2. Summary
Jan. 1, 2014, ushered in new Affordable Care Act (ACA) health insurance
market reforms. These changes are impacting the way in which employers
offer and structure benefits for their employees. Some ACA regulations
have already been implemented, while other rules begin in 2015. The law
does not affect all businesses in the same way. This guide is intended to
help small businesses understand what’s important for 2015 and beyond.
1
Employer Shared Responsibility 2
6055/6056 Reporting Requirements 4
Summary of Benefits and Coverage 5
Exchange Notices 6
Get Covered Illinois 7
Actuarial Value 8
Small Business Resources 9
Essential Health Benefits 10
Out-of-pocket Maximum 10
Pediatric Dental and Vision 11
3. 2
Full-time
Under ESR, an employee is generally
considered full time if he averages at least
30 hours a week or 130 hours in a
calendar month.
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Full-time Equivalent
Under ESR, two part-time employees
who worked 15 hours per week on average
are the equivalent of one full-time employee.
So, for example, an employer that employs
40 full-time employees (that is, employees
employed 30 or more hours per week on
average) and 20 employees employed
around 15 hours per week has the
equivalent of 50 full-time employees
and would be subject to ESR.
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Minimum Essential Coverage
Minimum essential coverage, or
MEC, is the type of coverage an individual
needs to meet the individual responsibility
requirement under ACA. Generally, any
kind of comprehensive major medical
coverage including most individual
policies, job-based coverage, Medicare,
Medicaid, CHIP, TRICARE and some other
types of coverage.
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In general, if you are a small employer with fewer than 50
full-time employees, you will not have to pay any penalties for
not providing health care. However, if you are an employer
with a small group plan that has 50 or more full-time employees,
including full-time equivalents, you may be subject to ESR,
and here’s information that you need to know.
Do you have 50 or more full-time employees, including full-time
equivalents? Starting in 2015, your business may face a penalty
if you:
• Don’t offer MEC to your full-time employees (generally defined
as 30 or more hours a week) and their child dependents
• Offer coverage to your full-time employees and their child
dependents, but it doesn’t have minimum value (doesn’t cover
60 percent of employee health care costs)
• Offer coverage to your full-time employees and their child
dependents, but it isn’t deemed affordable (defined as
employees paying more than 9.5 percent of their household
income for the lowest-cost, self-only coverage)
However, you may avoid this penalty if you:
• Have between 50 and 99 full-time employees and meet certain
ACA conditions
• Offer coverage to 70 percent of your full-time employees
and their child dependents in 2015*
• Offer coverage to 95 percent of your full-time employees
and their child dependents in 2016*
Employers may still face a penalty for offering coverage that
fails to meet ACA requirements if any of the full-time employees,
including those who are not offered coverage at all, enroll in a
subsidized health plan on Get Covered Illinois, the Official
Health Marketplace of Illinois.
Employer Shared Responsibility
One of the important considerations for 2015 is whether an employer
will face a penalty for not providing minimum essential coverage (MEC)
to employees. The Employer Shared Responsibility (ESR) provision,
which begins in 2015, applies to large employers.
Please Note: this is intended as a
high-level overview of ESR and does
not include all ESR scenarios, safe
harbors and transition rules an
employer may need to consider.
*This rule applies whether you intentionally — or unintentionally
— don’t offer coverage.
4. 3
Fred’s Florist First Bank of Springfield Sullivan Tech
Fred’s Florist is a small,
independently owned
business with 20 part-time
and 10 full-time employees.
Combined, that equals 20
full-time (or full-time
equivalent) employees.
2
Things to consider
• Are you offering MEC to your full-time
employees and child dependents that is
affordable and meets minimum value?
• Have you considered your potential penalty risk
for not offering coverage to all or most of your
full-time employees?
• For additional information, see the list of
frequently asked questions from the IRS or the
U.S. Treasury Department fact sheet.
• Did your plan renew on Jan. 2015? If not, your
group may not have to comply until the begin-
ning of your 2015 plan year, subject to certain
terms and conditions.
• How many full-time or full-time equivalent em-
ployees do you have? Do you own your business
independently or do you share a common owner
with other companies?
Under this scenario,
Fred’s Florist may not
be subject to ESR.
The 2015 ESR penalty
could be about $10,400
per month.
The 2015 ESR penalty
could be about $1,040
per month.
ESR Possible Scenarios
These are examples of some scenarios. Please keep in mind this is for informational purposes only.
ESR is between the IRS and an employer. Employers should seek guidance from tax, legal and compliance
counsel to ensure they are meeting their obligations under this aspect of the health care reform law.
