The Affordable Care Act (ACA) has introduced widespread changes to the healthcare landscape. It has increased the availability, quality, and affordability of health insurance for the general population, regardless of age, gender, or pre-existing medical conditions.
The ACA has also altered the guidelines for employer-sponsored insurance, which has thrown many small- and mid-sized businesses for a loop.
In 2015, the ACA employer mandate will require employers with 50 or more full-time employees (defined as an average of 30-plus hours per week) to offer a minimum coverage health plan at affordable rates (less than 9.5 percent of an employee's household income).
Additionally, companies with 200 or more employees are required to automatically enroll employees in employer-sponsored insurance with a waiting period of no more than 90 days.
Despite extensive ACA education and assistance campaigns, many employers -- especially franchise owners -- are still confused about what the new laws mean for their businesses and employees.
1. If I own a franchise with multiple locations, how do I count my employees for insurance purposes?
The common ownership rule says that if a group of companies has the same or similar ownership, it will be treated as the same company when assessing employee numbers. Therefore, franchises cannot treat different stores as separate companies.
2. If I own a small business with fewer than 50 full-time employees, am I still required to provide health insurance under the ACA?
No. The small business mandate says that any business with fewer than 50 full-time employees (or the equivalent) has no obligation to offer health insurance.
3. How do I measure my employees' total hours to determine their full-time or part-time status?
When measuring employees' hours to determine their full-time or part-time status, each franchise can choose its own measurement period or look-back period. However, tracking must be done diligently.
Employee hours (based on payroll outputs) must be actively tracked for a full year to ensure that part-time employees don't accidentally become full-time employees and suddenly fall under new employer-sponsored insurance mandates.
4. What are the penalties associated with not offering health insurance?
Employers who opt to not offer insurance will face penalties of $2,000 to $3,000 per worker per year and risk an IRS audit.
5. What are my options if offering insurance is just not the right path for my company?
Offering employer-sponsored insurance is not always the best option for all companies. For one, offering ESI prevents your employees from benefiting from subsidies available on state or federal healthcare exchanges.
Low-wage workers are eligible for subsidies in the marketplace, making family plans cost-effective. Families purchasing through the exchange are paying as little as $25 per month for a bronze plan. Medicaid is also available for many low-wage workers, but since the system is so complicated, it's best to let a Medicaid expert walk your employees through that process.
6. What can I do to help my employees determine the right ACA path for them?
The best thing you can do for your employees is to help them understand all of their options for healthcare coverage, including the fines associated with not having insurance. Many employees may not have access to computers outside the workplace, so allowing them the time and resources to apply for insurance at work will help keep everyone on track.
7. What can I do as an employer if I don't understand the laws well enough to make a decision yet?
Hire a third-party enroller, benefits advisor, or broker who can help you understand how the new laws apply specifically to your company, giving you a clearer picture of what the most cost-effective route for your business will be. An outside expert can also walk you and your employees through the enrollment process, answer questions, and troubleshoot problems.
The employer mandate doesn't go into effect until 2015, so now is the time for employers to determine what the new laws will mean for their companies. Franchisees, in particular, must evaluate their options to understand what choice is best for their workforce, and if necessary, seek assistance from an outside expert for more guidance.
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