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Recent surveys show many employers are still concerned about non-compliance with the Affordable Care Act. Small employers must worry about essential benefits and eligibility requirements, while larger employers (50+) must worry about these requirements along with pay or play rules, and much more.
As employee benefit brokers, Way Financial understands employer obligations under the ACA and is dedicated to helping our clients navigate the uncertainty of this complex law, as well as other state and federal laws affecting you, your clients, and your employees.
SAVE ON YOUR PREMIUMS
Individuals and Small Businesses may be eligible for a tax credit under ACA healthcare reform laws. The credit is applied as a discount on your monthly insurance premium. To see if you are eligible for a tax credit, use the Subsidy Calculator provided by the Health Insurance Marketplace. Or, if you are a business, use the Small Business Tax Credit Calculator provided by the Health Insurance Marketplace. In any case, both businesses and individuals must purchase benefits through the Health Insurance Marketplace to secure their tax credit.
AVOID TAX PENALTIES
EMPLOYERS: Employers who have more than 50 full-time equivalent employees must offer 95% of their workforce benefits that pay for 60% of the minimum essential coverage. If you are in non-compliance, a penalty is assessed monthly and is equal to the number of FTE employees (minus the first 30) multiplied by one-twelfth of $2,000. You may also incur a penalty when at least one of your employees receives a premium tax credit in the Exchange. The payment is assessed monthly and is the lesser of: one-twelfth of $3,000 per FTE employee receiving federal subsidies through the exchange, or one-twelfth of $2,000 per full-time employee (minus the first 30).
INDIVIDUALS: Following is information on the Individual Mandate of the ACA. The penalty for 2020 under Covered California law affects individuals who failed to obtain qualifying health insurance. Individuals could have coverage through their employer, or through an individual policy to satisfy the requirement. If an individual did not have qualifying health insurance, the tax penalty will be $695 for adults. Additionally, the penalty is $347.50 for each child, or 2.5% of gross income above the filing threshold, whichever is higher. Consequently, your penalty will be applied on your annual tax return.
UNDERWRITING GUIDELINES OF THE ACA
-There is no longer a pre-existing condition clause. In other words, insurance companies can not increase rates or deny coverage because of a pre-existing condition.
-Your dependents can remain on you policy until they turn 26 years old.
-Insurance companies can not consider gender when setting rates.
-Employer renewals must be based on the same rates as new business.
-The waiting period for employer benefits should not exceed 90 days.
ESSENTIAL BENEFITS
Your employer paid benefits must comply with the “Essential Benefits” of ACA. Specifically, to be in full compliance with the law, your insurance policy must cover at least 60% of the costs of the following essential benefits. If you purchase an individual policy from the marketplace, it’s likely that your policy will also contain these benefits.
-Ambulatory patient services
-Emergency services
-Hospitalization
-Maternity and newborn care
-Prescription Drugs
-Mental health and Substance —Abuse disorder services
-Rehabilitative and habilitative services and devices
-Pediatric services, including oral and vision care
-Preventive and wellness services, and chronic disease management
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And although your financial strategy will be unique to you, we’ll ensure that it’s built on a solid foundation to help you protect against the unexpected, accumulate wealth and preserve what you’re working so hard to achieve.
If you’re a business owner, we recognize there’s no separating the goals you have for your family and the goals you have for your business. That’s why we offer a process that addresses both, allowing you to create a competitive business advantage and live the life you envision.
You’ll be supported by a team of experts who specialize in business planning – such as employee benefits, insurance and exit planning – alongside those who specialize in personal financial planning and estate planning.
Learn more about the business planning, products and solutions under the Services tab on this website.
Regardless of whether or not you own a business, our personalized approach to financial planning is much like building a custom home – designed to your specifications, built to meet your goals.
Then, take the first and most important step toward creating a lifetime of financial security. Contact us to set up a meeting.
An HMO group health plan requires employees to appoint a primary care physician who directs treatment utilizing service providers affiliated with the HMO. HMOs offer access to a comprehensive package of health care for a low monthly premium. A small co-payment is often required for services, depending upon the type provided.
PPO group health plans offer a vast network of quality healthcare providers and facilities. Employees save the most money on healthcare if they use providers within the network, as some services may be only partially covered or not even covered at all when outside providers are used. Also, many services may not be covered if deductibles are not first met, however, the plan includes important wellness and preventative services provided outside of the deductible with a small co-pay.
POS plans combine features of HMOs and PPOs. Most POS plans require members to choose a primary care physician from within the POS network, but allow them to use out-of-network specialists with a referral from a primary care physician. Co-payments will be higher for out-of-network services.
Most insurers include wellness benefits in their comprehensive coverage, designed to improve lives and keep members healthy. At no extra cost, your group health plan will generally include services like
National surveys have shown that Short Term Disability and Long Term Disability remain of high importance for most employees. Thus, savvy employers attract and retain top talent by offering both STD and LTD insurance as part of the employer paid benefit package or as a voluntary (worksite) benefit.
