Under health care law, there are health insurance requirements for employers of all sizes. Non-compliance with these requirements can lead to costly fees. To help, this article provides a summary of key small business health insurance requirements, with links to dive in deeper.
General Small Business Requirements
All small businesses should be knowledgeable about these general health insurance requirements:
Requirement to Offer Health Insurance (50+ FTE only)
Health care law requires larger employers to either offer affordable health insurance coverage or pay a penalty. But remember, the “Employer Shared Responsibility Payment” only applies to employers with 50+ full-time equivalent employees. For small employers with fewer than 50 FTE employees, there is no requirement, and no penalties, for not offering health insurance coverage. Read more about the requirements for 2016.
All employers, regardless of size or health benefits offerings, are required to provide certain information to employees about coverage options on the Marketplaces. See notice requirements here.
Requirements of Offering Health Benefits
Small businesses who offer formal health benefits should be knowledgeable about the following requirements:
Group Health Plan Reforms (“Market Reforms”)
Under health care law, all group health plans must meet these standard requirements:
- No Cost-sharing for Preventive Health Services
- No More than a 90 Day Waiting Period
- Extension of Dependent Coverage
- Summary of Benefits and Coverage (SBC)
For more information on these requirements, and how they impact different types of group health plans, see this in-depth article.
Health Care Reporting
Employers who have 50 or more full-time equivalent employees, are a health insurance issuer, or offer a self-insured health plan must complete annual health care reporting. Read more here about the reporting requirements.
Limits on Flexible Spending Accounts (FSAs) Contributions
For plan years beginning on or after January 2013, the maximum amount an employee may elect to contribute annually to a health care flexible spending arrangement (FSA) is $2,500, subject to cost-of-living adjustments. The contribution limit only applies to elective employee contributions and does not extend to employer contributions. Additionally, there are new use-it-or-lose it rules, effective since 2013. Read more here.
Workplace Wellness Program Rules
The maximum reward to employers using a wellness program contingent on employee health is currently 30 percent of the cost of health coverage. The maximum reward for programs designed to prevent or reduce tobacco use is 50 percent. Read more about wellness rules here.
Medical Loss Ratio Rebates
Under the health care law, insurance companies must spend at least 80 percent of premium dollars on medical care. Insurers that don’t meet the Medical Loss Ratio requirement must provide rebates to policyholders. Employers who receive premium rebates must allocate the rebate properly.
Employer Health Care Arrangements (Employer Payment Plans)
Under health care law, employers who use employer payment plans or non-compliant employer health care arrangements are at risk of being fined a $100 dollars per day, per employee, as of July 1, 2015. Employers with an employer payment plan, or who are reimbursing employees formally or informally, should ensure the practice complies with the group health reform requirements.
While small businesses are exempt from many of the larger health reform requirements, there are reporting and health insurance requirements applicable to employers of all sizes. Using this list as a reference, small employers should ensure their benefit offerings and reporting practices meet these requirements for 2016.
Do you have questions about small business health insurance requirements in 2016? We’d love to hear from you. Leave a question or comment below.