Large Business Private Exchange
What you need to know about Health Reform
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Large Business Q&A
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Business Requirements
Am I required to offer health insurance to my employees?
Yes, most employers with 50 or more full-time equivilent employees are required to offer affordable health insurance to their employees or pay a penalty. Penalties will begin in 2015.
What is considered a full-time equivalent (FTE) employee?
A full-time equivalent (FTE) employee works 30 or more hours per week, and generally speaking, receives a W-2 at at the end of the year.
How do I count part-time or seasonal workers?
Seasonal employees working less than 120 days per year do not count toward your total number of FTEs.
Part-time employees can count partially toward your total number of FTEs. For example, if you have two part-timers who work 15 hours per week, the total is 30 hours, so together, they count as one FTE for the purposes of Health Reform.
Do I have to offer benefits to part-time or seasonal workers?
No, you do not have to offer benefits to part-time or seasonal workers, but they might count toward your total number of FTEs to determine if you are a small or large business, according to the Affordable Care Act.
Why does it matter how many FTEs work for my business?
It matters because the rules, plans, and pricing are very different for small and large businesses. A small business is defined as one with less than 50 FTEs. A large business is defined as one with 50 or more FTEs.
How do I know if I'm offering "affordable" coverage under the law?
The Affordability Test says that the employee portion of the premium (what the employee pays for single coverage) cannot exceed 9.5% of his or her Modified Adjusted Gross Income. Spouse and children's premiums are not taken into consideration for the Affordability Test. Penalties for not offering affordable coverage begin in 2015.
American Health Insurance Exchange will conduct the Affordability Test for you and provide your business with the proper reporting and employee notifications that are required by law.
Can insurance companies charge my business whatever they want to?
Under the Affordable Care Act, insurance companies must spend 80% or 85% of your premium dollars back on healthcare, not administrative costs. It can vary depending on your exact business size and state. This is referred to as the "Medical Loss Ratio Rebate".
Is there a limit to what an employee can contribute to a Flexible Spending Account (FSA)?
Yes, beginning January 1, 2013, the Affordable Care Act limits the amount that each employee can contibute to their healthcare FSA to $2,500, subject to cost of living adjustments. Please note that the $2,500 annual cap only applies to the employee contribution and does not apply to what the employer may contribute.
Did the law affect Medicare withholdings on wages? What is the new Medicare Assessment on Net Investment Income?
Beginning January 1, 2013, the Affordable Care Act increased the employee portion of the Medicare Part A Hosptial Insurance withholdings by .9% (from 1.45% to 2.35%) on employees with incomes over $200,000 for single filers or $250,000 for married joint filers. If an employee's income falls below that mark, the withholding will not change and will remain at 1.45%.
Also beginning January 1, 2013, a 3.8% tax was assessed on the investment income such as capital gains tax, dividends, rents, royalties, and interest for taxpayers with a Modified Adjusted Gross Income (MAGI) of $200,000 for single filers and $250,000 for married filing joint.
What is the maximum waiting period for a new hire before he or she can be added to our group health plan?
Starting January 1, 2014, no individual will have to wait longer than 90 days before being added to employer-sponsored health coverage.
What is the Transitional Reinsurance Program?
The Transitional Reinsurance Program is a three-year program, beginning in 2014 and continuing until 2016, that reimburses insurers in the individual insurance exchange for high claims costs. The program is funded through fees to be paid by employers (for self-insured plans) and insurers (for fully-insured plans).
The U.S. Department of Health and Human Services estimates that the fees for 2014 will be $5.25 a month (or $63 for the year) for each individual covered under a health care plan, with the required fee for the following two years to be somewhat lower. The fee applies to all employer-sponsored plans providing major medical coverage, including retiree programs. The U.S. Department of Labor has advised that for self-insured plans, these fees can be paid from plan assets. The IRS has stated that the fees are tax deductible for employers.
What factor do Wellness Programs play under the Health Reform law?
