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Health Care Reform: What AEs Need to Know

October 4, 2013

The North Carolina Association of REALTORS®’ newest affinity partner is a health insurance provider—not surprising, given that all REALTORS® must have health insurance by 2014.

“We’re excited about the timeliness of this addition to our partner program, since health care will be a major focus in our upcoming communications,” says Blair Wilburn, the association’s communication and marketing director. Already, the partner has provided webinars for members and local association executives explaining the new insurance requirements.

Some of the biggest provisions of the Affordable Care Act, or Obamacare, take effect next year. Although you may have heard that the law affects businesses with 50 or more employees, there is still information that you need to know if you offer health insurance—or even if you don’t. Member brokers and agents may increasingly be looking to their REALTOR® association for guidance and resources. You may receive qualified guidance from your insurance broker and tax consultants, but you should know the law’s essential facts.

50 or more employee threshold

Beginning in 2015, employers with 50 or more full-time equivalent (FTE) employees must offer health insurance coverage for their employees and dependents. A full-time employee is defined as one who works 30 hours or more per week, averaged over the course of a month. Part-time employees’ hours will need to be tracked to determine whether the 30-hour-per-week threshold is met. If so, they and their dependents also would need to be covered under your plan. Employers with fewer than 50 FTE employees are not required to offer health insurance coverage.

What your health insurance plan must now cover

No matter how many employees you have, to meet the new law’s requirements, your association’s health insurance plan must include some basic provisions ranging from maternity care to prescription drugs. If you’re working with an insurance broker, make sure he or she is offering a policy that’s compliant with the new requirements, which also stipulate coverage levels, out-of-pocket limits, maximum deductibles, policy limits, and more.

Notices that you must now provide to employees

Summary Plan Comparisons must be provided to all eligible employees, even if they waive coverage. Summaries must be provided during your annual enrollment period and within 90 days from new employees’ hire date.

Effective October 2013, employers must provide a notice to all employees regarding the existence of the State Health Exchanges. Samples of these letters can be found at:

Since the beginning of 2013, the full cost of the premium paid for the employee’s coverage level must be reported on his or her W-2, Box 12, Code DD. The amount is not taxable but is for informational purposes only.

New tax break incentives for associations

Associations with fewer than 50 full-time equivalent employees may purchase health insurance via their state’s small-group insurance market or the new small-employer marketplaces known as the Small Business Health Option (SHOP) exchanges. Nonprofit associations that have fewer than 25 FTE employees, an average wage of $50,000 or less, pay 50 percent of the employee’s premium, and purchase through their state’s SHOP are eligible for two years to receive a tax credit of up to 35 percent of insurance premiums paid. You will be able to find plans meeting the requirements of the new tax credit and the new law on your state’s Small Business Health Option Web site or through traditional insurance brokers who agree to work through the SHOP exchange. Offering health insurance attracts and retains employees. Small associations that could not afford to offer coverage due to its cost may now consider doing so because they may be eligible to receive the tax break.

In 2014, employees typically will be enrolled in those SHOP insurance programs that the employer has chosen. In a small number of states in 2014 , and beginning in 2015 in all states, a small employer will select a level of coverage and employees will be able to choose from any of the plans available within that level in the SHOP exchange.

Large associations must offer affordable health coverage

Associations with 50 or more FTE employees must offer a health insurance plan for employees and dependents or pay a penalty beginning in 2015. Coverage may be provided via a fully insured group policy offered by an insurer or by self-insuring. In some states, firms with 50 to 100 employees may be able to purchase coverage via the SHOP exchange in 2014. Beginning in 2016, all state SHOPs must be open to firms with 50 to 100 employees. Plus, the coverage offered must be “affordable.” Affordability is calculated on the basis of the cost of an individual plan for an employee, which cannot exceed 9.5 percent of the employee’s Modified Adjusted Gross Income.

Exemptions

Group health plans that were created—or an individual health insurance policy that was purchased—on or before March 23, 2010, are exempt from many changes required under the Affordable Care Act. You can find out if your insurance is grandfathered by reviewing your health plan documents.

