Everything You Need to Know About ACA Compliance in 2016

ACA ComplianceI know the chances that this article’s readers are probably not reading this as a bedtime story or “just for fun”. But as dry as understanding the ACA mandate can be, it is important to embrace it with both hands… that way your hands will be tied and you won’t have to worry about hurting anyone!  I have seen many things improve as a result of the mandate, but have also seen individuals and businesses be impacted from negligence to compliance regulations. I am going to take you down the delightful trail of “Everything You Need to Know About the ACA Mandate”! Buckle up, all extremities in the cart, and we’re off!

Large Businesses and Midsize Businesses (who may be larger than they think)

On our first stop, we will explore the changes pertaining to employers. There have been continuing changes since the mandate was first introduced, so let’s make sure you are up to speed.

What does ACA compliance mean for your business?

It has been required for businesses with 100 or more full-time employees to offer health care benefits to their employees. Now, if your business has 50 or more full-time equivalents (FTE) based off the prior year’s numbers, then your business is now considered an ALE – Applicable Large Employer (and you have to offer health coverage!). Before you get too excited, let me explain. An employee that works more than 30 hours a week is considered a full-time employee. The mandate has created a formula to merge your part-time staff and combine them to make full-time equivalents. For example: Say you have a total of 80 employees on the payroll. You have 30 full-time employees who work 30+ hours a week.  The rest are part-time and (for easy math) all work 15 hours a week.  Those part-time employees are paired together to create full-time equivalents, and would add another 25 full-time employees to your tally. So your business would be considered an ALE, with 55 FTE. This change in the definition has confused many employers and caused them to pay noncompliance fines—which we will get into in another section.

If you are a business owner who has been deemed a large employer, chances are you have organized yourself to handle the compliance paperwork and have probably issued your 1095 tax forms to your employees. If you are a small business, and are thinking of growth, keep this formula in mind with regard to your business size. If you have not already, start tracking your employees on payroll each month and their average hours. It will be a much smoother transition during your growth period to start the reporting organization now.

Uh oh, there is a sharp twist and a steep drop ahead, hold on tight!

Is your offering Affordable?

So you have decided on an insurance plan, and benefits package to offer your employees…and it seems to be the best value to you. How do you know if it is considered affordable to your employees? Surprise, there is another formula for that! Bear in mind, you are offering the benefits to your full- time employees only.  The chosen plan will pass the affordability test if the employee’s required contribution for self-only coverage does not exceed 9.66 percent of the employee’s household income for the year. Let me provide another handy example. In Florida, the minimum wage is $8.05/hour. If your lowest paid employee makes $8.05/hour and works 40 hours a week, the employee’s “Safe Harbor” salary amount (the threshold amount requiring affordable coverage) is $16,744. Multiply that by 9.66% to find that the maximum amount this employee can pay towards their health insurance is $1,617 a year, or $135 a month. When looking at your employee premiums for the health benefit, make sure that their contribution is that or less. Have I lost you yet?

I almost see the end of the ride….

How does this impact my bottom-line?

I hear the voices in your head overwhelmed with new rules, and wondering what you think you will have to re-arrange in your budget to accommodate these new standards. If we can just take a moment of peace, and really look at the broad picture, I think it may all fall into place.

Non-compliance can cost you. Honestly, it can cost you more for defiance of compliance than to embrace the value of offering a benefits package to your employees. You thought you were reading an article, not solving math problems…but, I have another formula for you! You are a large employer with 75 full-time employees. You have decided you are above the law, and fail to offer health insurance to your employees. One of your employees goes to the marketplace to get a subsidy, and fills out that their employer does not offer health benefits. You are going to get slapped with a $96,300 fine for failure to offer coverage! We have arrived at this total by taking your 75 employees minus 30 (the government’s grace) multiplied by $2,140. Ouch!  Moral of the story, in the “pay or play” ballgame… play nice, and by the rules…it’s better than the consequences.

One last twist and round-a-bout..

When choosing what plan to offer for your benefits package, there are guidelines as to what is deemed Minimum Value or Minimum Essential Coverage. Most plans that the carriers now offer are considered a qualified plan. A quick way to ensure your plan is qualified is to see if a metal tier of Bronze, Silver, Gold or Platinum labels the plan. The tiers stand for the level of cost sharing or actuarial value that increases from Bronze to Platinum. A Bronze level plan is a very basic plan with minimal benefits, whereas a Platinum plan is a benefit rich plan with very low deductibles and copays. There are plans that can be offered that cover just preventative care on  the most basic level of benefits-called a “MEC” plan. They are a non-traditional form of health insurance, and you aren’t completely safe from the penalties. It’s a dicey solution to the reform, as you comply with Part A of the mandate, but are at risk of the Part B compliance fine. Let me circle you back around to the last example.  You have 75 full-time employees and offer a MEC plan to those employees. One of them receives a subsidy from the marketplace because the MEC plan that you offered him doesn’t meet the Minimum Value Requirements. Because he is now disgruntled, he runs and tells his best friend, who tells her best friend, etc…and before you know it, 15 employees have gone to the marketplace to receive a subsidy. For each of the 15 employees receiving that subsidy, you are now fined $3,240 – totaling $48,600. Not to mention, the costs associated for offing the plan combined with the fine, are probably more expensive than just offering a qualified health plan from the start. While we are talking about the worth of a health plan, have you considered how the offering helps in retaining valuable employees and what that means for your company?

As we are entering back into the loading zone, may I remind you to remain seated, buckled in until a complete stop, and check under your seat for any stray belongings.

