California Small Group Definition Will Hurt Business Owners In 2016

When the small group definition of businesses by the Affordable Care Act is reduced to 50 employees or less in 2016, many California business owners are going to be unfairly hurt. In California, the small group definition is going to remain 100 employees or less. As a result, any business with 50 to 99 employees will be damaged by qualifying under the small group definition. Pontrelli, Timour & Associates, Inc. want to help our clients navigate these dangerous waters.

The Sacramento Business Journal reports that Covered California will move forward with an expansion of the definition of small employers under state law. This counteracts the new federal law that halts the change. On October 7, 2015, President Obama signed into law the Protecting Affordable Coverage for Employees (PACE) Act which repeals the Affordable Care Act provision that on January 1, 2016 would have mandated expansion of the definition of “small employer” subject to insurance market reforms from employers with 1 to 50 employees to those with up to 100 employees. Yet, in California, state law defines businesses with 100 or fewer employees as small.

California Small Group Definition Damages

california small group definition

California Small Group Definition Hurts Business Owners

When it comes to being a small group, benefits administration is more costly with less benefits offered to your employees. In addition, small group benefits have higher deductibles for employees and a higher out of pocket expenses. Overall, there was a 26% increase for small group companies in terms of overall healthcare costs in 2015.

Pontrelli, Timour & Associates, Inc. does not believe the California state government is being fair to local business owners. Why should local business owners be penalized because their companies are based in California? Is this a good way to convince businesses to either stay or come to the state? Why would the California definitions be different from the national definitions when the Affordable Care Act has set the bar for benefits administration across the country?

Employment Data & California Small Group Definition

Based on California labor market employment data, roughly 14 percent of all California employment — 2.3 million employees — fall in the 51-100 segment, while roughly 2.4 percent of all California businesses—33,000 employers—fall into the 51-100 market. In California small group definition, an employer has historically been defined as 50 or fewer eligible employees for group health insurance purposes. Unless an employer has a grandfathered large group plan, employers with 51-100 full time equivalent employees who renew or purchase coverage in 2016 will be required to follow all small group regulations.

For large groups, insurance providers commonly use health status or claims experience, industry risk factors, employer size, participation and contribution levels, age/gender factors and composite ratings to determine premiums. With the mandatory migration, those falling under the new small group definition will no longer be allowed those variations. For example, the gender factor will no longer be permitted and age rating will be limited, with a 2016 ratio maximum of 3 to 1.

Age, Family Size & Geography Insurance Factors

Family size, too, will be a determining factor in adjusting premiums under the 2016 provisions with the California small group definition. Up to three children under 21 years of age may be charged a premium within a family, but any additional children can receive coverage at no additional charge. Geographic regions within the state that are currently prescribed may also be changed significantly, as well as premiums for tobacco use, which may be increased up to but not exceeding 50 percent.

Group Benefits Leader Helping Small Group Business Owners

When the ACA small group definition becomes effective in the state of California in 2016, groups sized 51-100 will for the first time fall under the same requirements that currently apply to groups sized 1-50. The California small group definition simply is not fair. As insurance brokers and group benefits leaders, the goal of Pontrelli, Timour & Associates, Inc. is to make sure our present-day clients and our future clients are not hurt by these healthcare problems.

 

Does Your Company Know About The Affordable Care Act’s Employer Shared Responsibility Payment?

Under the Affordable Care Act, applicable large employers – those with 50 or more full-time employees, including full-time equivalent employees – are required to take some new actions. Applicable large employers (ALEs) particularly need to pay attention. ALEs are subject to the employer shared responsibility provisions. A goal of Pontrelli, Timour & Associates is to provide our clients and potential clients with the best information available about the employer shared responsibility provisions and all the requirements of the Affordable Care Act. After all, information is the power to chart the right course.

The Affordable Care Act’s Employer Shared Responsibility Payment

employer shared responsibility payment

Employer Shared Responsibility Payment

Whether an employer is an applicable larger employer in a particular calendar year depends on the size of the employer’s workforce in the preceding calendar year. This is a key distinction to remember. To be defined as an ALE for a particular calendar year, an employer must have had an average of at least 50 full-time employees (including full-time-equivalent employees) during the preceding calendar year. All types of employers can be ALEs, including tax-exempt organizations and government entities.

