ACA Compliance Enforcement Begins!

ACA Compliance enforcement beginsEmployers are out of excuses and delays; ACA compliance enforcement has begun and they need to be compliant now. If you or your clients are an employer that decided not to choose a compliant plan or didn’t offer anything at all, the employer may be subject to penalties under the Employer Mandate.
May has been a big month for the Department of Health and Human Services (HHS). They’ve made two major announcements regarding the process for determining if an employee is eligible for a subsidy under the Affordable Care Act (ACA). Earlier this month, HHS announced that they hired a third-party contractor to conduct an “employer verification study” where the contracted company will be calling employers and asking about the health insurance coverage they offer. The purpose of these calls is to determine whether employers have successfully offered an affordable plan that meets the minimum value requirements to their employees.
The need for these calls goes back to the ACA Exchanges, a person must state that they were not offered a plan that was affordable and meets minimum value by their employer. If they were indeed offered an eligible plan, this person would be ineligible for a subsidy.
CMS also released a sample notice that the Federal Exchange will send to employers that one of their employees has submitted an application for a subsidy and claims they haven’t been offered compliant coverage.
So why does this matter to you and your clients?
Well, some employers did everything they needed to do and chose a plan that was compliant, like the ones FreedomCare offers but the Exchange did not discover that fact during the verification process. The employer will have the opportunity to contact the Exchange and provide documentation that they offered a plan that is affordable and meets minimum value requirements. After the Exchange receives this info, they will re-determine the employee’s eligibility and discontinue any premium subsidy payments.
Let’s talk about our 100% compliant ACA solutions, give FreedomCare a call asap.

IRS releases updates to form 720 (PCORI)

IRS releases updates to form 720 (PCORI)The ACA includes a number of fees that employers are required to pay in order to help support various aspects of healthcare reform. One of those fees, PCORI was just updated by the IRS for 2016. The deadline for these fees to be paid is July 31st, 2016.

What is PCORI and why does it matter to employers?

According to their website, “The Patient-Centered Outcomes Research Institute (PCORI) helps people make informed healthcare decisions, and improves healthcare delivery and outcomes, by producing and promoting high-integrity, evidence-based information that comes from research guided by patients, caregivers, and the broader healthcare community.” Under the ACA, all employer sponsored health plans are subject to PCORI fees.

Why was the PCORI fee created?

The PCORI fees were established under the Affordable Care Act (ACA) to advance comparative clinical effectiveness research. PCORI fees are assessed on issuers of health insurance policies and sponsors of self-insured health plans. The fees are calculated using the average number of lives covered under the policy or plan, and the applicable dollar amount for that policy or plan year.

How much is the 2016 PCORI fee?

$2.17 per life

When are the 2016 PCORI fees due and how do you pay?

For policy and plan years ending on or after October 1, 2015, and before October 1, 2016
Employers and insurers will need to file Internal Revenue Service (IRS) Form 720 and pay the updated PCORI fee by July 31, 2016.

Employers have one month to calculate and send payment to the IRS. This form is relatively simple, but is structured in a way as to cause some confusion about who it applies to.

Give FreedomCare a call to discuss how to calculate and what to do if your clients aren’t compliant.

The FreedomCare Difference

The FreedomCare DifferenceWith the fear of the Employer Mandate last year, savvy employers had to do something fast. Some rolled the dice and went with plans that were on the fence of whether or not their plans would be compliant with the laws.

With 2015 half over, a lot of companies have failed in multiple ways: poor administration, covered employees not receiving their cards, misinterpretation of the laws and more.

Now that you or your clients are looking for something else, what separates FreedomCare from the rest?

  • No application is needed for enrollment, we are able to auto-enroll employees from a census the employer submits via a secure site.

  • We handle the payment for the required PCORI fees on behalf of the employer.

  • We handle ALL COBRA administration on behalf of the employer.

  • A bronze level Minimum Value Plan (MVP) will be offered to all eligible employees. This program has no participation requirements for employers to meet.

  • In addition to the Minimum Essential Coverage (MEC) and MVP, employees have the ability to design a healthcare package that fits their health and financial needs through additional products available for them to purchase.

  • Flexible commission rates for brokers.

  • Unlimited 24/7 telemedicine program and discount RX program available to all employees at no additional cost.

  • Unused claims funding will be returned to the employer on a quarterly basis.

  • We assist the employer with the completion of required ACA forms (6055, 6056, 1094, 1095).

  • We supply our exclusive legal guarantee of compliance to employers that choose the Advanced and Preferred programs.

From day one we haven’t taken shortcuts, we don’t plan to start now. Our administration services can’t be beat. Give us a call today.

How to achieve a ‘penalty-free’ workplace

The New York Times recently said: After the enrollment deadline passes on Sunday, every adult without insurance will be subject to a minimum penalty of $325 when filing taxes next year. The fee will rise the following year to $695 per adult, more than seven times the $95 penalty for being uninsured in 2014.”

That story was about the individual mandate penalties, not the business penalties.

By now you probably know that large employers are facing penalties for not providing insurance, and they make the individual penalties look like a bargain. Businesses face penalties of $2000 per full-time employee, and possibly $3000 for each employee who gets an insurance subsidy on an exchange.

How to achieve a penalty-free workplaceThe Times article made it clear that the President and his team were openly pushing the fear of penalties to drive consumers to the exchanges where they can sign up for health insurance. Their goal is to have about nine million individuals enrolled in a plan. Are any of those nine million people employed by you?

If they are, then you owe a $3000 penalty if you failed to offer that person a health plan that is ‘affordable’ under the rules. You will also owe an additional $3000 for every one of your employees who takes the President’s advice and gets insured through the exchange with a subsidy.