The Affordable Care Act creates new incentives to promote employer wellness programs and encourage employers to take more opportunities to support healthier workplaces. Health-contingent wellness programs generally require individuals to meet a specific standard related to their health to obtain a reward, such as programs that provide a reward to employees who don’t use, or decrease their use of, tobacco, and programs that reward employees who achieve a specified level or lower cholesterol.
Under final rules that take effect on January 1, 2014, the maximum reward to employers using a health-contingent wellness program will increase from 20 percent to 30 percent of the cost of health coverage. Additionally, the maximum reward for programs designed to prevent or reduce tobacco use will be as much as 50 percent. The final rules also allow for flexibility in the types of wellness programs employers can offer.
Penalties and Reporting
What is the penalty for not offering health insurance to my employees?
If you have at least 50 FTEs, and you do not offer affordable health insurance, you could be subject to penalties starting in 2015. The penalty is waived for the first 30 employees. For every employee over 30, you will pay a $2,000 per employee annual penalty to the IRS.
For example, if you have 50 FTEs, your penalty would be $2,000 times 20, or $40,000 per year. You are not charged a penalty on the first 30 employees.
This leaves many employers asking if they should "Pay or Play"? American Health Insurance Exchange provides the software to show your cost in penalties for not offering coverage versus your cost in benefits for offering coverage. We can show you the best financial solution.
What is the penalty for not offering affordable coverage to my employees?
The benefits that you offer must pass the Affordability Test for all employees. If it does not, and one or more of your employees uses a tax credit to purchase a reduced premium plan through the public exchange (through the government), then you are subject to penalties starting in 2015.
The penalty for not offering affordable coverage is $3,000 per FTE annually.
What is W-2 reporting of Aggregate Health Costs?
Beginning January 2013 (applicable to 2012 reporting), most employers must report the aggregate annual cost of employer-provided coverage for each employee on the Form W-2. The new W-2 reporting requirement is informational only and it does not require taxation on any health plan coverage. Reporting is required for most employer-sponsored health coverage, including group medical coverage.
American Health Insurance Exchange can assist you with this part of compliance.
What is the Summary of Benefits and Coverage (SBCs) Disclosure Rules?
Employers are required to provide employees with a standard “Summary of Benefits and Coverage” form explaining what their plan covers and what it costs. The purpose of the SBC form is to help employees better understand and evaluate their health insurance options. Penalties may be imposed for non-compliance. American Health Insurance Exchange can assist you with this part of compliance.
What is the Employer Notification of the New Health Insurance Marketplace?
Beginning January 1, 2014, individual consumers, self-employed, and small businesses (less than 50 FTEs) will have access to affordable coverage through the new health insurance Marketplace (public exchange by government).
Originally, under the Affordable Care Act, employers covered by the Fair Labor Standards Act (generally, those businesses that have at least one employee and at least $500,000 in annual dollar volume of business), were required to provide notification to their employees of coverage options available through the Marketplace. But since then, that requirement has been dropped, and now it is optional.
Employers could provide this notice to all current employees no later than October 1, 2013, and to each new employee at the time of hire beginning October 1, 2013, regardless of plan enrollment status (if applicable) or of part-time or full-time status.
American Health Insurance Exchange can assist with this optional notification if you would like to offer it to your employees.
What are the Health Insurance Reporting Requirements?
Beginning in 2015, employers subject to the Employer Shared Responsibility (must offer affordable coverage if you have 50 or more FTEs) rules described above must provide the IRS information about full-time employees' coverage under the health plan and the benefits provided.
If an employer offers a self-insured plan, they must also submit reports on each individual employee to the IRS.
American Health Insurance Exchange can assist you with this part of compliance.
Exchanges
What is an exchange?
An exchange is really just a fancy word for website that shows you all your benefit options in one place, compares benefits and pricing side-by-side, and allows you to enroll online.
There are two types of exchanges: public and private. The public exchanges are either administered by the federal or state governments. If you are an individual consumer or Small Business (less than 50 full-time equivilent employees), you might qualify for tax subsidies or Small Business Tax Credits by purchasing public exchange plans.
