California health insurance - 5 Ways to Save - Move to ACA Plans During Renewals
Is Your Company Up To Date on the ACA Changes?
If not, it could means $1000's in either savings or penalties.
That's not an exaggeration.
The IRS just (July 1st) notified companies that paying for individual/family plans (not employer sponsored) will result in:
A penalty of $100 per employee per DAY. Yes...$36,000 penalty.
Roughly
20% of California companies do this either unknowingly or at the recommendation
of agents/entities.
They are accruing a daily penalty right now and some are hoping the IRS doesn't figure it out.
Good luck betting against the IRS to go after money.
That's just one instance of how new changes are completely transforming the group health insurance market as a result of the ACA law.
Let's look at the 5 critical changes that every California company needs to know about (or pay as a result).
Tax Credits for Business
It's not all stick.
There's a pretty big carrot in the ACA law for California companies that meet the following criteria:
- 25 or less employees
- $50K or less average salary (does not include owners or officers)
For these companies, they are can receive up to 50% of their employee health insurance premium right away.
The monthly premium is reduced by this amount (no waiting till April).
We can quickly size up if you're eligible for these tax credits and quote all the carriers that participate in the Covered California for Small Business market.
Call 866-696-8636 or enter your Company census here so we can run your tax credit eligibility
Penalty for companies that pay towards individual/family plans
Okay, so there are some sticks as well.
This is a big one and many companies are unaware.
We speak with them everyday and they either don't believe us (IRS notification here) or they panic. Yes, believe us and No...do not panic.
So what's the deal?
A lot of California companies dropped group health insurance since the ACA law came into effect because their employees could go get tax credits on the Covered Ca individual market (you can quote that here).
Great news...employers reduces cost of health care and a lot of employee get subsidized health coverage.
Good news for everyone but the IRS.
The IRS calls this double dipping. The employer is getting tax deduction on contribution to employee benefit. The employee is also getting tax credit from Covered Ca.
IRS is not happy.
IRS issues "clarification".
If a company (even small business down to 1 employee) contributes to an employees individual/family health plan, there is a penalty of $100 per day per employee.
It's a big stick and meant to send a strong warning to companies.
If you're in this situation, call us immediately.
We can help you either establish a group health plan with the best rates (and maybe even the tax credits established for companies) or advise on compliance with the law above.
New
cloud based HR and Payroll Systems
This isn't so much a result of the ACA law as a result of the internet.
About time.
We now have a new benefit system called Rippling which is going to make employer's (or their HR person) lives so much easier.
It's also FREE to you.
For our clients, we pay for the entire system.
No cost except for a optional payroll integration with your existing payroll company.
Paychex, ADP, any company with an internet interface.
This is a huge deal.
What can you expect?
- Simple one-click onboarding, offboarding, and HR management
- Payroll integration and benefit management is completely integrated
- Reporting and Compliance is full integrated
The real beauty of the system is the beauty of the interface.
We are very excited and proud of Rippling.
It's going to save you so much time and effort that you'll actually like insurance agent.
We're pretty likable already but this is a clincher. Check out our Google reviews
Call us at 866-696-8636 or email help@calhealth.net for a free demo.
While we're at it, we'll also run a full quote and proposal (including tax credits) to make sure you getting the best rate.
Renewal to new ACA Plans for 80% of California Companies
Many
companies (approximate 80%) have opted to forego the move to ACA plans by first
grandfathering and then grandmothering coverage.
We've run out of time and frankly, out of grandparents.
Q4 is crunch time
And most companies are going to feel the crunch when they see the new rates.
Here's the deal.
The ACA plans have to hit one of four benefit benchmarks (bronze, silver, gold, or platinum).
A companies plan cannot deviate from these benchmarks by more than +-2%.
So what's the big deal?
For any company (or employee) that is on a lower priced, deductible plan, the new plans don't match up exactly.
We've seen increases of 20-50% for the default transition plan
Employees are finding that their old plan was either richer or much less rich than the new ACA benchmark available.
The old plans had no benchmark.
The net effect of this is that rates may jump or benefits may drop significantly...and there is no middle ground.
That's what 80% of the California companies will have to face Q4.
A completely new landscape for group health benefits.
We know from above that we can't pay towards individual/family plans so how do we address this?
We have to start from scratch and this is how we will help.
We will run a complete benefit proposal reflecting all the new options including:
- Availability of tax credits
- Comparison quote across all major carriers
- Private Exchange options which can be priced better for certain carriers/plans
- HSA and HRA options to reduce the cost
- POP 125's, Sectoin 105's and other options to reduce out of pocket
Just enter your census information in the Group Health Quote tool and we'll get started. Let us know your current carrier/plan/rate and we'll get to work.
Our services are completely free to you.
Penalty for Larger Companies (50+ full time equivalent employees)
As
if the first penalty wasn't enough, larger companies are literally dodging
sticks.
There's a big one which is confusing but we'll break it down.
If a California company employs the equivalent of 50+ full time employees and does not offer Minimum Health Benefits, they will be subject to a fine.
It gets a little more complicated but here's the net effect.
If a company offers no coverage, they are subject to a $2000 penalty/employee/year for all eligible employees.
This is the big one.
If a company offers a Minimum essential Coverage plan, they will subject to $3000/employee that gets a tax credit at Covered California. This penalty can fluctuate depending on how many employees are getting tax credits.
We know from above that we can't pay for individual/family plans so what should a company do?
There are three options.
- Pay the penalty. Damn the torpedoes. (company may sink...no pun)
- Offer a MEC plan if it's less expensive (penalty only on employees that get tax credit)
- Offer a full plan if it's less expensive (no penalty)
The calculation here has some additional wrinkles and it's complicated but we're happy to run the numbers for you and give you a cost estimate for all three options.
We'll make it clear, easy, and quote the best rates on the market. Email at help@calhealth.net or call 866-696-8636 for your free proposal and comparison.
A Quick Round Up of the Options
Okay.
Those are the big changes affecting the California group health insurance market and if they haven't brought to your attention by your agent or carrier then....well, we'll reserve our remarks.
We have notified all our clients and helped them evaluate the options in advance so that they are not hit with a penalty (accruing right now) or find themselves behind the eight ball when changes hit them.
If you want that type of guidance and help which directly translates into savings and avoidance of penalties, feel free to contact us.
Our services are Free to you but our advocacy is invaluable.
Related Pages:
Online HR Benefit System Saves Time and Money
5 Ways for California Companies to Save on Health Insurance
Request your Small Business Health Quote With Tax Credit Calculations