Provisions of the Affordable Care Act start coming into focus
On Jan. 2, 2013, the Internal Revenue Service published a proposed rule in the Federal Register that defines the employer shared responsibility (a.k.a. employer mandate) provisions of the Patient Protection and Affordable Care Act (ACA). The rule covers how employers count their employees to determine if they are required under ACA to offer minimum coverage, who they have to offer that coverage to and what the ACA means by affordable.
“We are looking at the rule now and trying to understand all of the different provisions in it and how they affect American Rental Association (ARA) members,” says John McClelland, ARAR's vice president for government affairs. “This is a very complicated rule that will take some time to really understand. However, there seems to be some flexibility in the regulation, which is good news for the regulated community.”
For example, the rule indicates that the ACA provision of affordability, which is set at a premium cost no greater than 9.5 percent of an employee’s salary, can be calculated from their Form W-2. The employer still can use the potentially higher “household income” figure if that is to their benefit, but they are not required to determine the household income of each employee under the proposed affordability safe harbor. The rule also requires that employers with more than 50 full-time employees or full-time equivalent (FTE) employees must offer insurance to their employees and dependents. However, the insurance offered to dependents does not have to meet the affordability requirement and spouses are not considered dependents. Dependents are defined as children up to the age of 26.
An FTE is considered an employee who provides at least 30 hours per week of service. Part-time employees whose weekly hours of service add up to 30 hours per week constitute one FTE. Thus, three employees working an average of 15 hours per week make 1.5 FTE’s. The rule discusses a number of methods for calculating the average number of employees a firm employs over time.
The rule also discusses minimum coverage. In the ACA, minimum coverage is defined as a plan that pays at least 60 percent of the benefits of the plan. This guidance also is currently under review.
Click here to read the complete IRS proposal.
For more information and answers to your questions about the ACA, plan to attend Healthcare 101 for Your Rental Business: What You Need to Know to Implement the Law of the Land seminar on Sunday, Feb. 10 at 1:45 p.m. at The Rental Show 2013 in Las Vegas at The Sands Expo and Convention Center.
ISSUE BRIEF: Small Business Health Care
Over 46 million American workers are uninsured because they cannot obtain health care or they cannot afford it. Many employers want to provide basic health benefits to their employees but cannot afford annual double-digit increases in health insurance premiums.
ARA is a member of the Small Business Coalition for Affordable Healthcare (the Coalition), a coalition of more than 100 trade associations representing employers and individuals who purchase health insurance in the small group and individual markets. The Coalition has been involved in discussions with key Senators who are crafting a health care reform proposal as well as key House members who are engaged in a similar process. The Coalition has developed a detailed set of principles that are focused on market-based reforms to expand competition and choice in all markets for the purchase of private health insurance. Significant elements of reform supported by the Coalition are:
Market-Based Pooling Arrangements
- Market-based pooling arrangements achieve greater purchasing clout, spread risk, and lower administrative costs. This means greater affordability and choices for the purchase of private health insurance for business owners and their employees.
- Such pooling approaches might include purchasing pools, connectors and exchanges.
Tax-Based Health Insurance Incentives
- Tax credits can be applied toward the cost of private health insurance for employers, the self-employed and individuals.
- Tax-equity for the self-employed and individuals is a significant step toward creating a more level playing field on the tax treatment of health insurance.
New Healthcare Markets, Marketplaces and Products
- Small businesses want the flexibility to choose the health insurance packages that best meet the needs of their workforce.
- These products should be comprised of a range of choices that include traditional insurance products, account-based arrangements and cafeteria plan options that allow consumers the freedom to spend healthcare dollars as best fit their needs.
Understandable and Easy to Compare Healthcare Information
- Too often, healthcare information is difficult to obtain and incomprehensible to consumers. Improved transparency is critical to making sure that all consumers –including employers, employees and individuals across all insurance markets – have accurate and useful information on costs, quality and performance of products.
Support market-based health care reform.