New regulations in federal health care law to affect businesses, employees
MORGAN CITY, La. — Recent changes and regulations in the Affordable Care Act will soon start to change which businesses have to offer health insurance to their employees, said Michael Bertaut, health care economist and exchange coordinator for Blue Cross Blue Shield of Louisiana.
The Internal Revenue Service redefined who is eligible to receive health care benefits in October 2012, Bertaut said Monday at the St. Mary Industrial Group’s monthly meeting.
“If someone works 30 hours for you over an extended period of time, you have to offer them health insurance unless you’re not an applicable large employer,” said Bertaut.
The act created the notion of an applicable large employer, which is aimed at trying to figure out how many “full-time equivalents of labor over an extended period of time” a company employs, is determined by several calculations, Bertaut said.
To find out if an employer is an ALE — applicable large employer — the employer must first add up its number of benefit-eligible employees, and then create a “bucket of hours,” worked by all other people the employer employs. Next, the employer divides the “bucket of hours” by 120 hours per employee per month.
Finally, the employer adds the benefit eligible number to the full-time equivalent number to get a total full-time equivalent for each month, he said.
Employers must then take the full-time equivalent total and track it for a year, and see if the full-time equivalent total comes out to be 50 or above, he said.
If the number is below 50, the employer does not have to do anything in terms of providing health insurance for its employees, he said.
If the number is above 50, the employer must offer health insurance that meets a federal affordability test and minimum value test for the insurance plan. The employer must also certify that it has offered health insurance to 95 percent of the employees eligible for health insurance, Bertaut said. There are several affordability tests employers are allowed to use that produce different maximum percentages of the employee’s insurance premiums that the employer can charge the employee, he said.
The affordability test only applies to the employee and not a spouse or children, though the children, up to age 26, must be included on the plan, but the employer does not have to subsidize the cost of the children’s insurance, he said.
Bertaut said there are two “loopholes in the law” when determining if an employer is an ALE. One of the loopholes is that you do not have to add more than 120 hours per month per employee into the “bucket of hours” regardless of how many more hours an employee works, he said. The second loophole is that an employer can take any continuous six-month period during the year and take the average of those six months applied over the entire year to see if they can get the number of full-time equivalent employees below 50, Bertaut said.
For applicable large employers who have a health insurance plan already in place, they must be in compliance with the new provisions outlined in the act in October 2012 as of the anniversary date of the policy, he said.
On Oct. 1, 2013, the federal government will be opening a website called a health care exchange for those people who are not offered health insurance by their employers. The exchange is more of a “marketplace” of insurance plans where employees can shop for a plan and receive government subsidies to help pay for the plan depending on their income, Bertaut said.
People applying for health insurance through the exchange are not asked any medical-related questions so no one can be denied health insurance because of any medical conditions they have, he said.
However, only employees who were not offered health insurance by their employers can get insurance on the exchange, he said.
Overall, the Affordable Care Act has taken away a lot of state health insurance regulations and replaced them with federal regulations, which tend to be more of “one size fits all” regulations, Bertaut said.
Going into effect as of Jan. 1, 2014, the federal government will have redefined what constitutes a valid health insurance policy. Therefore, about half of the products Blue Cross Blue Shield offers in Louisiana do not meet the new federal definition of health insurance and those plans will no longer be offered unless someone is grandfathered in, Bertaut said.