American Health Insurance Exchange is an example of a private exchange. Individual consumers, the self-employed, small and large busineeses can all have access to coverage through the private exchange. Health insurance is offered as well as a catalog of other benefits ranging from dental and vision to tele-medicine and pet insurance. And the plans offered in the exchange are hand-selected and pre-negoiated to bring you the best plans from all the top insurance companies who are competing for your business.
Through American Health Insurance Exchange, you enroll in either public or private exchange plans. We'll show you both side-by-side and help you determine which option is best for your business.
How can an exchange save me time and money?
Through the Private Exchange, your business will have access to everything you need to cut costs and streamline your administration, which will give you more time and money to re-invest in your business.
We negoiate the best value from all the top carriers, and you have the buying power of our nationwide network of agents.
We'll build a custom store full of better plan choices for your employees. A private exchange gives employees the power of choice and allows them to choose their own benefits and only enroll in the coverage they want and need.
We'll develop a custom financial strategy for your business and show you, down to the penny, what option benefits you the most. Most businesses save 10%-20% in the first year.
We give you a custom benefits management system that can include online enrollment, payroll services, intra-office communication system, HR support, custom reports, and more. Employees can use it year-round to check or change information. Download the Private Exchange app to your smartphone, so you always have access to your important benefit information.
We take care of all the reporting, calcuations and notifications that are required by the Affordable Care Act, preventing you from making a costly oversight. You have access to the top Health Reform experts in the country for questions or advice.
How do you decide what products go in my store?
We don't; you do. We provide all the best rates and benefit plan from the top insurance companies who are competing for your business. You just tell us what you'd like to have added to the aisles of your benefit supermarket, and we'll build it custom for you. Employees will login and make their selections - and that's it, enrollment's done.
Can I keep my agent and still use American Health Insurance Exchange?
Sure. Our nationwide network of agents is expanding, and if your agent isn't already one of our partners, we'd love to talk to him or her about offering you a Private Exchange. Or, you can work directly with one of our expert agents.
What makes this exchange better or different?
Several factors, including things we'll tell you about in the next few sections of the Business Exchange. But here's a few that really separate us from other private exchanges:
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Our exchange was built by award-winning insurance agents who have been working closely with businesses just like yours for decades. We understand your problems so we developed a solution. Many private exchanges are built by technology gurus who have little to no experience in the employee benefits field.
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Our exchange was built for all market segments: individual and families, Medicare-eligible consumers, the self-employed, small businesses, and large businesses. Many exchanges don't provide support for all markets, which can limit your choices or financial strategies.
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We know that insurance is confusing and you don't want to spend hours figure out Employee Benefits. We provide a Your Virtual Insurance Agent experience that walks you through the benefits in everyday language, so your employees can quickly and comfortably make choices.
General Information
When does the law begin?
The Patient Protection and Affordable Care Act was first passed in 2010 and is scheduled to be implemented over several years. Many of the key provisions start in 2014.
Please take a look at our Health Reform Timeline for more specifics.
I heard the law was delayed? What does that mean for me?
The law itself was not delayed. There were only a few parts of the law that were delayed including the employer mandate to offer affordable coverage and the out-of-pocket limits on plans, both delayed until 2015.
Our Health Reform Timeline can give you more specifics about when certain provisions of the law are scheduled to begin.
Am I personally required to have health insurance?
There are a few exceptions to the rule, but starting January 1, 2014, most of us are required to have qualified health insurance or pay a penalty. See our Individual Requirement page for informations about rules, exceptions and penalties.
There are several different options to have qualified health coverage. These include things like coverage through your job or your spouse/partner's job, Medicare or Medicaid, other government programs or coverages, or private individual or family coverage that you purchased on your own.
Where can I get information on the entire law, not just the parts that apply to businesses?
You might want to check out our ACA Summary for a detailed summary of the law from how it was passed originally in 2010.
Or, for a more bullet point review, please visit our ACA Timeline.
Or, you can browse through the other sections of American Health Insurance Exchange for information on individuals and families, the self-employed, small businesses (less than 50 full-time equivilent employees), or large businesses (50 or more FTEs) and we'll show exactly how the law affects those people or groups.