Simplifying Health Reform: The Truth About Three Common Myths
Myths vs. Facts With so many changes and new rules under Health Care Reform, it can be difficult to understand what is required. Below are some of the most common myths for employers surrounding the law. MYTH #1: Employers that offer health insurance must provide the same coverage to all employees. FACTS: Similarly situated individuals must be treated equally. Distinctions among groups of similarly situated employees may be permitted if they are based on bona-fide employment-based classifications consistent with the employer’s usual business practice—for example, full- and part-time employees. The IRS has delayed the requirement in the Affordable Care Act that fully insured group plans comply with rules “similar” to the rules prohibiting discrimination in favor of highly compensated individuals (currently applicable to self-insured plans). Large employers may be liable for a “pay or play” penalty beginning in 2015 if they do not offer affordable health insurance that provides a minimum level of coverage to full-time employees—those averaging at least 30 hours of service per week. An employer who plans to use a SHOP-Exchange (Small Business Health Options Program) must offer coverage to all full-time employees. MYTH #2: Employers cannot continue to use their brokers to purchase health insurance coverage for employees. FACTS: Regardless of whether an employer buys coverage inside or outside of a SHOP-Exchange, the employer can use its current agent or broker. Health insurance brokers can help employers: Apply for insurance for their employees; Review and compare price, coverage, quality, and other important features; and Choose a plan that works for the employer’s budget, business, and employees. Employer premiums for SHOP-Exchange coverage will be the same whether or not the employer uses a broker. MYTH #3: Small businesses are required to buy health insurance for their employees. FACTS: The law does not penalize small employers that choose not to offer coverage. Starting in 2015, large employers—generally those with at least 50 full-time employees, including full-time equivalents (FTEs)—may be liable for a “pay or play” penalty if they do not offer affordable health insurance that provides a minimum level of coverage to their full-time employees. For purposes of the “pay or play” rules, affiliated employers are generally combined to determine their workforce size. As a result, small employers that individually do not employ 50 or more full-time or FTE employees may still be subject to the requirements if they meet the threshold when combined with other companies under common ownership or that are otherwise related. Click to review our Health Reform Checklist for 2013.