But there’s good news. You only owe the full penalty if you fail to offer a plan for the entire year, or if you fail to offer an ‘affordable’ plan that meets the IRS’ tests for affordability.

That's not all, their are plans available that are not only affordable but offer a preventative and wellness plan and a Bronze plan at the same time. The combination creates a ‘penalty-free’ workplace allowing you and your employees peace of mind during tax season.

The preventative and wellness plan is a minimum essential coverage (MEC) plan and fulfills your employees’ requirement to have health insurance. So there’s NO penalty for your employees. But what about you, as their employer?

The offer of the Bronze plan satisfies your requirement to offer a plan. This puts you, and your employees, in the penalty-free zone. So where can you find this combination that keeps you safe?

FreedomCare offers the only guaranteed compliant program available that is low cost and easy to implement. There are thousands of employees around the country with FreedomCare cards right now, and thousands more on the way, and none of them will have their tax refund gobbled up by Uncle Sam as a penalty for not having health insurance. Not only are they penalty-free, but their employers are as well. It’s a win-win-win with FreedomCare.

Start today by making steps to create your own penalty-free workplace.


The $38K Question..

Last week we talked alternatives to traditional insurance plans like self-insuring for compliance under the Affordable Care Act. Unfortunately a large portion of employers have chosen to take a different approach…to do nothing. So you may be thinking, what are the consequences if you choose not to do anything?

For employers, the Affordable Care Act presents 2 possible penalties for not complying.

  1. The first is a $2,000 per employee penalty for not supplying a health plan offering 63 Minimum Essential Coverages. For our purposes we will call that Penalty A.
  2. The ACA also imposes a $3,000 per employee penalty if the employer supplies a plan but it does not offer coverage as generous as a Bronze Plan. We will call this one Penalty B.

To determine how much that really is, lets say your company has 200 full-time employees. If just one of those employees is not offered coverage and receives a subsidy or tax credit on the exchange, you are on the hook for Penalty A which equals $240,000! ($2,000 x (200 employees – 80 (the law allows for a deduction of 80))

The $38k Question

You could end up paying this entire amount even if you are offering insurance to the majority of your employees. On top of Penalties A and B, there is a Catch-All Penalty of $100 per employee per day for numerous kinds of violations that do not fall under Penalty A or B.

There are multiple ways to trigger this Catch All Penalty:

  • Your plan excludes people for pre-existing conditions or otherwise discriminates based on health status.
  • Your “Out of Pocket” limits are higher than allowed by the ACA.
  • You incorporate a waiting period of longer than the 90 calendar days without properly enacting and calculating an additional 30 day orientation period.
  • Your plan includes annual or lifetime limits on essential health benefits.
  • You are not properly offering dependent coverage to children up to age 26.
  • You do not properly provide a Summary of Benefits and Coverage.
  • You do not have adequate claims appeal and external review processes.

The Catch All Penalty would apply to every single affected individual as long as the violation exists. This is calculated on top of Penalties A & B. Calculated over an entire year, the Catch All Penalty would cost an employer $36,500 for one employee. Using our example above, if you have 200 employees and you are in violation for the entire year, your penalties would be too outrageous to even contemplate..over $7 Million! So what are the total amount of possible penalties and excise taxes employers could face per employee?

That is the $38k Question.

To make things worse, these penalties are excise taxes and are not tax deductible like health plan contributions would have been. Does it seem like it’s a good idea to choose not to do anything? It’s not to late to mitigate your losses, check out our previous post about Self-Insuring your benefits to begin exploring alternatives to traditional insurance and choosing not to do anything.

3 Reasons to Self-Insure your Benefits Plan

shutterstock_94589152Most brokers and employers were in denial this past year about the Affordable Care Act. With its ever-changing laws, continuous delays and lack of clear information some brokers and employers were under the impression the employer mandate would never go into effect. Well, its 2015, nothing was overturned and here we are, employers are facing thousands of dollars in potential penalties.

Most people don’t know that a large portion of the ACA is going to be funded by employers who fail to comply and end up paying penalties. Compliance is critical if you or your clients do not want to be part of the Obamacare funding machine.

Any insurance agent who represents large groups of 50 or more full-time employees knows that the ACA is going be challenging. Agents and Employers that understand the basics of the laws are more equipped to navigate the changes and are often more open minded to considering different strategies.

When considering plans like the ones FreedomCare offers, you have to start by changing the way you think about traditional health insurance plans and start exploring the world of self-insured health plans, also known as ERISA qualified plans. The Affordable Care Act brought numerous mandates on traditional insurance plans but exempts ERISA plans from a lot of the ACA provisions. Self-Insuring your benefits is not only legal; it has been around for decades. Traditionally Self-Insurance has only been able to be utilized by large employers; until now.

So why would you want to self-insure?

1. You have more control over your plan design:

Traditional insurance companies usually offer set packages for benefits. By self-insuring, an employer can tailor a plan suited for their employees.

2. You can save a lot of money:

Self-Insured plans are not traditional products, they have very different costs associated with them. For example, they don’t have to build in extra charges for profits or taxes.

3. Better cash flow:

With a traditional insurance plan, the employer pays the same premium even if their employees use less care one month than predicted. With a self-insured plan, the employer pays the actual cost of care instead of a fixed monthly premium and holds on to that extra money.

So you’ve seen that self-insuring offers several advantages over traditional insurance. But where do you begin?

Well FreedomCare allows employers greater flexibility and discretion when it comes to self-insuring their benefits. We offer the only Guaranteed Compliant program along with a wealth of benefits that are not only valuable to employees but also a value to business owners.

Take control of your benefits program, start your self-insured program today.