During the time an employee is unable to work due to a qualifying disability (illness or injury), STD generally allows for income payments to the employee to begin after about a two-week waiting period and will continue to pay the employee until he/she recovers or maxes out the benefits–usually anywhere between one month to two years, depending on the policy.
During the time an employee is unable to work due to a qualifying disability (illness or injury), LTD generally allows for income payments to the employee to begin after about a 90-day waiting period. However, it could be much longer depending on the policy. The policy will pay the employee far longer than STD–for a few years, up to age 65, or even for life.
A good life insurance policy provides for an employee’s final expenses, taxes, mortgage and more. Additionally, it may even pay for their children’s education. Also, employees are more productive when they feel secure that their loved ones will be taken care of, in the event of illness or an untimely death. Smart employers consider life insurance a key part of the benefit package, and a valuable tool in attracting top talent.
This type of life insurance builds cash value which is sometimes used as collateral for loans, if needed. However, most employers only offer basic term life insurance (see below), but also offer permanent life insurance on a voluntary basis. Even so, employees appreciate the opportunity to widen their safety net.
This type of life insurance does not build cash value. However, it will pay a set amount to the named beneficiary upon the death of insured within the stated term. Additionally, some policies may also make payments upon terminal or critical illness.
Employees always appreciate dental coverage as part of the basic benefit package. Studies have shown that regular dental exams help employees to stay healthier and more productive in the work place. Additionally, you can detect serious underlying conditions such as heart disease and diabetes, through regular dental exams. In fact, the National Association of Dental Plans and the Centers for Disease Control have performed studies that show that employees with dental insurance have better attitudes and are less likely to suffer from depression, a common condition in today’s fast-paced world.
Dental insurance offers a variety of diagnostic, preventative care and corrective services. This includes cleanings, exams, x-rays, fillings, root canals, orthodontia for children, and emergency care while traveling.
Similar to dental policies, vision plans are inexpensive and save employees money on routine eye care. Examples of care include exams, eyeglass frames and lenses, contacts, and even discounts on procedures like LASIK. Additionally, monitoring your eye health with regular exams helps to prevent serious eye diseases like glaucoma and cataracts. In addition, regular eye exams help to detect early stages of diabetes, high blood pressure, and high cholesterol.
When employers self-fund their own group health plan, they will benefit from a significant savings in the overall cost of their benefit programs. For example, savings may be in premiums, increased cash flow and certain tax advantages. Additionally, employers have more control over the benefits that the plan offers. Typically, self-funding was not available to small employers in the past. However, today self-insured group health plans are considered to be good options for both small and large employers.
How it works. A self-funded group health plan requires the employer to become the insurer. Most often, employers will partner with a PPO to provide services for the plan. Then, a third party administrator (a TPA) is engaged to handle claims and processing. Self-insured employers run the risk of large catastrophic claims. As a result, they need to purchase stop-loss insurance to protect themselves in such an event. Even with the additional expense of stop-loss insurance, employers save a significant amount of money on premiums and other advantages.
Partially-Funded Plans (aka Level-Funded) are a variation of a Self-Funding and allows small employers to take advantage of all the cost saving and benefit design features of a fully self-insured plan, however, they share the risk with one of our top national carriers. The premiums for shared funding plans are generally much lower than fully insured plans. An employer may save even more by implementing wellness programs into the benefit strategy.
How it works. An employer will select any of the fully insured plans that the carrier offers. Then rates will be determined by the group’s claim history. Next, stop-loss insurance is added to protect against catastrophic claims. Since the carrier will handle the administration of the plan, there is no need to hire a separate vendor to handle claims and processing.
A Flexible Spending Account is a cafeteria plan under Section 125 of the tax code. It is a tax-favored savings account and is funded solely by the employee through regular pre-tax payroll deductions. The funds from the account can be withdrawn tax-free to pay for eligible medical, dental, vision, prescription and dependent daycare expenses. Additionally, employees elect how much they want withdrawn from each pay period, which can be changed annually or upon a qualifying event such as marriage or divorce. For example, the average working employee in America spends more than $1,000 annually on these types of benefits. By participating in a FSA, an employee always has cash to pay for these expenses, and as an added benefit, their taxable income is reduced which also increases the percentage of pay they take home.
An Health Reimbursement Account pairs a high deductible, low premium health insurance plan (HDHP) with a tax-favored savings account to cover the high deductible. The plan requires that the employer contribute to the savings account. The account can be used to reimburse employees for co-pays and other qualified expenses submitted by the employee, prior to the deductible being met.
An HSA combines a high deductible, lower premium group health insurance plan (HDHP) with an employee owned savings account. Both employer and employee can contribute, with pre-taxed dollars, to the savings account. The account is used directly by employee to help fund the deductible and other qualified medical expenses.
A Premium-Only Plan allows employees to select, purchase and pay monthly premiums for their own individual insurance plan with pre-tax dollars. Employees elect a set amount of wages to be deducted from each payroll to be used by the employer to reimburse the employee for the monthly premium.
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