The Affordable Care Act raised the ante on providing health insurance to Americans for U. S. businesses. It mandated that applicable large employers (those with 50 or more full-time employees and equivalent employees) must make offers of minimal essential coverage to 95% of their full-time employees. For some businesses that can be a challenge. As open enrollment season nears, the best course of action for employers to achieve a grade of 95% involves the two C’s: communication and compliance.
Open enrollment is the time period when employers provide all of their eligible employees with health insurance plan options. Some employees find themselves enrolling in an insurance plan for the first time. It’s also the time when errors can strike.
Communication
Your staff may not be fully fluent in health insurance plans. Some may be fresh out of college and this may the first plan they’ve obtained on their own. It’s imperative to have your Human Resources personnel discuss plan options with your employees.
Here are some keys to good communication:
Be as clear and comprehensive as possible. Clear and direct communication can make a significant difference in employees’ understanding of which plan options fit their needs best, and in those employees signing up for the appropriate plans. When providing an Offer of Coverage, have HR prepared with a clear understanding of what each of your plan options offers to employees. Have staff on hand to explain the details and next steps.
Clear up any confusion. Make sure employees are clear on what their ideal plan might be, and educate them on the packages offered. Look back to previous years of open enrollment to review just how smooth or rough the process was. If there have been problems in the past, consider engaging a third-party with ACA experience who can help you develop a more sound approach to providing information to employees.
Compliance
The word “compliance” appears in a lot of discussions surrounding the Affordable Care Act. With specific mandates that surround the law and its many parts, employers must either have in-house compliance expertise or seek outside assistance.
Open enrollment can intensify the possibilities of compliance errors that may lead to IRS penalties. Some violations include: failure to offer minimum essential coverage to 95% of full-time employees, failure to file Form 1094-B, failure to furnish a correct Form 1095-C, and failure to file accurate employee information. The list goes on and the penalties can add up.
In addition, as an employer, the ACA requires that your offers of minimal essential coverage to employees be both affordable and provide the minimum essential benefits under ACA guidelines. If not, your employees are allowed to find plans on the ACA’s Health Insurance Marketplace and potentially receive Premium Tax Credits to subsidize insurance premium payments. These are subsidies your company may be responsible for in the form of IRS penalties at the end of the tax year should your plan be proven unaffordable or it is not properly defended, and your employees failed to understand your plan offering and opted to erroneously obtain insurance through the healthcare exchanges.
Some states add to the healthcare tracking burden beyond the ACA. For example, a new law in Massachusetts requires employers to pay up to $750 for every non-disabled employee that opts to obtain insurance through the state exchange rather than opt for company-offered health insurance.
This law was passed to address the increasing enrollment in the state’s healthcare program by workers who either do not receive health insurance from employers or who are offered employer healthcare insurance that is not as generous as options offered by the state.
Here are some keys to compliance:
Set up a robust system to gather and analyze employee information. Understand that the days of a pen and pad to maintain data are gone. Your company should have an electronic filing system to hold all pertinent documents (including Offers of Coverage) or hire an outside party to do it for you. When the IRS calls to undertake an audit, you want to have a digitized paper trail with easy access to necessary documents. If you are unsure how to do this, consider contacting a knowledgeable third-party with a track record of success in addressing filings with the IRS.
Formulate the right strategy. It is important to use the right method for identifying full-time employees/equivalents at your company. Certain methodologies are not always appropriate to use, and even if appropriate, can be complicated to execute. Using a third-party expert in the ACA can be an asset in determining the best method to use.
Technology is a gift, but not a cure all. Too often, DIY software solutions process data, but these solutions cannot tell you if the information has been organized in a way that addresses any data discrepancies. It takes human knowledge to make those types of assessments to avoid submitting inaccurate information to the IRS. Should your company not have the level of expertise and knowledge to handle this task, the most effective route may be to hire a third-party that has the human and technical expertise to crunch the data and ensure it is accurate and addresses any potential issues that could cause your filing to be flagged by the IRS.
Open enrollment doesn’t have to result in problems if the right processes are in place. And the best time to do may just be before you start open enrollment.
