Category Archives: Employer Responsibilitiies

Don’t Reimburse Employees For Individual Health Insurance

Thousands of small employers reimburse or “pay a little extra” to reimburse employees who purchase individual health insurance…However, beginning this month huge fines are possible…even for a small family business of 2 employees if you reimburse employees for individual health insurance.

“Illegal reimbursements can also take on more subtle forms e.g. paying a higher wage in exchange for declining health plan coverage. Some of these indirect arrangements are also illegal. If you think this affects your small company, here’s someone you can talk to for free. Time is running out.”

Tax Deductibility Is Not The Main Issue Here

This is true whether or not you take a tax deduction for reimbursing these premiums!  We are referencing the latest IRS bulletin addressing the subject: Basically, the IRS argues such arrangements create the existence of a group health insurance plan…and since individual plans are not compliant with the same ACA regulations that apply to group health insurance, IRS conclusion…you are sponsoring an illegal plan!  The penalties are punitive, to say the least (read further for details).

Expensive Mistake If You Reimburse Employees Improperly

I don’t think we can overstate this:  it’s a mind-blowing change of policy that negatively impacts smaller employers. Recently, MarketWatch did a good job of bringing this subject to mainstream media, in this article:

“Under an employer payment arrangement, the employer reimburses participating employees for premiums paid for their individual health insurance policies or pays the premiums directly on behalf of participating employees….The penalty for running afoul of the market reform restrictions is $100 per-employee per-day, which can amount to $36,500 per employee over the course of a full year. (from MarketWatch:  The full story)

If you think this affects your small company, don’t focus on the problem, focus on the solution: here’s someone you can talk to for free. Time is running out.

Don't Reimburse Employees For Individual Health Insurance

 

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3 Actions To Keep Affordable Health Coverage While Looking For A New Job

Time is of the essence to find or keep affordable health coverage while looking for a new job, and you must take action fast. In this three-part series, here are 3 important steps to find or keep affordable health coverage under the Affordable Care Act:

  1. If all else fails, use CAL-COBRA or Federal COBRA as a backstop, although it may not be the lowest price option: Warning, there is a maximum 60 Day Time Limit To Respond or you could lose your COBRA rights and eligibility;

Failure to enroll within the special 60-day period will not only incur a possible IRS tax penalty, but will consequently lock you out of the U.S. health insurance market until the following open enrollment period i.e. January 1st!  (This is a lessor known problem with the Affordable Care Act).  Read more about Special Events here or request assistance.

If you cannot afford the high cost of COBRA premiums, and really want the most affordable health coverage, then CoveredCA, the Covered California health exchange market may work better for you. Read about the pro’s and con’s of CoveredCA in Part II of this series, or proceed to Part III, “Private Insurance” options.

 

 

Proceed to Part II of this article or skip to Part III.

4 Actions Employers Must Complete By October 1, 2013

Employers Must Act Soon (deadlines apply to all future new hires):

[Employers also read Huge Penalties for Reimbursing employees for their Individual Health Insurance Policies]

  1. This Department of Labor (DOL) regulation may surprise small employers who do not yet offer employee healthcare coverage:  The requirement hits them, too. Basically, the DOL requires that employers with as few as one employee hand out a disclosure form, even for 1099 employees. Further, the DOL has adopted different notices for different employer situations.  Make sure you are using the correct notice: Read more here.
  2. COBRA Notices- Amend existing COBRA notices to include new Department of Labor required language for employer COBRA disclosures.  Your COBRA administrator or vendor should be updating this notices.
  3. Move the money:  It is time to allocate monies you received in July, on behalf of your employees i.e. the Medical Loss Ratio (MLR) rebates.  Can you keep the refund?  Read our article about this very question.
  4. Download and properly distribute Summary Benefit Coverage forms by the appropriate deadline.  For a quick reference, download a free PDF Summary of SBC Requirements, which outlines employer requirements and deadlines. Kaiser employers read a related article here.

As the individual marketplace continues to deteriorate, the small group market has gained a firmer footing, including stable PPO networks and easier participation rules with Kaiser and traditional PPO plans.  Is it time to review available small group plans?   Reserve your appointment early for Open Enrollment, which begins this November.  Find local assistance in San Jose, Santa Clara and the San Francisco bay area or via telephone, throughout Northern and Southern California..

Eventbrite - Shopping For Obamacare And Better Covered California Insurance

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