To prepare for 2016, if your organization is an applicable large employer, you need to keep track information each month in 2015, including the following:

  • Whether you offered full-time employees and their dependents minimum essential coverage that meets the minimum value requirements and is affordable
  • Whether your employees enrolled in the minimum essential coverage you offered

PT Benefits can help our clients keep track of this information by providing supporting guidance and information.

Your company needs to track this information because you could be subject to an employer shared responsibility payment if your organization falls into either of these circumstances:

  • You offered coverage to fewer than 70 percent of your full-time employees in 2015 while at least one full-time employee enrolled in coverage through the Health Insurance Marketplace and receives a premium tax credit. The 70 percent threshold is for 2015, after 2015 this increases to 95 percent.
  • You offered coverage to at least 70 percent of your full-time employees and their dependents in 2015, but at least one full-time employee receives a premium tax credit because coverage offered was not affordable, did not provide minimum value or the full-time employee was not offered coverage. After 2015, this threshold increases to 95 percent.

 Pontrelli, Timour & Associates Can Help

Pontrelli, Timour & Associates understands if these requirements and logistics seem complicated. We can help you understand your company’s designation and take the steps to remain in compliance with the Affordable Care Act. Naturally, our goal is to help your company avoid an employer shared responsibility payment. To learn more and access the help you need, please call the group insurance experts at PT Benefits at 626-795-4138.Employer Shared Responsibility Payment

Do You Know How PPACA Affects Employers With 50 Or More Full Time Equivalent Employees?

In a recent update released on the IRS.gov website, the Internal Revenue Service offered Affordable Care Act guidance for large employers with 50 or more full time equivalent employees. Since some of the provisions of ACA apply only to large employers, which are generally those with 50 or more equivalent employees working full-time, the goal of this guidance is to let large employers know about deadlines approaching and compliance requirements that need to be met. As a group benefits and insurance leader for companies across Southern California, Pontrelli, Timour & Associates, Inc. offers this synopsis of the main points covered by the IRS in the recent update.

Large Employers Under The Affordable Care Act

50 or more full time equivalent employees

50 or more full time equivalent employees

If you have 50 or more full-time equivalent employees, your company is considered as an applicable large employers or ALEs. Applicable large employers are subject to the employer shared responsibility provisions and the annual employer information return provisions. For example, in 2016 applicable large employers will have annual reporting responsibilities in relation to health insurance. These reporting responsibilities detail whether your company offers health insurance to your employees and what kind of health insurance was offered in 2015 to your full-time employees.

Regardless of size, all employers that provide self-insured health coverage must file an annual return reporting certain information for the employees and other individuals they cover. The first returns are due to be filed in 2016 for the year 2015. Such filings have now become an inherent part of business tax filings with the IRS.

100 Or More Full Time Equivalent Employees

Effective for calendar year 2015, applicable large employers with 100 or more full-time or full-time equivalent employees will be subject to the employer shared responsibility provision. The shared responsibility provision goes hand-in hand with the possibility of having to make a shared responsibility payment. Like a penalty, the shared responsibility payment applies to employers that do not offer adequate, affordable coverage to their full-time employees. As a result of not offering such coverage, if one or more of those employees get a premium tax credit, the shared responsibility payment will be triggered for ALEs with 100 or more full time equivalent employees.

50 Or More Full Time Equivalent Employees

As for the smaller ALEs with 50 or more full time equivalent employees, but less than 100, the employer shared responsibility provisions will be activated from 2015 to 2016. Given this change and potential penalties involved, calculating the number of employees becomes of paramount importance. Any employers that have close to 50 employees or whose workforce fluctuates throughout the year should consult with a benefits administration expert to figure out exactly what they need to stay in compliance.

