Since 2014, individual health insurance premiums have been increasing rapidly, usually around 50% per year. Even with those increases, however, from 2014 – 2016 many employers still thought it was financially beneficial to not offer group health insurance to employees. All of that will change for 2017.
Small Group Health Insurance Requirements
At around this time last year an important piece of the Affordable Care Act was ready to take effect in Minnesota – the transition of employers with 51-100 employees to the small group market instead of the large group market. This would have meant a substantial increase of people insured through the community rated small group risk pool, which would have substantially altered health insurance rates for thousands of people.
Sometimes small business owners ask the question: Why should I use a broker at all, much less you as a broker? There are several reasons, but here are a few:
Many MN small businesses are wondering if they should offer an employer sponsored group plan or simply pay for employees’ individual plans. In light of recent IRS guidance, employers must be very careful when pay for employees’ individual health insurance plans. Not only do they have to treat any payment toward individual premiums as wage (and thus subject to FICA and taxed), but they also cannot associate those payments with any individual plan. That means any “reimbursement” or payment has to be a salary increase that is the same for every employee in the job class, even if the employee is on their spouse’s plan. If the payments are in any way tied to an individual health plan, the possible penalty is $100 per day per employee.
Many small employers believe the Employee Retirement Income Security Act (ERISA) only affects large businesses or retirement plans. That is, however, not the case. ERISA affects small businesses as well, and possible fines can be levied against small businesses not in compliance.
A big part of the Affordable Care Act is being implemented next year, and planning should begin soon for MN small businesses. Starting January 1, 2016, businesses with more than 50 full-time employees but less than 100 full-time employees are transitioning from the large group platform to the small group platform per Affordable Care Act requirements. What does this mean for those MN businesses offering group health insurance benefits?
New IRS Guidance has been released that will dramatically change the way small businesses help their employees pay for health insurance. IRS Notice 2015-17 states that employers who offer employees reimbursements or pay premiums for employees' individual health insurance plans will be subject to a $100 per day per employee excise tax. The interpretation from the IRS is that any reimbursement or payment for employees' individual plans is actually a group health insurance plan, and because the payment is a group plan, it does not meet Affordable Care Act requirements for health insurance plans. Enforcement of this notice will go into effect July 1, 2015.
Effective October 1, 2013, employers must notify new and existing employees in writing about their state’s health benefit exchange and advance premium tax credits available through the exchange to help them purchase individual coverage. The requirement is contained in Section 218b of the federal Fair Labor Standards Act of 1938. The U.S. Department of Labor is charged with issuing regulations providing more specific guidance on the notice but has not yet done so. Section 218b requires the following information be included in the notice:
One of the most advantageous aspects of the Affordable Care Act is a premium tax credit for small businesses. This credit allows small businesses that meet certain conditions to qualify for a tax credit up to 50% of what they contribute toward their employees’ health insurance premiums. Below are the conditions that a small business must meet in order to qualify:
Recent Blog Posts
Health Insurance Quotes
GET QUOTES NOW!