*Penalties are indexed annually by the premium adjustment percentage (PAP). PAP criteria, methodology and amount are set by the U.S. Health and Human Services
Secretary and published annually in the Notice of Benefit and Payment Parameters.
**80 for transition relief in 2015, this moves to 30 in 2016.
First Bank of Springfield has
140 full-time employees.
However, in 2015, it won’t offer
MEC to any of the employees
or their child dependents.
Under this scenario, the First
Bank of Springfield could have
to pay the following penalty:
$2,080 ($2,000 + Premium
Adjustment Percentage*)
x total number employees - 80**
(30 for 2016)/12.
Or, $2,080 x 60/12 = $10,400
penalty per month.
Sullivan Tech has 200 full-time
employees. It offers minimum
essential coverage, but it’s not
affordable for four employees,
who get subsidized coverage
on the Marketplace instead.
The company could have to
pay the following penalty for
those employees who got
subsidized coverage:
$3,120 ($3,000 + PAP*) x
number of employees who
received subsidized coverage/12.
Or, $3,120 x 4/12 = $1,040
penalty per month.
5. 6055/6056 Reporting Requirements
ACA added reporting requirements to the Internal Revenue Code
under Sections 6055 and 6056.
4
Section 6055 reporting (minimum essential coverage,
or MEC reporting) requires organizations that
provide MEC, such as health insurers and self-insured
plans, to report this coverage to the IRS. It also
requires these organizations to report this coverage
to the responsible person (your employee, for
example) for use on their federal tax filings.
Section 6056 reporting (Employer Shared
Responsibility reporting) requires applicable large
employers (generally, those with at least 50
full-time employees, including full-time equivalents)
to report to the IRS information about the MEC
they offered to their employees.
For 2015, the deadline for providing reporting to
individuals is Feb. 1, 2016. The deadline for
providing reporting to the IRS is Feb. 29, 2016,
or March 31, 2016, if filed electronically.
Things to consider
• Is your organization responsible for Section
6055 or Section 6056 reporting? Consult with
your legal and tax advisors to determine your
responsibility under ACA.
• Do you employ 50 or more full-time employees,
including full-time equivalents?
• The IRS is requiring insurers and self-insured
plans to collect Social Security Numbers. You
may want to encourage your employees to
include that information for every person on
the plan upon enrollment.
Blue Cross and Blue
Shield of Illinois (BCBSIL)
will file Section 6055
returns and furnish
statements to the
responsible individual
for insured groups.
The regulations do not
require third-party
administrators to report or provide support
for Section 6055 reporting on behalf of their
self-insured groups. We will not be reporting
nor providing support for Section 6055
reporting to self-insured groups.
It is also the responsibility of applicable large
employers (not insurers or TPAs) to provide
Section 6056 reporting to the IRS and the
responsible individual. We will not be reporting
nor providing support for Section 6056 reporting
to the IRS for any applicable large employers.
6. 5
Summary of Benefits and Coverage
Under ACA, all health insurers and group health plans are required to
provide consumers with a Summary of Benefits and Coverage (SBC).
The SBC is a summary of the benefits and health
coverage offered by a particular plan. It is intended
to provide clear, consistent, easy-to-digest
descriptions that may make it simpler for people
to understand their health insurance coverage and
for consumers to shop for and compare
insurance plans.
It must be provided at certain specified times, such
as upon application, at enrollment, annually at
re-enrollment, upon request (no more than seven
business days after the request), at special enrollment
(must be provided within 90 days after enrollment)
and when materials are changed.
The SBC must include the following two statements
per the federal government:
Does this Coverage Provide Minimum
Essential Coverage?
ACA requires most U.S. citizens and legal residents
to have health care coverage that qualifies as
minimum essential coverage. This plan or policy
[does/does not] provide minimum essential coverage.
• This statement lets employees know that they
meet the requirement for health insurance.
Does this Coverage Meet the Minimum
Value Standard?
ACA establishes a minimum value standard of
benefits of a health plan. The minimum value
standard is 60 percent (actuarial value). This health
coverage [does/does not] meet the minimum value
standard for the benefits it provides.
• This statement lets employees know that you are
providing insurance that meets the minimum
value standard
As a reminder, BCBSIL will complete the minimum
essential coverage and minimum value sections of
the SBC for fully insured groups. Any carve-out
benefits must be completed by the employer, as
BCBSIL does not administer those benefits.
Note that if at least 10 percent of the population
living in a particular county is literate only in the
same non-English language, translated versions
must be provided in one of the four ACA-required
foreign languages, as well as an English version
explaining that translated versions are available.