Although the basic calculation seems simple, it can be particularly complex given the natural fluctuations of a large workforce on an annual basis. The IRS describes the calculation needed:

To determine its workforce size for a year an employer adds its total number of full-time employees for each month of the prior calendar year to the total number of full-time equivalent employees for each calendar month of the prior calendar year and divides that total number by 12.

The Challenge Of 50 Or More Full Time Equivalent Employees

Did you know that employers with more than 50 cannot purchase health insurance coverage for its employees through the Small Business Health Options Program? With the SHOP Marketplace off limits, it becomes even more for employers with 50 more full time equivalent employees to work with a groups benefits provider like Pontrelli, Timour & Associates, Inc. that can answer your questions, lower your costs and help your company stay in compliance. To learn more about how PT Benefits can help, please call us today at 626-795-4138 to speak with a member of our customer-centric team.

PT Benefits Addresses The Challenges Of Filing IRS Form 5500 Under ERISA Plans

Filing IRS Form 5500 under ERISA plans can be challenging. Pontrelli, Timour & Associates, Inc. needs to let our clients and potential clients know that ERISA (Employee Retirement Income Security Act) plans with 100 or more participants at the beginning of the plan year are required to file an IRS Form 5500. An ERISA financial audit may also be required. Smaller plans with less than 100 participants at the beginning of the plan year may be eligible to file IRS Form 5500-SF. Certain welfare benefit plans with less than 100 participants at the beginning of the plan year may be exempt from filing IRS Form 5500.

IRS Form 5500 Filing Challenges

irs form 5500

Importance of Filing IRS Form 5500

The IRS Form 5500 must be filled no later than 7 months (or up to 9 1/2 months with extensions) after the end of the plan year. As a result, the necessity for filing plans for 2014 is rapidly approaching. A two and one half month extension may be obtained by filing Form 5558 with the IRS. PT Benefits. Rather than filing such an extension, it is better to work with an experienced group benefits leader like PT Benefits to file such forms.

Did you know that the penalties can be up to $1,100 per day for failure or refusal to file an IRS Form 5500? If you discover that you have not filed all your Forms 5500, do not wait for the government to find you! Please take advantage of the Delinquent Filer Voluntary Compliance Program. PT Benefits can help. We are available to prepare your annual Form 5500 and Summary Annual Report.

Questions About IRS Form 5500

It is essential to know how to define a participant in such plans. The IRS Form 5500 instructions define “participant” for purposes of filing in a confusing manner, but PT Benefits can help. An individual becomes a participant covered under an employee welfare benefit plan when one of the following happens:

  1. The date designated by the plan as the date on which the individual begins participation in the plan;
  2. The date on which the individual becomes eligible under the plan for a benefit subject only to occurrence of the contingency for which the benefit is provided; or
  3. The date on which the individual makes a contribution to the plan, whether voluntary or mandatory.

PT Benefits understands how intimidating all of the bureaucracy of IRS filings and ERISA plans and PPACA can be for any company. What is essential is to stay in compliance and not make careless mistakes. As a group benefits leader and a qualified insurance broker, PT Benefits can help with IRS Form 5500. To learn more about ERISA filings, please call 626-795-4138 and speak to one of our brokers.

PT Benefits Explains Employer Shared Responsibility Reporting Requirements Under PPACA: Code Sections 6055 & 6056

PT Benefits wants our clients and potential clients to understand that there are two types of employer shared responsibility payments, also known as pay or play penalties, under the Affordable Care Act (ACA). The first penalty under Internal Revenue Code (Code) Section 4980H(a) is the penalty for failure to offer health coverage.  Effective for plan years that began on or after January 1, 2015, a $2,000 annual penalty applies to a large employer that fails to offer at least 70 percent of its full-time employees (FTEs) health coverage. Employer Shared Responsibility Reporting Requirements mean serious business.

