Posts

Insurance Brokers! Higher commission and better rates are here!

Attention brokers! Do you want to get higher commissions and better rates for your clients? Look no further! SBMA provides the most competitive rates for your minimum essential coverage. Our goal is to make you look like a rockstar for your clients while making more commission.

Understanding Minimum Essential Coverage Options

Understanding the various minimum essential coverage plans that you can offer your employees is essential to providing coverage that matters. At SBMA, we offer the most competitive limited medical plans in the industry. We ensure every client remains ACA compliant by offering our medical plans.

SBMA benefits serve employers with ACA mandated compliance requirements. It supports those employers by offering employees who need affordable benefits the right solution for them. Our mission is to provide great benefits at a great price. SBMA is nationally recognized as industry experts on ACA compliance, ERISA law, and Healthcare Reform, and we’re here to help!

How much can you save with MEC?

How much can you save with MEC? Minimum Essential Coverage (MEC) is coverage that complies with ACA requirements. The Affordable Care Act (ACA) states that all employers with 50 or more full-time employees- Applicable Large Employers- are required to provide coverage to all eligible employees or they will be subject to fines/ penalties. 

MEC plans generally cover preventative and wellness-related tests and treatments. These plans can be a great cost-effective option for larger employers. With a MEC plan, the premiums can be paid solely by the employers, the employee, or they can be co-funded. In order to be ACA compliant, employers must offer this coverage to all of their full-time or full-time equivalent employees. 

How much can you save with MEC? Check out our calculator!

What is MEC and What Does it Cover?

What is MEC?

Understanding minimum essential coverage (MEC) can be complicated when comparing MEC to Minimum value, essential health benefits, and actuarial value. Let’s start by answering what is MEC and what does it cover? MEC is a plan that meets the Affordable Care Act requirement for getting health coverage. Some of these programs under MEC include marketplace plans, job-based plans, Medicare, and Medicaid.

So what is the difference between MEC and minimum value?

Minimum value is a higher threshold than MEC. Minimum value is when a plan pays 60% of the actuarial value of allowed benefits under the plan. If a large employer offers benefits and meet MEC requirements, but they do not meet the minimum value they meet the ACA employer requirements. 

What about MEC and Essential health benefits?

Essential health benefits are the core benefits that “qualified health plans” must cover. MEC also has a lower threshold than Essential Health Benefits. If a group health plan doesn’t provide all the benefits under the essential health benefits, the coverage will likely meet MEC, so companies will be ACA compliant.

Why is it important to understand the differences? 

Each of these coverage specifications are important to ensuring large employers provide proper coverage to their employees. As an employer, you must understand your legal liability in providing benefits, as well as understanding what coverage you need to be offering your employees to give them the best options and ensure compliance with the ACA.

At SBMA, all of our plans are compliant with MEC regulations to ensure your employees have coverage for whatever comes your way. Want more information? Visit our site to understand your coverage options better.

What is MEC and what does it cover?

Are You Liable for Shared Responsibility Payments?

are you liable for shared responsibility payments?

With all the recent changes to employment due to the global pandemic, navigating ACA compliance can be challenging. ACA noncompliance may lead to shared responsibility payments. Businesses with 50 or more full-time employees must offer affordable, minimum essential health coverage. 

How can your business avoid tax penalties from the IRS? 

The first step to avoid potential shared responsibility payments is to make sure your business stays compliant with the ACA shared responsibility requirement. While this may seem simple, there are few distinctions to be aware of, including determining full-time employment status and full-time equivalents, and identifying the minimum value requirements. 

If employers do not cover at least 95% of full-time employees and their dependents, the employer will be subject to a shared responsibility payment. 

If a full-time employee receives a premium tax credit because they were not offered coverage, the coverage was not affordable, or the minimum value was not provided, the employer may also be subject to a shared responsibility payment. 

Once you have identified how to stay compliant with the ACA shared responsibility requirements, ensure your reporting is accurate and timely. 

Applicable Large Employers (employers with 50 or more employees) are required to file information returns with the IRS, Forms 1094-C and 1095-C. These forms will inform the IRS of the employers that owe shared responsibility payments.

To mitigate the risk of receiving a letter from the IRS for shared responsibility payments, employers should carefully review and complete the forms above. 

If you do receive a shared responsibility payment letter from the IRS, the employer has 30 days to respond. If you do need more time to gather your information, the IRS may be able to extend the 30 days deadline. Either way be sure to respond or ask for an extension as quickly as possible.