BCBSIL can provide translation services and provide
the SBC in the foreign languages (Spanish, Chinese,
Navajo and Tagalog) required by ACA.
Things to consider
• Did you know the SBCs are provided to you in
English and Spanish?
• Do you know how to access your group’s SBC?
7. Exchange Notice
6
Things to consider
• Do you have to provide the
Marketplace notice?
• Do you have a process in place
to provide the notice to new
employees within 14 days of
the employee’s start date?
Exchange Notice
Employers covered by the Fair Labor Standards Act (FLSA) have
to provide new employees with written notice of the Marketplace.
Employers are required to provide the notice to each new
employee within 14 days of an employee’s start date. The notice
is required to be provided automatically, free of charge. It can
be provided in writing either by first-class mail, or electronically
if the Department of Labor’s electronic disclosure safe harbor
requirements are met.
Small group employers can also visit the Department of Labor
website. Employers should always seek guidance from their tax,
regulatory and compliance professionals to ensure they are
meeting their obligations under the health care reform law.
Employers who wish to inform their employees about the different
levels of coverage available on the Marketplace may find our
Infographic (under Actuarial Value on Page 8) helpful.
Pre-Existing Conditions
Starting with the first plan year
on or after Jan. 1, 2014, plans
can’t include preexisting
condition exclusions for
enrollees of any age.
8. 7
The Marketplace is a website where people can explore
and compare a variety of health insurance plans based on
budget and benefit needs, apply for coverage and determine
whether they are eligible for financial assistance.
If you don’t provide health insurance to your part-time
and/or full-time employees, the Marketplace might be a
good option for them to get covered.
Your employees can review insurance plans available in
their area. They can apply for coverage online, over the
phone or by using a paper application. Health insurance
plans in the Marketplace offer comprehensive coverage,
from doctors to medications to hospital visits. Individuals
can compare all of their insurance options based on price,
benefits and other features that may be important to them.
Your employees may be able to get a premium tax credit
and other cost-sharing assistance that lowers their monthly
premium. Depending on their situation, they may even be
eligible for a $0 premium plan. They can see what their
premium, deductibles and out-of-pocket costs will be
before making a decision to enroll.
All plans on the Marketplace include EHBs, or essential
health benefits. You can find more information about
EHBs on Page 9.
Open enrollment for 2015 plans began on Nov. 15, 2014,
and ended on Feb. 15, 2015.
Things to consider
• Do you have any employees who are not
eligible for employer coverage?
• Have you provided them with information
about the Marketplace?
There are some reasons an individual
could still get coverage under the
Special Enrollment Period, such as:
Move to a new state or area that requires
choosing a new plan
Becoming a member of an American Indian
and Alaska Native tribe
Losing health coverage due to job loss,
a decrease in work hours, end of COBRA
coverage or other reasons*
Loss of coverage on a family member’s
policy as a result of turning 26, legal
separation or divorce, or death of the
policy holder
Marriage
Change in income or household status that
affects eligibility for premium tax credits or
cost-sharing assistance
Loss or denial of Medicaid or Children’s
Health Insurance Program (CHIP)
Birth or adoption of a child
Becoming a U.S. citizen
Generally, if If any of these happen, the
individual will have 60 days to go to the
Marketplace to enroll in a health insurance
plan or change plans.
Get Covered Illinois
In 2014, Get Covered Illinois, the Official Health Marketplace of Illinois,
launched as a new way to buy health insurance.
* Please note that the following are not considered loss of coverage:
voluntarily canceling your health insurance plan, having your plan
canceled because you did not pay your premiums or because your
plan did not meet the requirements set by the Affordable Care Act.
9. 8
Actuarial Value
You can find non-grandfathered small group plans in different levels —
Bronze, Silver, Gold and Platinum. These plans are available both on and
off the Marketplace and are meant to make it easier for you to compare
plans with similar levels of coverage.
Platinum
Gold
Silver
Bronze
$
$
$
$
$
$
$
$
$
$
$
$
$ $
$
$
$
$
$
$Monthly Cost
Monthly Cost
Monthly Cost
Monthly Cost
Cost When
You Get Care
Cost When
You Get Care
Cost When
You Get Care
Cost When
You Get Care
Good option if you
want to save on monthly
premiums while keeping your
out-of-pocket costs low
Good option if you
need to balance your monthly
premium with your
out-of-pocket costs
Good option if you
don’t think you’ll need a lot of
health care services
Good option if you
think you might use a lot of
health care services
10. 9
Small Business Resources
Things to consider
• You can only get the Small Business Health
Care Tax Credit by enrolling through the
Marketplace.