Penalties & Employer Shared Responsibility Reporting Requirements

Employer Shared Responsibility Reporting Requirements, PPACA

Employer Shared Responsibility Reporting Requirements

The second penalty under §4980H(b) is for the failure to offer coverage that is of minimum value and affordable. The Section 4980H(b) penalty is a $3,000 annual penalty assessed on a monthly basis, and applies to each FTE who is not offered minimum value affordable coverage by the large employer, goes to the Marketplace Exchange and receives an exchange subsidy for insurance he or she purchases through the Marketplace Exchange.  It is important to note that even if an employer offers coverage to 70 percent of its FTEs for 2015 and 95 percent of its FTEs for 2016 and beyond, the employer could still be subject to penalties under Section 4980H(b) if the coverage is unaffordable or does not provide minimum value.

What is even more troubling when it comes to Employer Shared Responsibility Reporting Requirements is that even if an employer meets the 70/95 percent threshold, it still faces the potential for the $3,000 Section 4980H(b) penalty for every FTE who is not offered coverage (i.e., the 30/5 percent safe harbor employees) if that employee receives an exchange subsidy for insurance he/she purchases through the Marketplace Exchange.

Code Section 6055 requires health insurance issuers and employers that sponsor self-insured health plans to report information concerning the type and period of coverage to the IRS and to the covered individuals.  Section 6055 reporting is intended to serve as verification that the individual has MEC for purposes of enforcing the ACA’s individual responsibility requirements.  Code Section 6056 requires large employers to provide information to the Internal Revenue Service (IRS) about whether MEC is offered to their FTEs and their dependents. The IRS will determine whether an employer owes a shared responsibility payment under Code Section 4980H and whether an employee is eligible for a premium tax credit on a Marketplace Exchange will use this information.

Employer Shared Responsibility Reporting Requirements – 6055 & 6056

Employers with 50 or more FTEs use Forms 1094-C and 1095-C to report the information required under Code Sections 6055 and 6056.  Form 1094-C is used to report to the IRS summary information for the employer and to transmit the Forms 1095-C to the IRS.  Form 1095-C is used to report information about each applicable employee. If an employer provides coverage through an insured plan, part of Form 1095-C will be left blank.  The insurance company will separately report on MEC for those individuals enrolled in fully insured plan options.

Recognizing the burden of these Employer Shared Responsibility Reporting Requirements imposed on employers, the IRS has provided a simplified reporting method for large employers that make qualifying offers of coverage to FTEs, their spouse and their dependents for all 12 calendar months of the reporting year. A simplified alternative that allows the employer to report without identifying or specifying the number of FTEs is also available for employers that offered, for all 12 months of the calendar year, affordable health coverage under IRS safe harbors.

Help With Employer Shared Responsibility Reporting Requirements

PT Benefits believe that employers should review the draft reporting forms and instructions to familiarize themselves with the types of information that must be provided under these Employer Shared Responsibility Reporting Requirements.  If such forms and instructions are too complicated, PT Benefits will help our clients navigate this maze of PPACA bureaucracy. To learn more about how PT Benefits can help your company with Employer Shared Responsibility Reporting Requirements and whether your company qualifies for an IRS safe harbor, please call 626-795-4138 today.

3 Strategies To Help Employers Manage Workplace Stress And Improve Productivity

Published in June 2013, Employee Benefits Healthcare research, reveals that just 46% of respondents have strategies in place to combat workplace stress. There are many reasons why the majority of employers have yet to address this problem. For example, many employers simply refuse to accept that stress is actually a problem in their workplace. Many others recognize the issue, but do not take it seriously and do not believe it is there responsibility. But lessening workplace stress and addressing employee health issues is part of a good employer’s compact.

How To Manage Workplace Stress

workplace stress

Managing Workplace Stress = Productive Employees

Pontrelli, Timour, & Associates Inc. has seen from experience that employers who address the issue of workplace stress in advance avoid problems and pitfalls later on. Yet, when the return on investment is so difficult to measure, it is difficult to convince senior managers to use resources, funds and valuable time to address this problem. Another problem is caused by the continuing sensitivity about mental health issues, particularly within the workplace. Many employees do not reveal the damage being done by difficult situations that generate workplace stress until it’s too late.

