How Agents Can Help Comply with PPACA

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“You can help your employer clients comply with the Patient Protection and Affordable Care Act [PPACA] by becoming their trusted advisors,” Julie L. Hulsey, CLU, LUTCF, president and CEO, Zynia Business Solutions, Amarillo, Texas, told her audience in her presentation, “Employers’ Greatest Fears: PPACA and Compliance.”

As of Jan. 1, 2016, Hulsey reminded the audience, employers of 50 or more full-time equivalent (FTE) employees are required to provide health insurance to at least 95% of their employees or face a penalty. One key issue for employers is that many federal government entities are auditing small businesses with little to no coordination, for example:

1. Department of Labor, including the Wage and Hour Division, the Equal Employment Opportunity Commission and the Occupational Safety and Health Administration

2. Internal Revenue Service

3. Office for Civil Rights

4. Immigration Customs Enforcement

5. Department of Transportation

“Smaller employers, those with less than 50 employees, or 50 to 100 employees, don’t have an HR department or even an HR professional on staff,” Hulsey observed. One way agents and brokers can demonstrate their value is by providing clients with charts showing affordable coverage employee wage calculations for a 40-hour work week and for a 30-hour work week, she explained, showing the charts she had created for her clients.

Penalties 101 for agents and brokers

Hulsey reminded the audience that for 2016 the employer shared responsibility penalty of $2,000 is now $2,160, and the $3,000 penalty is now $3,240. If an employer is considering paying the penalty instead of offering insurance, you can point out that the penalty is not a tax deductible business expense but health insurance premiums are, which may affect the employer’s decision.

“Penalties will be calculated on a monthly basis so if you are out of compliance for just one month, you will only be penalized for that month,” Hulsey pointed out. “Therefore, become compliant as soon as possible to avoid accumulating more monthly penalties.”

If an employer offers a “minimum essential coverage” plan that meets the “affordable” and “minimum value” tests to an employee who declines it, no employer penalty will be owed for that employee. “Tell the employer to keep a copy of the signed waiver of coverage form, and get a signed waiver every year!” Hulsey said.

It’s important to let our clients know what the Department of Labor and the Department of Justice are targeting, Hulsey said. Quoting from a recent presentation by the DOL and DOJ that she attended, Hulsey said that the DOL’s FY 2013 Strategic Plan has a goal to generate $1,172,108,000 in enforcement results through 4,330 reporting compliance reviews. They indicated their enforcement program will use a series of approaches (including national/regional priorities, civil/criminal litigation, and sample Investigation Programs) to achieve this goal. The current strategic plan is under review and that enforcement goal is likely to increase.

Hulsey acknowledged that agents and brokers are losing commissions but you can take some action to limit those losses “Connect with professionals like TPAs and payroll vendors to offer some of those third party services,” she suggested. “Also, be sure you understand your clients’ needs so you can answer their questions.” Employers need answers about PPACA and compliance, and they’ll be calling you or their attorneys. “It’s better if they call you,” she said.

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