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EmploymentUpdates and News

February 2013

Employer Responsibilities to Provide Health Insurance Under the Patient Protection and Affordable Care Act

By Thomas E. Daugherty, Esq.

Employers of at least 50 full-time equivalent employees must offer health care insurance coverage to full-time employees, or pay a penalty. A full-time employee works an average of at least 30 hours per week. The coverage must pay for at least 60% of covered health care expenses, and employees may not pay more than 9.5% of their total household income for the coverage, for it to be considered “affordable” under the act.

Various new protections to the insured workers must be provided under employer provided coverage. For example, the required coverage is prohibited from applying lifetime dollar limits to key health benefits. Also, insurance carriers are not permitted to cancel coverage solely because of an honest mistake made on the insurance application. Additionally, the coverage must extend dependent coverage to employees’ adult children until age 26 (although, until 2014, group plans grandfathered in do not have to offer dependent coverage up to age 26 if a young adult is eligible for group coverage outside their parent’s plan). Spouses are not defined as dependents, and an employer need not offer health care coverage for full-time employee’s spouses.

If the employer does not employ 50 or more full-time employees, there is no requirement to provide health care coverage for employees. However, if there are 25 or fewer employees and the average wage is less than $50,000 the employer may be eligible for a tax credit for providing health coverage.

If an employer does not provide insurance, provides insurance that does not meet the basic coverage requirements, or requires employees to pay more than 9.5% of their total household income for the insurance, the employees can choose to buy individual coverage in California’s Health Benefit Exchange, “Covered California.” They should receive a premium tax credit for doing so, and the employer will then pay a fee.

Certain plans are grandfathered in to the new law, which allows some existing plans to remain in place. Health care coverage from a plan that existed on March 23, 2010 and that has covered at least one person continuously from that day forward may be considered a “grandfathered” plan. Such plans are exempt from certain requirements under the Patient Protection and Affordable Care Act. Likewise, employment based health care plans are exempt from certain consumer protections under the Act. For example, employment based and/or grandfathered plans are not required to: provide certain recommended preventative services at no additional charge to the employee/covered individual; offer new protections relating to appealing claims and coverage denials; and protect the employee/covered individual’s choice of health care provider and access to emergency care.

The changes in the health care laws are complex and in some instances, still changing, as to interpretation and time line of implementation. This article is intended as a general overview of key requirements under the new law. There are exceptions and differences, based on specific circumstances and provisions. Employers with questions relating to obligations under the health care law are encouraged to consult with a qualified employment attorney relating to the specifics of their situation. Klinedinst employment group provides this counseling service, among many others, to employers throughout California.

 

Klinedinst Employment Law Update

The opinions expressed in this employment update are general in nature, and are not meant to provide specific legal advice. For more information, please contact a Klinedinst attorney. No attorney/client privilege is created or assumed by reading this newsletter.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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