If you are required to pay a shared responsibility payment be sure to consult a lawyer to ensure your reporting is accurate. At SBMA, we want to ensure you remain compliant with all ACA requirements. If you receive a letter from the IRS in 1094/1095 filing that we completed, we will refile your forms, free of charge. 

Contact us today to learn more.

shared responsbility payments

What You Need to Know about 2020 1094/1095 Filing

Due to the Coronavirus outbreak, the IRS has pushed back the tax filing deadline to June 15, 2020, for individuals, but there have been no specific details into filing for 1094/1095. The only information they gave was that the 30-day extension that can be filed past March 2 can be extended an additional 30 days. Here’s what you need to know about 2020 1094/1095 filing.

Form 1094-C/1095-C

Form 1095-C, which is filed to any full-time employee of an Applicable Large Employers member (employers with 50 or more full-time employees), who is full-time for one or more months of the tax year. These members report information regarding each employee for all 12 months of the year.

The information that is reported from both 1094-C and 1095-C is used to determine employer liability for payment under the employer’s shared responsibility provision, section 4980H, and the amount, if any, that is owed. 

Employers that are subject to the ACA must distribute 1095 reporting forms to employees and transmit copies to the IRS, with a few exceptions:

Form 1095 B, Health Coverage

  • . Transmittal Form 1094-B to accompany Form 1095-B
  • Instructions for Forms 1094-B and 1095-B
  • Form 1095-C, Employer-Provided Health Insurance Offer and Coverage
  • Transmittal Form 1094-C to accompany Form 1095-C
  • Instructions for Forms  1094-C and 1095-C

Forms 1094-B/ 1094-B

Information in form 1095 B is reported to the IRS and taxpayers regarding employees who are covered by minimum essential coverage (which includes government-sponsored programs, eligible employer-sponsored plans, individual market plans, other Department of Health and Human Services coverage). Eligibility for this coverage may affect a taxpayer’s eligibility for the premium tax credit.

Everyone who provides minimum essential coverage to employees during a year must file an information return that reports the coverage, using forms 1094-B and 1095-B.

There is an automatic 30-day extension for both forms 1094-B and 1095-B, which you can receive by completing Form 8809 and filing it with the IRS on or before the due date. There is no need for a signature or explanation to receive the extension, but form 8809 must be filed before the due date of the returns. You may also apply for an additional 30-day extension under certain hardship conditions.

At SBMA, we take the complexity of 1094/ 1095 filing off your plate.  Our team will take care of all of the filings and, in the event the IRS sends a letter saying the filing was incorrect, we will take care of the refiling on your company’s behalf. 

Penalty A and B Compliance

What You Need to Know About Penalty A and B Compliance

If you are a business owner and qualify as a “large employer” —  any company with 50 or more full-time or full-time equivalent employees (employees who average 30 hours per week) — there a few things you need to know regarding employee coverage. If you don’t comply with the regulations set for you, you will face significant penalties, which can quickly add up. 

ALE employers must offer affordable or minimum value medical coverage to their full-time employees and their dependents until the age of 26. This minimum essential coverage includes various programs that comply with ACA’s provisions to employer health care. 

Any employer who does not offer minimum essential coverage to at least 95% of their full-time employees and their dependents is subject to penalty, and at least one employee obtains coverage through the Marketplace Exchange. This penalty includes a $2,320 fine per full-time employee after the first 30 employees. If you have 150 employees, this penalty would be $308,400.

If employers offer coverage, but the coverage is not affordable or does not meet a minimum value, they may still receive a penalty. If your employee’s share of the premium for the coverage you provide is more then 9.78% of their household income, the coverage is deemed unaffordable. 

The penalty includes either a $3,480 fine per full-time employee receiving a federal subsidy for coverage purchased on the Marketplace or a $2,320 per full-time employee, not including the first 30, depending on which is the lower cost for the company.

As you can see, these penalties can add up to a lot of expenses for your business. At SBMA, we want to help you avoid any potential penalties for lack of proper insurance. Contact us for more information regarding your employer benefit needs. 

The Importance of Penalty A and Penalty B Compliance

Employee benefit programs have been mandatory for all applicable large employers (ALE) since the Affordable Care Act, enacted in 2010. This Act requires employers to offer minimum essential coverage to all employees who work in a company with a staff of 50 or more. Failure to comply with this requirement will cause penalties for these companies and will likely lead to an IRS Audit down the road. Here is more information regarding the importance of Penalty A and Penalty B compliance.

