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Frequently Asked Questions

Most frequent questions and answers

The Affordable Care Act, also known as Obamacare, states that businesses with less than 50 full-time employees are not required to provide health insurance benefits to their employees and will not be imposed tax penalties for not providing these benefits to their employees.

However, employers may receive additional tax credits when providing coverage if they meet the following requirements:

      • Small businesses with fewer than or equal to 25 employees that have an average annual wage of less than $50,000 annually may be eligible for a special tax credit up to or equal to 50% of the employer contribution (must be at least 50%) toward insurance premiums for their employees.

Regardless if you offer health insurance or not to your employees it is imperative that you ensure your employees are aware of the obligation to have health insurance under the Affordable Care Act. You must inform them that they will have access to guaranteed coverage in the individual marketplace and that they may be eligible for government subsidies if the coverage provided by your business is not deemed affordable by the laws of Obamacare.

In 2016, the Affordable Care Act mandated businesses with 50 or more full-time employees to provide “affordable” health insurance to their employees or be subject to tax penalty.

Yes, most carriers will allow employer to choose up to six plans.  There are restrictions such as same network or similar plans.  Offering multiple plans allows employees a choice of plans to satisfy the different needs of your employees.

    • Only employees working in the United States are counted in determining whether an employer has 50 full-time employees or full-time equivalents.
    • Companies that have a common owner are combined for purposes of determining whether they are subject to the mandate. However, any penalties would be the responsibility of each individual company.
    • If a business hires seasonal workers and the workforce exceeds 50 full-time employees for 120 days or less during a calendar year, the employer is not considered to have 50 full-time employees.
    • Teachers and other employees of educational organizations who work full-time during the academic year are considered full-time employees and cannot be treated as seasonal.

Coverage is considered “affordable” if employee contributions for single coverage do not exceed 9.5% of the employee’s wages. The regulations provide three safe harbors that employers can use to determine if employee coverage is affordable:

    • 5% of an employee’s W-2 wages for the year
    • 5% of an employee’s monthly wages determined by multiplying the employee’s hourly rate by 130 hours per month
    • 5% of the Federal Poverty Level for a single individual

The regulation did not include any additional guidance about how “minimum value” will be determined. We are still awaiting the Minimum Value Calculator and safe harbor checklists.

As of July 1, 2015, under the Affordable Care Act you are no longer allowed to reimburse employees who obtain private insurance for individual or family plans. This arrangement, often known as “Employer Payment Plans,” does not satisfy reforms in the market and could be subject to a penalty of $100 per day as excise tax per applicable employee (also qualifies as $36,500 per employee per year) under the IRS code 4980D.

If your organization has equal to or greater than 50 full-time employee equivalents you will be required to provide health coverage insurance for your employees or be subject to tax penalties. All group health plans provided by THB are compliant to ACA guidelines to ensure you will avoid associated penalties.

Cost of insurance will be ultimately determined by the insurance company we select together to provide your group health insurance plan. Costs will be determined by a number of factors including location and size of your organization, as well as your employees ages to determine your monthly premium.

Under the Affordable Care Act, employees with pre-existing conditions and relative health will no longer impact your group health insurance coverage rates. Regardless if you apply through THB or another health insurance agency/go direct to insurance company, your final monthly rate will be the same for your selected coverage.

Normally at least 50% of the monthly premium for the employee is covered by the employer. The remainder of the premium is provided by the employee and additional coverage for dependents would be paid by the employee as well. The employer minimum contribution levels may be different from state to state and dependent upon the insurance company. Some employers often cover a higher percentage of their employee’s premium and extend coverage of some premium costs to the employee’s dependents.

You will have the ability to indicate the percentage of coverage you would like to cover for your employees and their dependents during the application process.

Yes, an employer can pay all or part of a former or current employee’s COBRA premiums. Employers may do so as a means to assist an employee during a merger, acquisition, layoff, termination, temporary or permanent disability, or retirement, or as part of a recruitment strategy.

Paying COBRA premiums without clear communication of the arrangements may open the organization to liability; therefore, an employer may want to consult with legal counsel for guidance.

If you offer an HSA plan, employees enrolled in the plan must be aware of:

    • 1099-SA forms will be issued in January to report distributions made by employees in 2012.
    • You must report pre-tax contributions (employer and employee) in Box 12, Code W of the W2s sent to your employees.
    • 5498-SA forms will be issued in May 2013 to members who had an HSA in 2012. This tax form provides information on contributions, rollovers, and fair market value for their account for the 2012 tax year.
    • If an employee withdrew funds using the Debit/ATM feature, they may be required to pay tax and penalty on those funds as the bank does not have a way to determine if it was used for medically approved items.