Do Employers Have to Offer Health Insurance?

Great question and one that has changed significantly since the passage of the ACA (Affordable Care Act) bill.

A big part of the law dealt with the "Pay or Play" mandate and how it affects employers.

The roll out has been in place for a few years but the penalties for not offering coverage are coming online recently.

Let's look at the whether employers have to offer health insurance to employees.

What's the cost to offering and not offering coverage?

Finally, what are ways to reduce the net cost to a company in regards to benefits for employees.

You can always run your employer group health quote here:

First, what does the law say?

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Pay or Play or Employers

Officially, a company does not legally have to offer health insurance to employees.

There's is no outright requirement.

 

There can be penalties for not doing so now.

 

Pay or Play refers to the section of the ACA law which basically says that certain company must either:

1. Offer ACA compliant health coverage; or
2. Pay a penalty for not offering coverage

 

There are many important criteria for this rule.

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Size of Companies Affected by Employer mandate

 

Companies with 50+ FTE are affected by the mandate.

What's an FTE?

Good question.

 

Basically, the law wanted to prevent companies from avoiding the penalty by dropping all their employee to part time.

The mandate only applies to Full Time Employees which is 30+ hours/week.

The law then goes on to say that the triggering of the penalty will be based on the "equivalent" of full time.

 

For example, 10 part time employees at 15 hours would be the same as 5 full time employees at 30 hours.

Here's the basic calculation of the FTE but were happy to help you.

 

So if your company has 50+ full time equivalents, you must offer ACA compliant coverage to employees (Play) or you have a penalty.

 

Part Time Employees and Penalty

 

Even though part timers figure into whether health insurance must be offered to employees (the FTE calculation)...

the law does not require employers to cover part time employees

Coverage is also not mandated for dependent spouses or domestic partners.

The penalty and mandate does apply to dependent children!

Many employers do not know about the child rule.

You don't want to find out about that from the IRS

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The Penalty for not offering health insurance to employees

 

There are actually two different penalty options (truly pick your poison).

We go through the employer health penalties in detail but here's the quick synopsis.

1. Offer no coverage and pay $2000/employee per year

 

2.  Offer non-compliant (MEC) coverage and pay $3000/employee that gets a tax credit on individual family Covered Ca exchange

 

It just got a little confusing.

 

MEC plan?

That stands for Minimum Essential Coverage plan.

 

It's basically a stripped-down health plan that doesn't meet the ACA requirements.

Think of a catastrophic hospital plan with some basic benefits.

Of course, the premium is much lower.

 

Find out what the cost is here:

So how do we compare the cost for offering ACA compliant coverage, a MEC plan, or no coverage (with penalty)?

That's where we come in!

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Comparing cost of options - To offer health insurance to employee or not?

 

We can run all three proposals for you and our services are free as California group health agents with 20+ years experience.

You can request your group health quote below or email us request for secured link (better for larger companies).

We'll get right to work!

We generally turn around the proposals in 24-48 hours with the following:

1. Lowest priced ACA compliant plan available
2. Estimated penalty for offering no health insurance to employees
3. Estimate cost and penalty for offering MEC plans

 

Again, there's no cost for our services.

So what's our take on which option generally is the best value?

 

Each company is different and costs fluctuate significantly based on these factors:

1. age of employees
2. salary of employees
3. # of people who qualify for Covered Ca tax credit

 

Here's our favorite approach.

Offer lowest priced ACA compliant plan

 

We'll first see which carrier is best priced in your area and base the employer's contribution on the lowest amount available (generally 50% of bronze or $100 fixed).

 

This partially depends on average age of our eligible employees.

 

We need to make sure that the employee's contribution for employee only is less than 9.5% of gross income.

The coverage offered needs to be "affordable" and that's the 9.5% threshold.

 

Again, we can help you analyze all three options (no coverage, MEC coverage, lowest priced full coverage)
 

Call us at 866-486-6551 or request your Company Health Quote.