ACA Requirements for Employers

Short Term Medical Insurance

SHORT TERM MEDICAL

Short term health insurance for temporary gaps in coverage.

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Please note, our Short Term Medical insurance is intended for temporary gaps in health insurance.  It is not compliant with the federal Affordable Care Act and does not cover expenses related to pre-existing conditions.

Individual citizens aren’t the only ones affected by insurance coverage requirements under the Affordable Care Act (ACA). Larger companies are also subject to the ACA coverage provisions issued by the U.S. Treasury Department and Internal Revenue Service on February 10, 2014.

These coverage provisions, known as the Employer Shared Responsibility provisions, require large businesses to offer compliant employee health coverage or owe an Employer Shared Responsibility payment. These employer provisions became effective on January 1, 2015.

Understanding the Employer Shared Responsibility Provisions

Small Employers: Companies with fewer than 50 full-time employees are exempt from the Employer Shared Responsibility provisions. According to the U.S. Treasury Department, these smaller companies make up approximately 96% of businesses.

Large Employers: A business with 50 or more full-time employees is considered a large business under the Affordable Care Act and is therefore applicable to the employer provisions.  To avoid the fine for failing to offer health coverage, these large businesses must offer coverage to 95% of their full-time employees beginning in 2016.

Understanding the Employer Shared Responsibility Payment

According to the IRS, if these large employers do not offer affordable health coverage that meets a minimum standard of coverage to at least 95% of their full-time employees (and their dependents), the employer may be subject to the Employer Shared Responsibility payment if at least one of its full-time employees receives a premium tax credit for purchasing individual coverage through the Health Insurance Marketplace.

  • The payment is equal to the number of full-time employees the company employed for the year (minus up to 30) multiplied by $2,000, as long as at least one full-time employee receives the premium tax credit.
  • For an employer that offers coverage for some months but not others during the calendar year, the payment is computed separately for each month for which coverage was not offered. The amount of the payment for the month equals the number of full-time employees the employer employed for the month (minus up to 30) multiplied by 1/12 of $2,000.

2016 Coverage Requirements

  • Large companies (50+ full-time employees) must offer health coverage to 95% of full-time employees or owe an Employer Shared Responsibility payment.

Employee Classification Categories

An employee’s classification as a full-time employee is based on his or her hours of service. Under the Employer Shared Responsibility provisions, an employee is a full-time employee for a calendar month if he or she averages at least 30 hours of service per week. Under final regulations, 130 hours of service in a calendar month is considered the monthly equivalent of at least 30 hours of service per week.

Federal health coverage regulations clarify whether the following types of employees qualify as full-time employees:

  • Volunteers: Bona fide volunteers such as firefighters and emergency responders who work for a government or tax-exempt organization are not considered to be full-time employees.
  • Educational employees: Teachers and other educational employees aren’t treated as part-time solely due to summer break.
  • Seasonal employees: Workers in positions for which the usual employment is six months or less generally aren’t considered full-time employees.
  • Student work-study programs: Service work performed by students taking part in federal- or state-sponsored work-study programs won’t be counted in determining if the students aren’t full-time employees.
  • Adjunct faculty: Employers of adjunct faculty are to find a reasonable and consistent method of crediting hours of service for adjunct employees.

What the Employer Mandate Means for Employees

If you work full time for a large company, your employer will be required to offer health coverage to you or be subject to a fine. If your employer chooses to forgo offering health coverage and instead pay the fine, you can purchase individual coverage on the health insurance exchange without worrying about being rejected.

Pricing for coverage is based on five factors, and health isn’t one of them.

  1. Age: Older people may pay up to 3 times more than younger people.
  2. Geography: Competition, local regulation, and cost of living all affect cost.
  3. Individual vs family enrollment: Insurers can charge more for a plan covering a spouse and/or dependents.
  4. Tobacco use: Insurers can charge up to 50% more for tobacco users.
  5. Plan category: Marketplace plans are available in 5 categories: bronze, silver, gold, platinum, and catastrophic. These categories reflect how you choose to split costs with the plan.

Finding a Short-Term Solution

HCCMIS offers Short Term Medical (STM), underwritten by HCC Life Insurance Company. STM is health insurance for people younger than 65 looking to cover themselves or their families in temporary situations, like deciding whether to purchase employer coverage. You can customize your coverage to meet your needs by selecting the deductible, coinsurance, and length of coverage.

If your employer doesn’t offer health coverage and you decide to buy a plan in the Health Insurance Marketplace, you’ll face a coverage gap of 15 to 45 days. STM is a great complement to an ACA plan, as it offers affordable coverage throughout this waiting period. Coverage for STM policies can be as short as one month, and you can tailor the length of coverage to your individual situation.

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