MURFREESBORO — Compliance with the Affordable Care Act is crucial for businesses since the new law is complex and ever-changing, an insurance benefits advisor said Wednesday.
Joe Lacher, group benefits advisor for The Crichton Group in Nashville, gave a presentation on the ACA, or Obamacare, to a crowd of about a dozen people at the Small Business Development Center. The center is operated by Middle Tennessee State University at the Rutherford County Chamber of Commerce. The Crichton Group bills itself as the largest independent insurance agency in Middle Tennessee.
There have been more than 3,000 changes to the ACA, Lacher said.
“It is a very big, scary, moving law,” he said. So much of the ACA has been delayed, that “they’re trying to put it together like a puzzle.”
Some, but not all portions of Obamacare have been delayed. Current requirements for the ACA this year include:
* States must have operational insurance exchanges or participate in the federal exchange. Tennessee does not have an exchange, but residents can sign up for the federal exchange.
* Individual mandate: Everyone is required to have insurance or be prepared to pay a penalty. (People whose insurance was cancelled may qualify for a hardship waiver.)
* Businesses must offer a new employee insurance within 90 days.
* Pre-existing health conditions may not be excluded from coverage. If a person has had a certain condition, the insurer may not exclude that condition (a practice that is called “lasering.”)
* There are no annual or lifetime limits on a policy.
***Who are employees?
One of the biggest challenges for small businesses is keeping track of employees who must be offered insurance, since part-time and seasonal employees may fall into the ACA’s mandate, Lacher said. The government uses a complex formula.
In 2015, businesses of 100 or more full-time equivalent (FTE) employees must offer insurance. In 2016, businesses of 50-99 FTE employees must offer insurance. Those requirements were delayed from a 2014 implementation.
Applicable large employers must offer minimum coverage to all full-time employees or face penalties.
But what is a full-time equivalent employee? They have an average of at least 50 FTEs in the prior calendar year, or any employee averaging 30 hours of service per week (including paid time off). A formula mixes together the number of full-time employees total hours of service by part-time employees and divides by 120 to find an average called the FTE.
If a company does not offer what is considered to be an affordable health insurance plan, and even one employee signs up for a plan on an exchange, the government will slap a $3,000 fine on that company. Affordable is defined as no more than 9.5 percent of an employee’s income.
Healthcare.gov asks applicants if they have access to affordable insurance at work, and if the answer is no, the person may qualify for a government subsidy to help buy insurance. The portion of the ACA that verifies affordability, however, has been delayed. But, if the government later determines an employee lied about affordable access, he or she will be considered to have committed fraud.
“It’s not up to you to decide if it’s affordable,” Lacher said, meaning you must use the 9.5 percent benchmark.
***Coverage fine print
Just because a company such as a convenience store has high turnover does not exempt it from being required to offer insurance, if the formula says it must do so, he said. And when those employees do leave, they would qualify for COBRA.
Also, the ACA does not require companies to cover spouses of employees — only the employee and child must be covered. Some businesses are dropping spouse coverage or charging high rates. Children qualify on a parent’s plan until age 26.
A person who does not have insurance will be fined. That amount will increase over the next three years. This year’s penalty is $95 per adult and half that for each child, or up to 1 percent of family income, whichever is greater. For 2015, the fine is $325 per adult and half that for each child, or up to 2 percent of family income, whichever is greater. For 2016, the fine is $695 per adult and half that for each child, or up to 2.5 percent of family income, whichever is greater.
Leroy C. Cunningham, senior business development specialist for the Small Business Development Center, said he understands the frustration of small–business owners who feel intimidated by all the red tape involved with the ACA.
“You’ve got to focus on your business,” Cunningham said. “You probably need to outsource this.”
Lacher said he recommends to clients that they do not let the ACA’s mandates dictate whether they grow their businesses.
“Don’t let insurance stop you from growing your business,” Lacher said. “You can’t let this stuff totally run your life, your business.”