Large associations that elect not to offer coverage (or offer a policy that does not meet the law’s requirements) and have one or more employees who obtain coverage and a premium subsidy in the state exchange will pay a penalty of $2,000 times the number of the firm’s FTE employees minus 30 employees per year. All penalties are scheduled to change each year based on insurance rates.

Changes to out-of-pocket limits

It is anticipated that associations will have to include deductibles and copays in the maximum out-of-pocket limits. So if your individual out-of-pocket limit is $6,400, and your annual deductible is $1,000, your out-of-pocket limit is reduced to $5,400 after the deductible.

All individuals required to be covered in 2014

The goal of the health reform law is to ensure that all individuals have insurance coverage via an employer plan, a government-sponsored health program (i.e. Medicare, Medicaid, SCHIP, veterans benefits, etc.), an insurance company, or the state exchanges for individuals.

Beginning in 2014, coverage in the individual market will look a lot like traditional guaranteed issue group plans. An insurer can no longer refuse to provide coverage for an individual based on health status; exclude pre-existing conditions; or set premiums based on gender, health status, job type, or any of the factors that have traditionally been used in the past. Moving forward, premiums in the individual (non-group) market can be based only on age, geography, type of policy purchased, and tobacco usage.

If your association doesn’t offer health insurance, your employees may still have questions about the requirement that they buy their own health insurance or face a penalty, especially if they haven’t had insurance before. Subsidies to help cover the costs of premiums are available to low- and moderate-income families who make as much as 400 percent of the federal poverty level (that’s $45,960 for individuals and up to $94,200 for a family of four). Estimates are that roughly half of all individuals currently purchasing their own individual insurance coverage will be eligible for premium subsidies via the state health insurance exchanges.

If an individual’s or family’s income is at or below 138 percent of the federal poverty level, they may be eligible for coverage via Medicaid if their state has chosen to participate in the expanded Medicaid program.

Noncompliant states and your options

Although states were given the authority to establish and run their own individual and SHOP Exchanges and could receive federal grants to help cover the costs involved, some have opted not to establish a state exchange or SHOP. Others have entered into joint ventures with the federal government to develop and administer their exchange and SHOP. If a state has chosen to take neither of these routes, the federal government has the authority to create and administer the state exchange and SHOP for the state. For an update on what approach your state has chosen to take, visit kff.org/state-health-exchange-profiles.

Thank you to Marcia Salkin, managing director, legislative policy, NAR; and Stephen A. Wells, assistant vice president, Aon Hewitt, NAR’s health insurance broker, for their assistance.

Donna Garcia is director of Human Resource Services for the NATIONAL ASSOCIATION OF REALTORS® in Chicago. She can be reached at 312-329-8311 or dgarcia@realtors.org.


Additional Resources

NAR Healthcare Reform Update
http://www.realtor.org/topics/health-care-reform/background#FAQ

Health Care Reform: A Guide to Your Coverage Options (REALTOR® Magazine)
http://realtormag.realtor.org/news-and-commentary/feature/article/2013/0...

Health.gov Website with Additional Resources and Calculators for Individuals and Small Businesses:
http://www.health.gov

Helpful FAQ (Kaiser Family Foundation)
http://kff.org/health-reform/faq/health-reform-frequently-asked-questions/

IRS FAQ on Employer Mandate
http://www.irs.gov/uac/Newsroom/Questions-and-Answers-on-Employer-Shared...

IRS FAQ on Individual Mandate
http://www.irs.gov/uac/Questions-and-Answers-on -the-Individual-Shared-Responsibility-Provision

Individual Mandate Infographic (Kaiser Family Foundation)
http://kff.org/infographic/the-requirement-to-buy-coverage-under-the-aff...

ACA Implementation Timeline (Kaiser Family Foundation)
http://kff.org/interactive/implementation-timeline/

In-Depth State-by-State Exchange Profiles (Kaiser Family Foundation)
http://kff.org/state-health-exchange-profiles/

State Exchange Overview (Kaiser Family Foundation)
http://kff.org/health-reform/state-indicator/state-decisions-for-creatin...