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Small Business Preparation For Health Care Reform - Part 2
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Small Business Preparation for Health Care Reform  -  Part 2

This article is Part 2 on the topic. See Part 1, which includes details on the definition of a covered employer under the Patient Protection and Affordable Care Act of 2010 ("PPACA").

There is an estimated 30 million uninsured Americans, out of a total population of 313.9 million, including 143.1 million employed and 12.2 million unemployed.

A covered employer under PPACA is referred to as a “large employer”.

When calculating the number of full-time equivalent employees to determine employer coverage, the owner of a business, as well as the family members of the owner who work in the business, must be included in the calculation.

“Affordable” means, an employee’s health care insurance premium must be less than 9.5% of his/her household income. There are at least 3 ways to determine this; perhaps the simplest is, make sure that the employee share of annual health insurance premiums, for the lowest-cost coverage option that also meets the minimum value requirement, does not exceed 9.5% of the amount reported in Box 1 of Form W-2 for an employee (the “W-2 Safe Harbor”). Apply this calculation to the lowest paid full-time employee.

“Minimum value”, at this point, means, the employer must pay at least 60% of the total allowed costs of benefits under a health insurance plan, considering such factors as deductibles and co-pays. A minimum value calculator will be made available in the future by the IRS and U.S. Department of Health and Human Services.

A large employer must offer health care insurance coverage to at least 95% of its full-time employees and their dependents. A “dependent” is defined as the children of an employee (up to 26 years of age), but does not include the employee’s spouse. Therefore, a large employer must offer dependent coverage, but is not obligated to offer family coverage.

The offer of coverage should be made, even if the employer is aware that a full-time employee is covered under his/her spouse’s health plan at another company.

Generally, an employer will be required to offer health insurance coverage within three (3) months of a full-time employee’s hire date. The customary 90-day probationary period for new hires is allowed under PPACA.

The U.S. Department of Labor has postponed the requirement that all employers must provide employees and new hires with written notice that a state-based health insurance Exchange is an available option. This written notice requirement has been postponed from March 1, 2013 to the summer or fall of 2013. More details are forthcoming.

The rules and regulations to implement PPACA are evolving. For questions, speak with a human resources consultant, health insurance agent, or employment lawyer.

For Part 1, go to a previous Street Articles publication.


Street Talk

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