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Coronavirus Help Center – tools to help you navigate today's challenges and opportunities.

Health Care Reform Checklist: Are You Ready?

Health Care

While the enforcement of the Employer Shared Responsibility (ESR) provisions of health care reform (HCR) has been delayed until January 1, 2015, it's important for applicable employers to begin preparing now in order to comply. Use this health care reform checklist to prepare your business for the coming provisions, and find out more about compliance and avoiding penalties.

Determine employee status

Large businesses (companies with 50 or more full-time workers, including full-time equivalent employees) are subject to ESR. Full-time employees are defined as individuals who work at least 130 paid hours a month (including vacation, holidays, sick time, disability, layoff, jury duty, military duty, or leave of absence). That works out to be about 30 hours a week. Full-time equivalent (FTE) employees are a little trickier to calculate. Take the hours worked by all part-time employees (capped at 120) in a month and divide it by 120. Add that number to the total of full-time employees and if it's 50 or more, you're considered an applicable large employer and, therefore, potentially liable for penalties under ESR.

Track your employee hours

This is important in determining which of your employees qualify as full-time and, thus, should be offered adequate coverage to avoid potential penalties. Be sure to capture accurate time clock logs of all employees.

Avoid ESR penalties

There are several ESR penalties which may affect your business. For example, applicable large employers who do not offer adequate coverage to their full-time employees, and have at least one full-time employee who gets a premium tax credit for coverage on the Marketplace, could face a penalty of up to $2,000 per full-time employee (after the first 30).

Be sure current medical insurance options meet MEC, minimum value, and affordability standards

Applicable large employers that fail to offer full-time employees insurance that meets the minimum essential coverage (MEC) requirements, or provides a minimum value or that exceeds 9.5 percent of household income for an employee, may be subject to a penalty if a full-time employee receives a premium tax credit for coverage through a Marketplace.

Enter health insurance plan value on Form W-2

Employers filing 250 or more Forms W-2 in the prior tax year must include the value of an employee's health coverage benefits on their W-2. This includes the cost of major medical premium (both employer and employee paid), certain health flexible spending accounts (FSA) salary reductions, premiums for self-insured plans subject to COBRA, certain wellness programs, certain Employee Assistance Programs (EAP), and certain onsite medical clinics.

Provide adequate information to your employees about the provisions

It's very important to be well informed about all facets of health care reform, not only to avoid penalties, but to serve as a useful resource to your employees. 

Beyond ESR provisions

Provide employer notices

The Affordable Care Act (ACA) requires employers to notify their new hires in writing of coverage options like the federal and state health insurance marketplaces within 14 days of their start date.

Learn about tax credits

The small business tax credit (SBTC) is reserved for companies with fewer than 25 full-time employees earning an annual wage of less than $50,000. (This figure will be adjusted for inflation beginning in 2014.) A qualifying employer can file for a credit for up to 50 percent of premium as long as they obtain coverage from the federal/state Small Business Health Options Program (SHOP).

Summary of Benefits and Coverage (SBC) and Uniform Glossary

Group health plans and their plan administrators are required to provide applicants, enrollees, beneficiaries, and participants for certain plans with a Summary of Benefits and Coverage (SBC) and Uniform Glossary.

This website contains articles posted for informational and educational value. Paychex is not responsible for information contained within any of these materials. Any opinions expressed within materials are not necessarily the opinion of, or supported by, Paychex. The information in these materials should not be considered legal or accounting advice, and it should not substitute for legal, accounting, and other professional advice where the facts and circumstances warrant.
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