The ACA is hear to stay.

ACA is here to stayAccording to NBC news, 9 in 10 in Americans have health insurance. “More than 7 million people who didn’t have health insurance last year got coverage this year.”

With the ACA being such a hot topic among presidential candidates, it will be an uphill battle to repeal. It seems like the ACA is here to stay.

American attitudes about the law have become more positive in recent months and the Supreme Court is on board. The time has come and passed for employers to ensure their compliance.

Just in case you have been living under a rock, employers are facing major penalties that have the potential to bankrupt their companies if they don’t get a compliant plan in place.

Be careful, there are a lot of non-compliant plans out there that will leave you vulnerable. Check out the FreedomCare difference to learn how FreedomCare stands apart from everyone else to make sure your business is protected.

ACA Benefit Small Business Owners

How does the ACA benefit small business owners?

What if I told you there are opportunities for small business owners to attract better talent and have healthier employees? Here are 3 ways the ACA can benefit small business owners.

1. Better recruiting and higher retention.

You now have the opportunity to reinvent your employee benefits for your small business. Gone are the days when only the larger employers could offer the benefits it takes to recruit the best employees. With the ACA, you are now able to offer employees access to discounted health insurance benefits such as individual health insurance which provides qualifying individuals access to premium tax credits.

2. Think outside of the box – Self-Insurance.

Your Group is never too small to self-insure. Before the ACA small business owners had limited options for providing health insurance to employees and the idea of self-insurance was just for the big boys like Walmart, Target, etc. but now it’s available to all business owners. We want to help you offer affordable competitive benefits through self-insuring.

3. Increased productivity.

We have programs in place to improve your employees productivity, employees who have enhanced access to health insurance services and options tend to be healthier and cost your business less. Healthy employees are able to come to work more and produce at a higher level of productivity versus an employee who does not have access to health insurance services and is constantly sick. Some of the unforeseen costs of having sicker absentee employees are their replacement costs. The expense of finding a new worker, training them, allowing for their learning curve, et cetera.

These are just some of the ways the Employer Mandate benefits small business owners. Stay educated, we are a resource for your questions and here to help you. Contact FreedomCare today.

*For purposes of the employer mandate – FTE classifies all employees who work 30 hours or more.

How to control your “out of control” insurance premium increases.

Insurance premiums expected to riseAmerica is sicker than we thought. The nation’s leading health insurers are seeking rate increases of 20 to 40 percent for the 2016 open enrollment season citing sicker than expected customers who purchased health benefit policies under the Affordable Care Act.

The rate requests, from some of the most popular health plans, suggest that the insurance market is still adjusting to the shock waves set off by the Affordable Care Act. Experts believe the root cause of this problem is the failure of several marketplaces to attract enough young, healthy applicants.

With increasing expenses already hurting your bottom line, how are you going to keep your business alive while facing inflated insurance premiums or massive penalties from the IRS?

  • Self-Insure your health benefits.

This isn’t a new concept, large companies have been self-insuring their health benefits and workers comp for years. We’ve now made it available to any size employer; so why would you pay a large insurance carrier for something you can do yourself?

  • Stop-loss or reinsurance to limit your liability.

When you self-insure, you need to have reinsurance to protect your business.

  • Claims funding is returned to you.Control your insurance premiums

When you self-insure, you are contributing monthly to a fund that claims are paid out of. Any money that goes unused will be returned to you on a quarterly basis. In a nutshell, you only pay for what you use and that unused money ends up back in your pocket.

  • Implement Health and Wellness Programs to keep your costs low

It’s no secret that America is unhealthy. Bringing health and wellness programs to your employees and encouraging yearly checkups can cut down on illnesses and increase the possibility of claims funding coming back to you.

Simple enough, right? Give FreedomCare a call to learn more about self-insuring and avoiding these premium increases.

The 5 things you need to know if you hire seasonal workers.

Did you know that a Seasonal “Worker” is not the same as a Seasonal “Employee.” Yes, they sound the same but they have very different meanings to you as an employer. Now let’s pretend we already rolled our eyes and commiserated about how confusing the ACA is and let's move on to the five important things you need to know:

1. You only worry about seasonal “workers” when you are determining if you are an Applicable Large Employer (ALE).

An ALE has over 100 full-time and full-time equivalent employees in 2015 and over 50 in 2016. If most of the time you are too small to be considered an ALE and only become an ALE because you hire extra workers for up to 120 days, then you can use the seasonal worker exception.

ALE Definition

EXAMPLE: Tom's Tomato Growers has 49 Full-Time Employees for 365 days per year. Tom's Tomato season is less than 120 days. Tom hires 200 employees for less than 120 days to pick tomatoes. If Tom uses a twelve-month measurement period, Tom can claim the Seasonal Worker exception and will not be considered an ALE.

Toms Tomato Growers

2. A seasonal “employee” is a defined term… not just someone you believe is “seasonal.”

A seasonal employee is

  • (a) hired into a position which typically lasts for six months or less; and
  • (b) the position must begin at about the same time each year (e.g. every summer or every winter.)

 

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3. It does not matter how many hours a seasonal employee works during the season.

This is a big deal. Consider this: if you are classifying employees as variable, you will have to offer them insurance next year if they work on average more than 30 hours per week this year. Alternatively, if your employees are truly seasonal (i.e. in a position that is six months or less) then no matter how many hours they work per week during the season, you will not be penalized if you do not offer them insurance.