Penalty A

Penalty A and B Compliance

The ACA ensures that ALEs offer coverage to more than 95% of their full-time workforce (who work 30 hours or more a week) and their dependents. If they fail to do this, the Employer Shared Responsibility Payment (Penalty A) will be issued. As of 2020, the cost for this violation is $2,750 for each full-time employee. Each month an eligible employee is not offered coverage; the penalty enforces, which comes to $214.19 per month for one employee.

If an employer has 500 employees, and they do not offer benefits to 95% of their full-time workforce, they could face at least a million dollars in violation fees. (See graphic.)

Penalty B

In addition to the minimum essential coverage ALE employees must provide, they also have to ensure that the coverage they offer their full-time employees is affordable. For coverage to be accessible, the employee must pay less than 9.78% of their household income. So coverage should cover more than 60% of medical service expenses. Noncompliance with this requirement could result in a $3,860 fine per employee who receives and exchanges tax credit.

If 100 of an employer’s employees receive a premium tax credit or subsidy on the Marketplace exchange, the employer’s fine is $3,860 per employee, which results in a $386,000 fine. Like Penalty A, Penalty B requires monthly assessments, for each employee not offered coverage that is a $321.67 fine.

Other Compliance Issues

Other penalties that may incur:

The delivery of Forms 1095-C to every recipient by January 31. Every form that is not delivered will incur a $280 fine.

All Forms 1094 and 1095 must be filed electronically by March 31. For every form, there will be a $280 fine failure with intentional disregard will increase the fine to $560.

At SBMA, we want to help your company avoid any potential penalties. Our team will take care of all of your 1095/1094 filings, and, in the event the IRS sends a letter saying the filing was incorrect, we will take care of the refiling on your company’s behalf.

What Does Minimum Essential Coverage Entail?

Minimum Essential Coverage was created when the Affordable Care Act was enacted. Before the Affordable Care Act began, people who already had medical conditions or had used too much medical care in the past were able to be denied coverage by insurers. Minimum Essential Coverage ensures that all ACA-compliant health care plans offer insurance to all enrollees regardless of health status or which plan they select. What exactly does minimum essential coverage entail?

To be considered minimum essential coverage, all health plans must cover ten necessary benefits. The amount of those benefits that they cover depends on the actuarial value. This number is determined by metal tiers, which depend on how much you pay per month. The more you pay the more is covered.

So what are the essential benefits that will be covered under minimum essential coverage?

Every plan must include these necessary benefits to ensure affordable health care for all. This saves people from spending ungodly amounts of money on health care services. These benefits include:

  • Laboratory Services: This includes diagnostic lab tests and preventive screening tests, like diabetes and cholesterol screenings.
  • Emergency Services: Any emergency care at a hospital or a facility out of network is covered with your insurer. 
  • Prescription Drugs: The medications are categorized by tiers, each tier contains at least one drug that your insurance will assists payment for. However, not all medications are within the tier, so similar medications to the ones included will not be covered under insurance.
  • Mental health and substance abuse related services: All plans include some kind of coverage for emotional and psychological well-being. These services include counseling, psychotherapy, mental health inpatient services, and treatment for substance abuse.
  • Maternity and newborn care: All plans include multiple services that care for you and your baby during all stages of your pregnancy, the delivery, and after delivery. 
  • Pediatric Services: For children who are included in your health plan your insurance will cover services that keep them healthy, including oral, vision care, vaccinations, and well-child visits.
  • Rehabilitation and habilitative services and devices: These services and devices that are designed for people with injuries, chronic conditions, and disabilities. It also includes physical, occupational, and speech therapy visits. 
  • Ambulatory patient services: Services included in outpatient care when a medical facility does not keep you the night after a procedure are covered.
  • Preventive/ wellness services and chronic disease management: Any services that assist you in staying healthy are covered by all insurance plans. This includes cancer screenings, annual checkups, and other preventative measures.
  • Hospitalization: If you have to go to the hospital for inpatient care, all plans are required to help with medical bills. This may only be more a certain period of time, but they are required to assist with the cost.

In addition to these 10 essential benefits for each plan, COVID-19 testing is also considered an essential health benefit. You must meet the CDC testing criteria to receive the test. If you live outside of California, New York, and Washington you will be required to pay any deductibles, copay, or coinsurance.

At SBMA, we are committed to providing top-of-the-line ACA compliant solutions to your insurance needs. Contact us for more information.

ACA Penalty A and B Breakdown

All large employers, with greater than 50 employees, must comply with the Affordable Care Act. The ACA requires employers to offer minimum essential coverage to all employees. If an employer does not comply with this employee coverage requirement could lead to penalties for the employer and potentially and IRS audit later on. Here is a breakdown of the ACA penalty A and B, and how they could affect your company:

ACA Penalties A & B