This year, Beyond Benefits members experienced a 1.4% employee benefits rate decrease, while other life science companies outside of the trust are seeing double digit increases. To celebrate the program’s continued success, Beyond Benefits members joined MMA, Biocom and Anthem Blue Cross for a post-renewal celebration. Check out the video below for more information.
As of January 1, 2016, employers with 51-100 benefit eligible employees are now considered small group employers. As a newly labeled “small business,” you may see rate increases of 20-30%, depending on your group, if you haven’t already.
Why the big jump in rates?
The change is tied to rules that apply to small groups. Small groups are charged with what the insurance industry calls “age-banded” rates. Age-banded simply means age-based. In other words, cost is assessed for the age of each employee and spouse in the group. The shift impacts many employers, especially technology companies since many employ under 100 employees, and adds another obstacle in the quest to offer affordably priced health care coverage.
If you are one of these employers, the following is a quick summary of things to be aware of.
As you know, everyone in the United States is now required to have health insurance, or pay a penalty. And as an employer, you also know that individuals must be able to prove that they maintained health coverage in 2015, either through their employer or by acquiring other health insurance. Even though you are likely aware of the intricacies of the ACA & how it affects your employees, it’s still a good idea to communicate this new step to them to avoid misunderstandings or undue worry.
Your employees don’t need to be tax attorneys, but they should learn about their own responsibilities and what they can expect from you and their insurance carrier. This proof of insurance involves IRS Forms 1095-C and 1095-B:
Form 1095-C simply documents the months employees were offered health insurance in 2015, as well as in future years. If the employer is considered an applicable large employer with 50 or more full-time and/or full-time equivalent employees, then the employer has until March 31, 2016 to prepare and deliver Form 1095-C to all fulltime employees.
Form 1095-B provides data on the employee (and potentially family members) enrolled in coverage, and will be sent directly to the employee from the insurance carrier, or included in Form 1095-C if their employer is self-insured.
Administering employee benefits can be time-consuming, but applying technology can help dramatically improve the process.
So what are the most effective ways to manage your benefits program, both from an employer’s and employee’s perspective?
Whether you’re in the early stages of looking for an online solution for your organization or already have one in place, here are five reasons technology will support your long-term goals and what to look for in a benefits administration platform.
1. Streamline enrollment information collection
Many companies have no organized approach to collecting enrollment data. Even today, with so much technology available, many companies still rely on a paper-based process to enroll employees or update benefits information.
With an online system, data collection is aggregated centrally and can be easily accessed and managed by the HR team from any location. Online data management is particularly important for complex benefits offerings, especially for employers with multiple offices, contribution strategies, and eligibility requirements.
2. Incorporate ACA tracking and reporting into your system
The "Affordable Care Act" (ACA) created two new duties to report healthcare information.
Individuals offered company-sponsored health insurance must state whether they had coverage that met the ACA’s requirements. Companies considered an Applicable Large Employer (ALE) also must report that they have complied with the ACA. To verify that information, the IRS created two forms, IRS Form 1095 C and IRS Form 1094 C. Employers can be fined $100 per day for each 1095 C form that has not been submitted to the IRS.
An online benefits administration system can integrate payroll, time and attendance information, so all of the data can be accessed in one location and transmitted seamlessly to the IRS.
3. Provide a self-service administration option for employees
For most companies with more than 50 employees, 2016 will bring significant new Internal Revenue Service (IRS) employer reporting requirements.
The goal of the IRS: To ensure that your employees maintained health insurance coverage in 2015, in addition to ensuring that certain employers offer coverage to full-time employees, as mandated by the Affordable Care Act (ACA).
Preparation is the key to managing this additional workload brought on by the ACA for your HR, Finance and Payroll teams. Planning is critical if you want to avoid a potentially big penalty. Employers may be fined up to $1.5 million for failing to report the proper information to the government.
By January 31, 2016, employers are required to report to an employee (and the government) as to what months the employee was offered coverage, in addition to other information related to the coverage, to the employee and the government. An employer must also transmit this information (along with other information regarding the offer of coverage to all of their employees) electronically to the government by March 31, 2016 (paper transmittals will be due one month earlier).
Unsurprisingly, the historic nature of the Affordable Care Act has made it a significant topic of discussion over the past four years and we don’t see that changing anytime soon. With numerous ongoing modifications and delays to legislation, it is essential employers stay up to date on ACA developments. As we approach the midway mark of 2015, we’ve compiled a list of high-priority ACA developments employers should have on their radar for the remainder of the year:
- Pre-established Stability Period - In 2014, employers should have established a Measurement Period or Stability Period for their variable hour/seasonal employees. The Stability Period should have begun January 2015 for variable hour/seasonal employees (subject to transition relief). If an employer has not yet established a Stability Period, the employer should do so immediately, unless they are entitled to transition relief in 2015.
- Section 125 Modifications - Employers that have not modified their Section 125 Plan documents to include the new permitted election changes introduced in 2014 may now choose to offer additional Section 125 Cafeteria Plan permitted election changes. This will allow their employees to make new mid-year election changes. This includes employees who:
- Intend to enroll in a Qualified Health Plan in the Exchange (i.e. Marketplace) or
- Work less than 30 hours a week during a Stability Period.
