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How To examine employee health insurance options under the PPACA

Author: defadmin 11-04-2013, 17:59

Patient Protection and Affordable Act (PPACA), with which new “pay or play” health related regulations were introduced, was released 12.28.2012. Businesses will start to work under new rules from 01.01.2014, so there is plenty of time to do all necessary calculations and legal preparations.


This act can be viewed as a next step to build a more social responsible insurance system in the USA. In general, companies will pay coverage for federal subsidies, which their low-income employees are likely to get from federal government. To be given such a subsidy, employees need to have income for a family of four between $92,000 and $368,000, that is to say 1 to 4 times federal poverty level.


Step 1.  Full-time equivalent employees.  

Now, employers have to decide, whether they have at least 50 full-time or full-time equivalent (FTE) employees. Here FTE stands for workers, who constantly does at least 120 hours per month, 30 hours per week, and you can't apply IRS rules to determine the number of such employees. In the answer is yes, than they are under the new regulations.


Step 2. Possible expenses.

Now it's time to forecast possible expenses for going through the regulations or penalties for no compliance with PPACA. In a case of paying needed coverage, businesses can do without penalties. Taxes are also not incurred if no one worker of the company have got federal subsidy. In the contrary to all cases said above, companies will pay $2,000 per full-time worker plus $3,000 per subsidized worker.


Step 3.  Taxation.

Another important issue is that of taxation. Payments for health care coverage can be deduced from taxation, but the penalties cannot.


Step 4. Human resources policies.

Companies also have to take into account theirs human resources policies, especially in the part of providing health insurance. They may still wish to provide such plans as part of motivational programs. This is the point where managerial decisions ought to be based on individual employer strategic vision. 


Step 5. Cost of administrating changes.

And, the last but not the least measure that have to be carefully calculated, is the cost of administrating changes in a company, allowing for periodic presentation of PPACA reports. This will include the number of full-time equivalent workers.

by Vladimir Dmitriev