Final Frontier

Now that you know the twists and turns, (and all the formulas) in regards to the mandate, I hope you feel confident in your business, and the upcoming choices you will be making on your health benefit offerings. I will leave you with a bullet point list of 5 reasons why offering benefits to your employees enhances your company:

  • Better employee morale– Showing you care about your employees, helps them to be more invested and loyal.
  • Healthier employees– More likelihood that with benefits, employees are taking advantage of their check-ups, and preventative steps.
  • Better job performance– Because employees are happy and healthy, they are not taking off sick days, and care about their team and productivity.
  • Minimize your turnover rate– Employees feel valued, and are dedicated to stay at a place where they are happy.
  • Increase your company appeal– Because your employees are happy, healthy & loyal, word will travel that your company is the place to be!

Food for thought!

I know I had a delightful ride, and hope you shared the same!

Stay tuned for my next post on “What The Mandate Means For Individuals”.

Kim Kato | Employee Benefits Advisor
kkato@w3ins.com | 727-522-7777 ext 285

6 Reasons Why “Technology-Backed” Trumps “Technology-Based” Employee Benefits

What do you expect from your broker when offering employee benefits? 

Employee BenefitsAre you looking for a trusted advisor who offers the expert help and service needed for you to choose the best employee benefits for your company? Or are you looking for a way to streamline paperwork and ease the administrative burden on HR? Either way, an independent insurance agency, like Wallace Welch & Willingham, is always going to be your best bet.

An independent agency gives you the expert guidance that makes the benefits selection, implementation, and analysis a smooth process. We use technology to offer you a variety of tools and resources that make the benefits administration process virtually painless.

If you are considering moving your HR tasks to a platform like Zenefits or Gusto you must take a look at the bigger picture. These companies can give you HR software, with benefits thrown into the mix, but they are, first and foremost, technology-based and technology-focused. You will not receive the benefits support and personalized service that a local agent provides.

Check out what Wallace Welch & Willingham can offer compared to these new technology-based companies.

1.) Industry Focused

We are focused on your needs and have the expertise necessary to guide you through the plan-choosing process. We’re here to answer questions, provide guidance, and support your HR needs with our HR tools: MillsonJames and the Seay HR Hotline. We’re here to serve you, and we have the personalized service, backed by technology, to help you succeed.

Technology-based companies are focused on providing you with HR software. Once they lure you in with free basic HR technology, they encourage you to switch to them for your benefits—helping  you with benefits is a concern secondary to the software.

2.) Local Presence

Wallace Welch & Willingham is located near you, and we’re proud members of this community. We understand what’s happening in the benefits marketplace, both locally and nationally, and we understand your business. If you want to communicate on the phone or over email, we’ll respond promptly. We’ll be there to sit down face-to-face and guide you through the benefits selection and strategic planning process. When you need us, we’re here for you.

Technology-based companies are headquartered in other states, working in virtual clouds. Zenefits, for instance, is based out of California. Their representatives rarely, if ever, meet with clients and they lack a local presence and understanding. If you enroll in benefits through them, you forfeit the ability to have personalized, face-to-face meetings to help you achieve your goals.

3.) Knowledge & Experience

We help you choose the best benefits, guide you through the open enrollment process, run health claims diagnostics, and sit down with you to develop strategic plans for lowering costs due to health claims. We understand that benefits are more than just benefits—they are an important recruitment and retention tool and choosing the right ones will help you keep your employees happy. We also provide you with compliance information and employee communications, so you are never left to struggle on your own. W3 has been in the insurance industry for over 90 years. We have the knowledge behind our products to offer the best solutions to our clients.

Technology-based companies will automate what they can, but, unfortunately, expert insight and advice cannot be obtained from a computer. Their sales people have were hired (recently) with one objective; to sell their product. Their ability to compete with local insurance agencies based on product knowledge is extremely limited.

4.) Service & Year-Round Support 

We are here for you year-round, and you never have to wonder if you’ll be able to reach someone. While open enrollment is often the most challenging time of the year, we don’t abandon our clients the other 11 months of the year. When you work with us, you’ll personally know who you’re talking to.  We bring an understanding of your business and a solid history of past exchanges to each new conversation. We provide consistent, prompt communication and guidance, and we are ready to serve you.

Zenefits is massive, but its size can be a disadvantage for clients who want to know who they are speaking to. You also want to know that your broker has a contextual and institutional understanding behind each new question or concern.

5.) Pricing Transparency

We are upfront with you about costs. If we are ever going to charge you a fee for an added service, we’ll let you know in a clear and timely manner so you can make an informed decision. We promise never to say “free” if we don’t mean it.

Technology-based companies claim to be free.  That statement is true for their “core features, ” however, beyond those basics, clients run into extra costs. These costs often include a monthly fee per-employee for certain features and even a per-employee charge for delaying implementation of core features.

6.) Compliance and Content

We provide our clients with content to meet business and employees’ needs.  We give you access to W3 Client Connect, a content portal, where you can target the information you need if you want to self-serve. Need help with compliance? Want employee newsletters? Need articles explaining benefits or related topics? Thinking about starting a wellness program? Want to make benefits education fun with short videos for employees? Whatever you’re looking for, we can deliver customized content and training for you.

These new technology-based companies don’t have a content library, employee educational articles, videos or newsletters, or wellness staff and program materials.

Technology-backed or Technology-based? 

When you are faced with a choice between Wallace Welch & Willingham and a technology-based company, consider what makes us different. Are you looking for a trusted advisor who can offer assistance while being backed by technology to make the process easier? Or are you looking for a technology-based solution that kicks service and expertise to the curb?

If you’re looking for a benefits expert who is technology-backed to meet your needs, contact Wallace Welch & Willingham today.