- Premim Reimbursement Grace Period for Small Employers - Small employers (less than 50 Full-time and/or Full-Time Equivalent employees) are able to continue having a premium reimbursement plan for their employees’ individual policies until July of 2015 without penalty.
- Cadillac Tax Planning - Employers should be focusing on strategies to reduce the cost of their high-priced health plans in anticipation of the looming Cadillac Tax. Health benefits (including HRAs, HSAs, FSAs) valued above the IRS threshold are subject to the recently released IRS Guidance on the applicability of the Cadillac Tax. The IRS Guidance also requested comments from the public on potential methods for calculating the cost of these plans.
Beginning January 1, 2016, employers with 1-100 benefit eligible employees will be considered small group employers. If it hasn't already, this change has the potential to increase your rates by 20-30%, depending on your group.
Why the big jump in rates?
The change is tied to rules that apply to small groups. Small groups are charged what the insurance industry calls “age-banded” rates. Age-banded simply means age-based. In other words, cost is assessed for the age of each employee and spouse in the group. The shift impacts many employers, especially life science companies that typically employ within the 51-100 range, and adds another obstacle in the quest to offer affordably priced health care coverage.
If you are one of these employers, the following is a quick summary of things to know.
For renewal dates that occurred on or after January 1, 2016, employers with 51 to 100 benefit eligible employees will:
- Move from large group to small group
- Pay medical rates based on each family member’s age and not the employee’s age
- Have rates based on the ZIP code of the employer (instead of the employees’ residential zip codes)
- Lose online administration of benefit eligibility
- Cease to receive underwriting discounts for industry and favorable employee demographics
Solution for Life Science Employers
Marsh & McLennan Agency, in partnership with Biocom, created the Beyond Benefits Trust to provide large group underwriting for small group life science companies impacted by this law.
Beyond Benefits leverages specific regulations established by The Department of Labor (DOL). These regulations allow for the formation of DOL-qualified small business trusts which pool small companies together. Under this structure, employers qualify for large group rates, regardless of their size.
Your group is young and healthy. So why the headache finding affordable health coverage for your team? Accessing reasonably priced, compliant health coverage is a big concern and a frustrating endeavor for many small life science companies. And it can be especially frustrating considering your generally young, healthy group doesn’t qualify for low rates under the Affordable Care Act.
While larger companies receive preferred industry and demographic discounts, employers with 1-100 employees (an increase from the original 1-50 employee count as of January 1, 2016) are stuck with age-based rates, which are determined by the employer’s location. Life science companies are caught in a Catch 22—they are in the right industry and have great demographics, but are too small to reap the benefits.
This legislation leaves many life science businesses and individuals out in the cold when it comes to getting reasonably priced coverage.
While navigating the Affordable Care Act can feel like swimming in the dark sometimes, there is a bright spot for life science companies. The Department of Labor (DOL) has created the opportunity for the formation of small business trusts. These DOL-qualified trusts pool small companies together and under this structure, employers qualify for large group rates, regardless of their size. In response to these challenges, Marsh & McLennan Agency created the Beyond Benefits trust, a DOL-qualified health benefits solution for the California life science industry. Four years into the trust, Beyond Benefits saves its members $5.8 million in annual medical premium. It has proven to be a lifesaver for the participants’ human resources departments as well. Some of the advantages reported include:
- Simplified plans. Online enrollment is easy for employers and their employees.
It’s the law. The Affordable Care Act requires the large majority of U.S. citizens and legal residents to have health insurance (or pay a penalty if they don’t). Hopefully, your benefit eligible employees have joined your employer sponsored health plan or have obtained coverage through their spouse. But how are you helping your part-time employees or those who are not eligible for health insurance with their coverage? Although it’s not required for you to do so, your part-timers may feel more supported if you do!
Check out our list of important information for employees who aren’t eligible for your company benefits to help them purchase affordable health coverage for the upcoming year!
Starting November 15, 2014 through February 15, 2015, individuals seeking health insurance can take advantage of the annual open enrollment period in the Public Marketplace. In addition to purchasing Public Marketplace coverage, individuals will also have the opportunity to purchase a private health plan outside of the Public Marketplace. Both of these are opportunities for those employees who were not eligible for your company sponsored benefits, or those that chose not to take your coverage, to buy a new policy or plan.
WHO THIS EFFECTS
Your part-time or ineligible employees will want to pay attention to the upcoming open enrollment period of the Marketplace and private health plans, particularly if they did not enroll in your group health plan during the last enrollment period, or want to change to a Marketplace or private health plan. Additionally, employees who experienced a qualifying event but did not enroll in time after their qualifying event took place would also be able to take advantage of these plan alternatives.
It’s hard to believe that while we can almost feel the sand between our toes, summer has come to an end and fall is here. Before we know it, businesses will be ringing in the New Year and along with it, implementing 2015 Affordable Care Act requirements. The Legislative Compliance Team at Barney & Barney wants to make sure you are ready.
Each year, Marsh & McLennan Agency hosts the Annual Employee Benefits Legislative Update. This year’s seminar will give employers the tools they need to build a benefits strategy for 2015 that meets the requirements of the Employer Mandate.
At this seminar we will:
- Review the Employer Mandate’s initial regulations
- Discuss the new rules
- Clarify details of the Employer Mandate’s final regulations
- Address specific state laws impacting California employers and multi-state employers
- Examine the employer reporting requirements for 2016