in-one benefit enrollment, employee tracking, and ACA reporting system. LBMC EP provides full brokerage services which includes shopping for group health plan options, assisting with employer contribution strategies, providing enrollment tools and processes, employee education, enrollment assistance, on-going claim status support, and monthly invoice reconciliations.

For those employers who need ACA reporting assistance only, LBMC Employment Partners can develop a process to collect the various payroll and enrollment data from the employer’s payroll and benefit sources and use that data to prepare for forms 1094-C and 1095-C. For those employers with more than 250 forms to file, LBMC EP has an approved electronic filing system in place.

LBMC EP is well versed in all things ACA, and their dedicated team of professionals will help you find the right plan for you. With so many intricacies, ACA can be difficult to understand, so it is in your best interest to seek professional help. Contact your local LBMC Employment Partners representative today to find out how they can help you!