2016 Affordable Care Act Changes Affecting Employers

Now is the time to become familiar with Affordable Care Act (ACA) changes and standards that will affect businesses in 2016. Some approaching updates apply mostly to smaller companies with 50 to 100 employees. National PEO can help smooth your upcoming health insurance transition by supplying benefit administration services. To request a quote, fill out our online form and indicate which options you want to offer your staff.

“Small Employer” Definition

Prior to Dec. 31 of 2015, ACA defined “small employer” as a company with one to 50 full-time equivalent (FTE) workers. For future plan years starting Jan. 1 of 2016 or after, that definition includes firms with one to 100 FTE staffers. Beginning next year, ventures with 51 to 100 FTE personnel must meet ACA’s small-business provisions unless they offer grandfathered policies. Those include plans that provide necessary health coverage and satisfy standard rating requirements.

Basis for Employer Mandate Fines

Although ACA will consider organizations with 50 to 100 FTE workers small employers for insurance purposes in 2016, it will categorize them as large groups when calculating Employer Mandate penalties. That directive requires companies to make minimum basic medical coverage available. Besides being affordable, it must provide minimal value for 95 percent of full-time workers and their protected dependents as old as 26.

If policies do not pay 60 percent or more of total medical service costs, firms will have to pay Employer Mandate fees. For 2016, that will pertain to establishments with 50 to 99 FTE staffers. The 2015 mandate applied just to ventures with at least 100 FTE jobholders.

Company Mandate Rules and Penalties

For 2015, firms with at least 100 FTE employees must offer health coverage to 70 percent of full-timers to avoid Employer Mandate fines. In 2016, organizations with 50 plus FTE staffers must extend insurance to 95 or more percent of full-time wage earners to avoid fees.

Those businesses also must pay penalties if any full-time workers receive Marketplace subsidies or tax credits because their company-provided coverage was not affordable or failed to meet the minimum value stipulation. For 2015, ACA did not include the initial 80 full-timers in fee calculations. However, in 2016, the law will exclude just 30.

Out-of-Pocket Maximums

Annual 2016 unreimbursed amounts for in-network providers that companies can require personnel or insured dependents to pay is rising to a maximum of $6,850 per employee or $13,700 per enrolled family. Those figures include copays, deductibles, and coinsurance. The highest out-of-pocket expenses for any covered person, whether a staffer or insured dependent, also is $6,850. Neither amount applies to transitional or grandfathered plans.

Increased IRS Fees

Law requires applicable large employers (ALE) to report full-time personnel’s health coverage information to the Internal Revenue Service (IRS). That data determines company-shared responsibility conditions as well as premium tax credits. IRS fines for not submitting 2015’s large employer reports in 2016, not providing full-time workers with individual statements, and penalty caps are going up. View all reporting obligations and fines here.

Maximum Coverage Waiting Period

Per ACA law, organizations that include health insurance in their employee benefit packages must offer policies to all eligible new hires within the first 90 days of their start dates.

SBC Disclosure Rules

Companies must provide Summary of Benefit and Coverage (SBC) disclosures to all workers. Being able to review health plan costs and ranges will help staffers understand their insurance options better. Skipping this step could result in non-compliance penalties for proprietors.

Flexible Spending Account Limit

Health care law allows employees to contribute up to $2,550 to their annual Flexible Spending Accounts. That limit is the same for 2015 and 2016. It does not affect company contributions to workers’ FSAs. These accounts use tax-free money to pay numerous expenses including insurance copays, deductibles, prescription medications, and medical equipment. Employers can allow staffers to carry a $500 maximum of remaining FSA funds over to the next plan year.

Workplace Wellness Programs

Affordable Care Act incentives encourage company-sponsored wellness programs to make workplaces healthier. Initiatives and activities that hinge on employee well-being have increased employer rewards from 20 to 30 percent of medical insurance costs. Tobacco usage reduction or prevention efforts boast a 50-percent maximum reward.

Online SHOP Accessible

The Small-Business Health Options Program (SHOP) Marketplace helps restricted operations offer insurance to their personnel. Before Nov. 15 of 2015, SHOP was open only to outfits with up to 50 FTE staffers. Now, small firms with 51 to 100 FTE workers can use that website to acquire health plans for their employees.

Categories: Affordable Care Act (ACA)