Employee Benefits Compliance Guide

Employee benefits are an essential part of your business. Without them, you will have a hard time finding the best, most qualified employees for your business. But employee benefits can be tricky to navigate–especially if you’re not up-to-date with current employee benefits compliance guide.

To ensure you’re keeping up with all ACA compliance rules and avoid any possible penalties, you need to pay attention to the changes that are implemented and communicate them successfully to all your plan participants. Let’s take a look at some of the biggest ACA policy changes for 2021 to review what you need to know to have successful employee benefits compliance.

To learn more about employee benefits compliance, or to request a quote, contact Beckham Insurance Group today

Changes in 2021 ACA Designs

With record-breaking unemployment rates considering the COVID-19 pandemic, pricing for Affordable Care Act (ACA) plans has greatly changed. These changes need to be efficiently communicated with all your plan participants as thoroughly as possible.

Among these changes is included the responsibility of larger employers to provide minimum value compliant health coverage for full-time employees and their dependents. If this standard is not met, harsh penalties may come upon your company. One such change is the employee’s contribution amount rising to 9.83 from 9.5 of their household income for the taxable year.

Additionally, Health FSA employee contribution limits are increasing by 1.5%, non-grandfathered health plans are required to meet certain cost-sharing limits for essential health benefits (EHB), and they must meet certain ACA requirements and preventative care measures that grandfathered plans do not necessarily have to meet.

Grandfathered Plans

Grandfathered plans are any healthcare plans that were in place before March 23, 2010–when the ACA first went into effect. These plans may be exempt from certain ACA requirements, and businesses do have the option to revert to one of these plans if they feel it is in tier best interest. However, if you choose to revert to a grandfathered plan, know that you must still comply with ACA required patient rights and benefit provisions.

Requirements for ALEs

Any plans that don’t meet ACA compliance standards may be subject to penalties–including applicable large employers (ALEs). These companies must provide affordable healthcare options that meet minimum requirements for full-time employees and dependents. But how do you know if your business is an ALE? Well, if you have at least 50 full-time employees–including full-time equivalent employees–then you’re an ALE.

ALEs have the responsibility of ensuring that the health coverage they provide is affordable for all their employees. To meet this requirement, the ACA mandates that at least 95% of full-time employees can meet the healthcare costs.

Compliance here is especially important now because the ACA’s “pay or play” penalties, those governing healthcare costs, are increasing for 2021 with two penalties under Section 4980H(a) and Section 4980H(b) that apply. For the first penalty, insubstantial coverage results in a penalty of the number of full-time employees minus thirty and multiplies it by $2,000 as the ALE’s fine. For the second, the penalty is to multiply the number of full-time employees who receive exchange subsidies by $3,000.

Reporting and Disclosure 

ALEs have to report employer-sponsored health coverage information to the IRS so that the IRS can certify employer-sponsored coverage. This also allows the IRS to use the information to administer employer-shared responsibility provisions. Businesses must determine which ACA reports apply to their health plans so that they can create the correct statements for their employees and reports for their business.

Most employers are required to use forms 1094-C and 1095-C to report their full-time employee’s healthcare information to the IRS. 1094-C lets employers summarize the information that is presented on form 1095-C as well as other organizational details, eligibility certifications, points of contact, and EIN. It will also include contact and specific business-based information for the company including its address, the number of employees, their phone number, and more.

The 1095-C is a longer summary of those healthcare plans that the ALE offers to both its full-time employees and its dependents. Copies of this document are given both to the IRS and to individual employees so that everyone is aware of benefits and coverage options and pertinent company information.

Benefits Plan Requirements

There are several requirements for ACA plans that spill into 2021. Included among these are child dependent age requirements, protected pre-existing conditions, no clinical trial coverage termination, and waiting period limitations.

For example, for child dependents, coverage must be provided until they reach the age of 26 and it can apply to both married and unmarried children, and with preexisting conditions. No coverage can be denied to a patient because of a pre-existing condition. There is a grandfathered exception to this rule concerning plans that began before January 1, 2014.

Employee Benefits Made Easy

We hope you now know more about the employee benefits compliance guide. At Beckham Insurance Group, our knowledgeable and experienced employee benefits representatives are here to help make your benefits administration as easy and stress-free as possible. Contact us today to learn more about how we can help you build a competitive and comprehensive benefits program.