With all of the changes in health insurance and the discussion of the ACA, it is hard to track what will be happening next. One item related to flexible spending accounts (FSAs) may have gotten lost in the noise. Late in October, the White House issued an informational fact sheet that sets out a significant change with FSAs. The “use-it-or-lose-it” nature of contributions has been modified by Treasury to allow a limited rollover of unused funds:
- as of this time, employers with plans that lack a grace period may elect to allow participants to roll over up to $500 of unused funds at the end of the 2013 plan year; and
- beginning plan year 2014, employers may allow participants to roll over up to $500 of unused funds at the end of the plan year.
Several media outlets are reporting the decision by the Seventh Circuit Court of Appeals this week finding that the requirement in the Affordable Care Act that group healthcare plans must cover contraceptives violates the Religious Freedom Restoration Act. This opinion does not strike down the requirement in all applications. The two companies who are parties to the case are closely held entities with Catholic owners. The 2-1 decision blocks the contraceptive mandate for those two companies.
The deadline of October 1 for employer ACA notices is almost upon us. October 1 is also the date that the ACA Health Insurance Marketplace will become operational. Open enrollment begins October 1 with coverage starting January 1, 2014.
As that happens, more information is being made available. The federal government–calling the Exchanges a simple and affordable way to get insurance coverage under the ACA–is promoting the system through several sources.
According to a White House release, “A new report shows that the Marketplace will give uninsured Americans access to affordable health insurance — and finds that average premiums are even lower than experts initially projected. For instance:
- A working family making $50,000 a year can get health insurance for less than $100/month.
- A 27 year-old making $25,000 a year could get coverage for an average of $93 a month.”
The IRS has an on-line resource with links that outline key tax issues facing small employers (those with fewer than 50 employees) and large employers (those with 50 or more employees).
The site is available by clicking here: http://www.irs.gov/uac/Affordable-Care-Act-Tax-Provisions-for-Employers.
By October 1, 2013, employers must provide a written “Exchange Notice” under the Affordable Care Act (ACA) to employees. The employer must give this to all current and new full-time and part-time employees and seasonal employees. This notice is required even if you provide health insurance.
The notice tells employees of the option to purchase health insurance coverage through an insurance exchange. The notice also outlines benefits and consequences of choosing that coverage.
The U.S. Department of Labor has guidance for contents of the notice, which as a threshold, must include the following:
- The contact information of the health exchange available in the state;
- The services provided by the exchange available in the state; and
- Possible eligibility for premium tax credits or cost sharing reductions when health coverage is purchased on the exchange.
Rising health insurance premiums have plagued employers for several years. There is significant fear over future costs. Upcoming requirements under the Affordable Care Act will place employers in a position of balancing those costs with potential federal penalties.
Beginning in 2014, large employers may be penalized if they do not offer full-time employees and their dependents minimum essential coverage or offer coverage that is deemed unaffordable. A “large employer” is defined as one that has 50 or more full-time equivalent employees during the preceding calendar year. A full-time employee averages 30 or more weekly hours of work. Hours worked by part-time employees are included in the calculation. These penalties amount to $2,000 per year per full-time employee (starting with employee number 31).
Coverage is “unaffordable” when:
- the employee’s share of the premium for self-coverage is more than 9.5 percent of the employee’s modified adjusted gross household income, and
- an employee receives a subsidy for coverage through a state exchange.
If coverage is not affordable, employers may be penalized $3,000 per year per employee who receives a federal individual insurance subsidy.
The United States Treasury Department has issued new regulations applying to large employers. For those with more than 50 employees, the employer faces penalties for every employee who elects federally subsidized coverage, up to $3,000 annually but prorated per month. Large employers will face decisions about how much employees will be contributing to their health insurance coverage. The difference is that according to the Department, the 9.5% threshold under the Affordable Care Act applies to the individual’s coverage, not family coverage. Under the ACA, an employee may opt for the federal subsidy if unable to get affordable insurance through the employer, and affordable is defined at this 9.5% threshold. This ruling has the potential to save the federal government money if fewer people opt for coverage through insurance exchanges. The effect on business, of course, would be the opposite.