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Pay it or Play it: Preparation Not Procrastination

All employers with 50 or more full-time employees will need to make a decision in January 2015 whether they are going to “pay or play.” Preparing now can be crucial to ensuring you make the right decision for your organization and avoid unwelcome surprises come 2015. As you make your decision, take a careful look at these three key areas:

 

1.) Affordability:

Health coverage is affordable from an employer when an employee’s premiums do not exceed 9.5% of the employee’s a.) W-2 Form, wages from that employer, b.) monthly wages equal to the hourly rate of pay X 130 hours or the employee’s monthly salary, or c.) the federal poverty line for a single individual.

These premiums are those paid on a minimum value, lowest cost coverage plan. To qualify as minimum value, a plan must pay at least 60% of the total allowed costs stated under the plan. Employers can use 3 methods to determine minimum value:

1.) IRS generated minimum value calculator,
2.) Safe Harbor Checklist,
3.) Actuarial certification.

2.) Full-time status:

Many tax penalties will occur because of the lack of quality systems that clearly differentiate eligible from ineligible employees. A full-time, eligible employee is anyone who works at least 30 hours per week in the previous year. Therefore, employee hours in 2014 will affect how much liability your company will face once the employer mandate takes effect next year. Benefits Lawyer, Peter Marathas, says that “employers should be working with payroll and HRIS vendor now to create systems that will flag hours employees work and maintain them in a form that will be suitable for use to prove to the government” (ebn, 2014).

3.) Non-discrimination:

Double checking eligibility can benefit both you and your employees. Employers can use a standard measurement period (SMP) between 3-12 months for ongoing employees in order to define full-time status based on hours worked during that period. On going employees are those which have been employed for at least one complete SMP and have worked an average of 3o hours per week during the stability period. The stability period, subsequent to the SMP and usually the same length, must be at least 6 months long and no shorter than the SMP. Employers can vary the SMP as long as the changes are consistent for all employees under the same category of employment. For example, if an employee is determined a full-time employee during an SMP of 6 months, then he/she must be treated as full-time for the duration of the next 6 months (stability period) even if they work less than the required 30 hours per week.

**Hint: Remember, even if you are part of controlled group with another company, both of the companies are combined to determine if they collectively qualify as a large employer. If so, both of you would be subject to the pay-or-play penalties. However, any tax penalty amount will be individually issued and assessed.

Still having trouble deciding whether paying or playing is right for your company? The following questions can help you start thinking about certain ramifications of both the paying and playing decision.

Pay_or_Play_decision_making

 

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The Feds released more regulations on how insurers and some large employers need to report on plans they are offering and the people that are enrolled one day before the exchanges are set to open.

See this article from The Hill for further clarification.

 

WestLake Financial Group, Inc.

1477 Barclay Blvd

Buffalo Grove, IL 60089

888-WESTLAKE

Affordable is a Relative Term

We have heard reports that the Health Exchange premiums will be lower and affordable, but that would depend on the consumer.  What may be affordable for one person may not be affordable for another with the same income.

This article from Kaiser Health News does a great job going into further detail.

 

WestLake Financial Group, Inc.

1477 Barclay Blvd

Buffalo Grove, IL 60089

888-WESTLAKE

No Penalty for Not Providing 10/1/2013 Exchange Notice

In a recently posted FAQ on the U.S. Dept. of Labor website, the question was asked if there would be a penalty or fine for not providing the notice of the Health Insurance Market place. The answer is no.

Here is the link.  Does this affect your decision as an employer to send this notice out?

 

WestLake Financial Group, Inc.

1477 Barclay Blvd

Buffalo Grove, IL 60089

888-WESTLAKE

How are you keeping track of all the PPACA penalties?

There are more than 10 different things to comply with that fall under the “general compliance” penalty of $100-a-day.  Do you know what those are and if so, who is making sure that your company is complying?

See this article for further explanation of these and more penalties.  And give us a call if you are in need of some help keeping track of them.

 

WestLake Financial Group, Inc.

1477 Barclay Blvd

Buffalo Grove, IL 60089

888-WESTLAKE

What's Obamacare?

With the insurance exchanges set to open October 1st, many Americans are still very unfamiliar with what health care reform does and what it means to them.  If few people go to the exchanges to sign up for coverage, how will it effect the success, or lack there of, of the exchanges?

This article from cnbc.com by Dan Mangan explores this further.

 

WestLake Financial Group, Inc.

1477 Barclay Blvd

Buffalo Grove, IL 60089

888-WESTLAKE

Massive Spike in Health Care Costs

With all the added fees and the costs of having to cover dependent children to age 26, who do you think will shoulder the burden of these costs?  That’s right, the employee.

See this article about how it will be affecting Delta from Fox News by Judson Berger.

 

WestLake Financial Group, Inc.

1477 Barclay Blvd

Buffalo Grove, IL 60089

888-WESTLAKE

More Union Favoritism?

An article just out today by Forbes says that the White House is considering giving subsidies, that were initially intended for the uninsured, to unions.  Is this an effort to placate the union outcry regarding Obamacare?

See the complete article here by Avik Roy.

 

WestLake Financial Group, Inc.

1477 Barclay Blvd

Buffalo Grove, IL 60089

888-WESTLAKE

Obamacare to Encourage Smoking?

Obamacare allows people to be charged higher premiums if they are a tobacco user.  Because of this, some people may not be subject to the individual mandate by saying that they smoke.  Incredible.

See this article from The Orange County Register by Joel Hay for the complete details.

 

WestLake Financial Group, Inc.

1477 Barclay Blvd

Buffalo Grove, IL 60089

888-WESTLAKE

UPS to Drop 15,000 Spouses Due to Obamacare

UPS announced last week that it will be dropping 15,000 spouses of employees from its health care plans due to Obamacare.  Their reasoning is that since Obamacare legislates that your employer must provide coverage or pay a fine, spouses that have coverage available to them through their own employer should take that coverage.  They are also, of course, citing cost as a major factor.  This is a big move by a major U.S. employer and many think it will open the door for other large employers to do the same.

See the complete article here by CBS This Morning by Amanda Cochran.

 

 

WestLake Financial Group, Inc.

1477 Barclay Blvd

Buffalo Grove, IL 60089

888-WESTLAKE