In an unexpected announcement pre-July 4th the big news was Obamacare Employer Mandate Delayed with penalties under the Affordable Care Act (ACA) until 2015. The mandate also known as the “Employer Shared Responsibility” requires employers with 50 or more FTEs to offer affordable health insurance coverage to their workers or face financial penalties for not doing so. Those penalties would originally have been applied beginning in 2014.
There has been a follow up guidance issued last week July 9th by the IRS. According to the IRS, the delay will give employers more time to prepare for the change in how health insurance is provided and will also give the Obama Administration time to simplify the insurance-related reporting requirements that employers face. This transition relief appears to come with “no strings attached.” Although the IRS guidance encourages employers to voluntarily comply with the employer mandate and maintain or expand health care coverage in 2014, the IRS will not impose penalties for a failure to do so.
Although the IRS guidance encourages employers to voluntarily comply with the employer mandate and maintain or expand health care coverage in 2014, the IRS will not impose penalties for a failure to do so.Notably, the guidance issued on July 9th also does not require employers to make “good faith” efforts to comply. As a result of this transition year, employers will have the option of deciding to what extent (if any) they will continue efforts to comply with the employer mandate during 2014.
Employers who intended to rely on one of the transition rules previously announced for 2014 should keep in mind that the latest IRS guidance does not provide special transition rules for 2015. Other group health plan requuirements still apply as discussed in our prior blog Essential Health Benefits Not Delayed.
This means that for plan years beginning on and after January 1, 2014, all group health plans must:
Eliminate all pre-existing condition exclusions (regardless of age);
Maximum Cost Sharing Deductible to $2,000/individual ($4,000/family); limit in-network out-of-pocket maximums to $6,350/individual ($12,700/family)
Individual Mandate Still Applies. individuals will still be required to obtain health care coverage or pay a penalty for each month they do not have coverage, beginning January 1, 2014
Exchanges (Marketplaces) Open for Enrollment October 1, 2013.
The IRS notice makes it clear that individuals who enroll in coverage on the marketplaces will continue to be eligible for a premium tax credit if their household income is within a specified range and they are not eligible for other minimum essential coverage.
Employers Must Send Notice of Exchanges (Marketplaces) Before October 1, 2013. These notices must be sent to current employees by October 1, 2013. Then, beginning October 1, 2013, employers must send this notice to new hires within 14 days of their start date.
New taxes still apply – Patient Centered Outcomes Research Institute (PCORI) excise taxes and transitional reinsurance program fees;HRA/HSA/FSA clients also pay a monthly $1/employee tax.
We will continue to monitor ACA developments and will provide you relevant updated information when available. In the meantime, please visit to view past blogs and Legislative Alerts at https://360peo.com/feed.
The pre-July 4th news of Obamacare Employer Mandate Delayed until 2015 decision may have started early fireworks. The administration did not, however, delay the larger new requirements facing employers who choose to offer health insurance in the small group market––employers with less than 50 workers. The biggest requirement – Essential Health Benefits not delayed.
Whether the rationale was to alleviate business pressure to meet new mandates by Jan 2014 or the real fear that Employers have already begun making necessary employment hours cut backs to avoid the $2,000 penalty. A $3,000/employee penalty was also looming for Employers offering unaffordable insurance.
Keep in mind that this limited delay does not affect other provisions of the Affordable Care Act slated to go into effect in or before 2014, such as:
Individual mandate which requires most individuals to purchase insurance by January 1, 2014, or pay a tax penalty.
a 90-day maximum on eligibility waiting periods;
monetary caps on annual out-of-pocket maximums;
total elimination of lifetime and annual limits (including expiration of waivers that permitted certain “mini-med” plans and stand-alone Health Reimbursement Arrangements to stay in place through plan years beginning in 2013);
The biggest impact is the Essential Health Benefits (EHB) which will not be delayed and this affects fully insured or ALL Small Businesses. While small employers are not required to offer coverage, if they do then they come under that large number of new essential health benefit mandates and group rating rules that won’t apply to large employers. These small group requirements are expected to increase the cost of small group coverage by an average of 15%––with wide variation by state and the average age of the group.
An employer sponsoring a Healthy NY or Brooklyn Healthworks Plan today for example would be disqualified as this does not carry all Essential Health Benefits. The very popular Healthy NY is slated to shut down for Jan 2014 and most Employers have just received this transition letter last week. Individual and Sole Prop Healthy NY is terminating and small business Healthy NY must be reapplied under a new higher cost version. While the plan did not carry Ambulance and had a $3,000 limited Pharmacy plan it is priced 35% below market and did manage to capture hundreds of thousands that would otherwise had been uninsured. The same is true for those on Hospital Only or high deductible catastrophic plans.
So what are these Essential Health Benefits?
All individual and small group policies on and off-Exchangemust cover ten categories of minimum essential health benefits.
Under the ACA, each state must choose one plan from among popular health insurance plans offered statewide to serve as a benchmark for EHBs. The benchmark plan will act as the model for how plans must define and include EHBs in their coverage — in both the individual and small group markets. New York selected the benefits of the State’s largest small group plan as its EHB benchmark. There is also a Minimum Value requirement, See NYS Minimum Value STANDARD BENEFIT DESIGN COST SHARING DESCRIPTION CHART (5-6-2013) Some of the plan’s components include:
No cost-sharing for routine preventive services
Pediatric dental and vision coverage
Habilitative and rehabilitative services, including physical therapy, speech therapy and occupational therapy
Rich mental/behavioral health services
No annual or lifetime dollar limits on benefits
Conversely, a shift to self- insurance is underway as self-insureds can avoid many taxes and instead ONLY cover the Minimum Essential Coverage which is different than the Essential Health Benefits. The strategy coupled with reinsurance is a great sophisticated model usually reserved for larger groups. This segment will be able to avoid local additional State mandates which in States like NY account for 14-16%% of the costs. Thats a total swing of 30% for a fully insured NY group. Also, self-insured groups do NOT pay added taxes such as the health insurance tax of $9 Billion annually over the next 10 years.
The administration has shown their sensitivity to larger groups. This segment already covers 94% of its employees at least in some fashion while small businesses cover less than 50%.
Why not do the same for small employers as well? And while they are at it, use the time to reconsider the impact many of these regulations are likely to have on the number of small employers continuing to offer coverage.
For a downloadable guide on self-insuring and secondary market reinsurance for your group please send contact form below. In the meantime, please visit to view past blogs and Legislative Alerts at https://360peo.com/feed.