4. In order to benefit from the seasonal employee rules, you must be using the lookback measurement method.

When you use the lookback measurement method, you are required to classify your employees as full-time, part-time, variable, or seasonal. You must be able to prove that the position you are categorizing as seasonal really is seasonal. For example, if your season has been more than 6 months for the past 5 years, you cannot all of a sudden claim it is less than 6 months this year for ACA purposes.

5. If you do not have a reliable and accurate way of measuring and documenting seasonal employees, you must offer coverage to avoid penalties.

BEWARE. While the seasonal employee rule sounds good, you can only take advantage of it if you understand it clearly, apply it correctly and document it so that an IRS agent believes you. Many employers are misapplying this rule as a way to avoid offering insurance. Many other employers are trying to comply but do not even realize that they are getting it wrong. Both are costly.

Employee Tracking Paperwork

Employers have a couple of choices here:

Farm Labor Contractors vs. Growers – 3 Steps to Compliance

The good news is that this article simplifies everything you need to know so that you can make the best decisions for your company. The bad news is that you are not going to like our answers whether you are the Farm Labor Contract (FLC) or the Grower.

The Rule: Applicable Large Employers (ALE) are required to offer affordable, minimum value insurance to their full-time employees or face penalties. An ALEs is any employer who employs more than 100 full-time and full-time equivalent employees in 2015 (more than 50 in 2016 and beyond).ALE Definition

 

The Problem: The only reason there is even a question here is because of one word: ‘Employer.’ And forget what you already know about this word in other areas of the law because the ACA broadened the definition. Under the ACA, the word ‘employer’ means any ‘common law’ employer. Typically, that would be the employer responsible for payroll taxes and withholdings and the one that does the hiring and firing. However, under the common law rule adopted by the ACA, the one who also controls and directs (or has the right to control and direct) the actions of employees is also considered the employer. This means that without clear guidance from the IRS or the courts, both the FLC and the Grower could be seen as the common law employer.

This is especially problematic if you are the Grower, for example, and you believe the FLC complied with the ACA with regard to the employees working for you. Let’s say you don’t find out until December 31, 2015 that your FLC offered a plan that did not comply with the ACA or that your FLC did not offer the coverage to all full-time employees. In that case, the IRS could penalize you, the Grower, for the entire year from January to December.

Alternatively, if you are the FLC, you face a different issue. You now have additional costs for your labor because you have to factor in the price of offering an ACA compliant plan. Your challenge is often how to convince the grower that the additional cost should be shared by both of you, right?

Here are the three things you need to know to protect yourself:

1. Growers may pay a fee. Growers may pay a feee

The employer mandate applies directly to the common law employer. In this situation, the Grower who is arguably also the common law employer will want to argue that the FLC’s offer of coverage satisfies the Grower’s obligations under the mandate. The only way the Grower can make such a claim is if the Grower pays a higher fee for ACA compliant labor than it would otherwise pay. The best way for a Grower to protect itself is to verify the cost of the coverage being offered and document the additional fee being paid to the FLC for such coverage.

2. Put it in writing.Put it in writing-01

 

A written contract is not a get out of jail free card but it will definitely help. In the contract you should specify (a) who is agreeing to offer coverage; (b) what fee is being paid by the party who plans to rely on the third party offer of coverage to satisfy their employer mandate; (c) what type of coverage is being offered and a verification that it complies with the ACA; and (d) an indemnification provision specifying who is responsible if there is an ACA violation.

3. Adopt a compliant plan.Adopt a compliant plan

 

Seems obvious right? It is more common that you might think than an employer believes they are complying with the ACA and finds out too late that their plan fell short. Whether you are the Grower or the FLC, you are both obligated to make sure that the plan being offered is:

  • (a) Minimum Essential Coverage;
  • (b) Affordable; and
  • (c) offering a Minimum Value Plan.

Your best bet is to adopt a plan that guarantees ACA compliance.

 

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.

Employers face Thousands in Tax Penalties

2015 is here, it’s a new year and as with most new years, we have all made resolutions to get healthy, save more money and other improvements to our lives. Unfortunately, I have some bad news, the dreaded Employer Mandate of the Affordable Care Act is now enforceable and it comes with hefty fines. You or your clients will be feeling the pressure if you haven’t worked to already have your compliant benefits plan in place. The penalties start in the thousands and only go up from there. If you have 70 or more full time employees you could be facing over $6,000 a month in fines alone. The fines aren't just on you either, your employees are also facing them.

Now let’s get to the good news, the fines are enforced each month and you can still mitigate your losses by acting sooner rather than later. If you just stumbled onto our blog or if you still have questions about what really happens during an IRS audit, start here by educating yourself of what the possibilities are.

We sponsored a very informative webinar series with Kaya Bromley of Your Obamacare Advisors in 2014 that was a huge success. Your Obamacare Advisors has archived all of those webinars for you to view at your own convenience. The topics include, "The Lookback Method, want to know what happens if you get it wrong?" "Common Questions about Self-Insuring" and more. If you are an employer, these are a must see or if you have clients who could benefit from these videos, you might want to do yourself a favor and pass them along.

Are you sure your business is safe

So now that you are facing these penalties..what can you expect in 2015? Well here at FreedomCare we will keep you updated with the latest breaking information regarding the Affordable Care Act with facts and opinions brought to you by our team of legal experts, seasoned insurance professionals and more. We will bring you weekly updates along with a series of very exciting Webinars. Stay tuned.