Here are three strategies to consider to proactively address employee workplace stress before it becomes a problem:

  1. Use online tools because they are anonymous & revealing
  2. Train managers to identify stress-related problem areas in your business and direct appropriate resources
  3. Encourage employees to take responsibility for their own physical and mental wellbeing

1) Online Tools For Workplace Stress Management

A number of organizations are working with the British program designed by PruHealth. The English company has developed online tools, packaged as the Vitality mental wellbeing suite, that can assess employee stress, psychological wellbeing, resilience and social support. Support is then offered through a Living Life online life skills course that uses cognitive behavioral therapy (CBT) and consists of modules, worksheets and e-books. In the United States, the Mayo Clinic and the Cleveland Clinic also have excellent online wellness programs.

2) Train Managers To Identify Potential Problem Areas

Managers are often not given any training to identify stress. Training involves giving managers the courage to have initial conversations with staff suffering with stress. Employers should identify particular problem areas of their business and direct their resources accordingly. Assess the challenging areas of your business and compile the difficulties in a document. Such an accounting can help in the targeting of potential problem areas.

3) Encourage Employees To Take Responsibility

In order to fully address the issue of stress in the workplace, employers need to encourage employees to take responsibility for their own health, both physical and mental.  It is surprising how promoting a walking group where employees enjoy an extended lunch break once a week can increase productivity and improve morale. Employees need to understand that employers support their efforts to promote wellness and engage in positive activities.

Pontrelli, Timour & Associates believes in helping our client companies address workplace issues at the outset in order to ensure they do not become problems. By addressing the issue of stress in the workplace, you can avoid a loss in productivity and profitability down the line. To learn more how PT Benefits can help you, please call 626-795-4138 for a free consultation.

Three Ways For Employers To Help Employees Understand Healthcare Policy In The 21st Century

With the onset of the Affordable Care Act changing the landscape of healthcare benefits and plans, employers need to help employees understand their company’s healthcare policy and the new options provided by the Affordable Care Act. From implementing any of the new changes to communicating new information about both regulations and options to employees, Pontrelli, Timour & Associates can help employers feel comfortable about taking such steps.

healthcare policy

Healthcare Policy in the 21st Century

Once you understand what needs to be communicated, you can come up with a workable and proactive plan of how to communicate this bevy of new information about your healthcare policy.  PT Benefits offers 3 ideas on how to help your employees with a dual goal of covering the informational bases of your new healthcare policy and creating common ground that raises morale.

3 Ways To Help Employees Understand Your Healthcare Policy:

1) An employer should make sure to share the “what” and “why” of their company’s healthcare strategy. If you’re changing your organization’s health benefits approach for 2014, communicate both the “what” and the “why” to employees. Such shifts in strategy and plans are very common among small to mid-sized companies, particularly nonprofits. You should help employees understand what impact the Affordable Care Act has on the plans you offer, including who is eligible for coverage. In addition to raising awareness, all employers are required to provide a notice about new coverage options with the health insurance exchanges.

2) Employers should develop a new plan for distributing resources about basic healthcare information. PT benefits can help you with such a plan based on our experience with other clients. Many employers are shifting how they offer benefits because of the Affordable Care Act. In many cases, this means is a shift toward consumer-driven health care or defined contribution. Both of these models require employees to take more control. Employees need access to resources and education about basic health care terms, and basic healthcare reform information. A good start is by answering the following questions:

Healthcare Policy Questions

  • Who can your employees call with questions?
  • How can healthcare experts like PT Benefits help? 
  • What resources should be provided to employees? 

3) In order to strengthen their bond with employees, employers need to reinforce the value of their health plans and the overall value of working for the company. Regardless of the type of health benefits you are providing, you obviously care about the health of your employees, but do your employees know this to be the case? If not, you should use communication about health reform as an opportunity to reinforce this principle in order to improve retention rates and create a sense of goodwill by raising company morale.

PT Benefits can support your efforts to help your employees understand your company’s healthcare policy. To learn about how we can make the Affordable Care Act easier for your company to navigate, please contact the professionals at Pontrelli, Timour & Associates by calling 626-795-4138 or fill out our handy contact form.