• How many full-time employees do you have?
• Does your business meet the requirements
for the tax credit?
The Small Business Health Options Program (SHOP)
is for small employers (less than 50 full-time employees,
including full-time equivalents, combined).
For 2015, small group employers can enroll in
SHOP coverage through the SHOP Marketplace,
using the help of a licensed agent or broker or
handling the enrollment themselves. Small groups
may also continue to offer coverage as they do
today (through a traditional group contract) or
pursue alternative ways to cover their employees.
Like BCBSIL’s other small group products, SHOP
plans offer comprehensive coverage, from doctors
to medications to hospital visits. Employers can
compare options based on price, benefits and other
features that may be important to their employees.
Plans offered through SHOP have to meet all of
ACA’s 2014 market reform requirements. Benefits
will be offered in select metallic levels based on the
amount of coverage that the plan provides.
The Small Business Health Care Tax Credit
is available to eligible small businesses and
small tax-exempt employers for two
consecutive tax years.
For small businesses, the maximum tax credit is 50
percent of premiums paid; for tax-exempt employers,
the maximum is 35 percent of premiums paid.
For 2015, small employers may qualify if they
employ fewer than 25 employees with an average
annual wage of $51,600 or less. Employers
planning to claim the Small Business Health Care
Tax Credit will need to get an official eligibility
determination from the federal government. Please
keep in mind that BCBSIL does not process forms
or applications for tax credit eligibility.
Please keep in mind
that small employers
interested in the Small
Business Health Care
Tax Credit have to enroll
in a SHOP health plan
(and meet other
eligibility requirements)
in order to qualify.
11. 10
Things to consider
• Each state sets a benchmark for EHB benefits.
Do you know which benefits in your plan are
considered EHBs?
• In the past, only coinsurance applied to the
OOPM. Now all in-network cost sharing
applies to the OOPM, including deductible,
copays, coinsurance, and Rx copays.
Out-of-pocket
Maximum
All non-grandfathered plans that
cover EHBs must limit annual
out-of-pocket member expenses
for in-network EHBs.
The 2015 out-of pocket maximum (OOPM) is
$6,600 for self-only coverage and $13,200 for
family coverage.
The following types of member expenses must
apply to the OOPM:
• Deductibles for in-network EHBs
• Coinsurance for in-network EHBs
• Copays for in-network EHBs (including Rx copays)
• Any other expenditure required by, or on behalf
of, an enrollee for in-network EHBs including
out-of-network emergency services.
Essential Health
Benefits
Non-grandfathered small group
plans must cover basic health
services, called essential health
benefits (EHBs).
ACA set 10 categories for items and services that
are considered EHBs.
• Ambulatory patient services
• Hospitalization
• Maternity and newborn care
• Mental health and substance abuse disorder
services, including behavioral health treatment
• Rehabilitative and habilitative services and devices
• Prescription drugs
• Emergency services
• Laboratory services
• Preventive and wellness services and chronic
disease management
• Pediatric services, including oral and vision care
Previously, insurers and self-funded plan sponsors
used a “good faith” definition to determine which
benefits are considered EHBs for the purpose of
addressing dollar limits. Now insurers and
self-funded plan sponsors must use an “authorized”
definition (authorized by the U.S. Secretary of
Health and Human Services [HHS]) of EHBs to
address dollar limits and to meet new out-of-pocket
maximum (OOPM) requirements, if applicable.
The minimum package of items and services that
must be covered in each of the 10 categories will be
generally defined by each state’s EHB benchmark
plan. Our small group health plans will cover the
EHBs under their “home state” benchmark plans.
12. Pediatric vision is also an added EHB effective in 2014 and benefits
are included with the member’s medical plan for dependents up to
age 19 with no cost sharing.
• Benefits include routine diagnostic eye exams and standard lenses.
This communication is intended for informational purposes only. It is not intended to provide, does not constitute, and cannot be relied upon as legal, tax or compliance advice. The
information contained in this communication is subject to change based on future regulation and guidance.
Blue Cross and Blue Shield of Illinois, a Division of Health Care Service Corporation, a Mutual Legal Reserve Company, an Independent Licensee of the Blue Cross and Blue Shield Association
226710.0415
11
Pediatric Dental and Vision
Dental and vision care are important parts of a comprehensive health
plan. That’s why BCBSIL offers dental and vision plans to provide critical
benefits and required essential health benefits.
Dental insurance plans for adults and children offer
savings on preventive care like check-ups, cleanings,
and basic X-rays, as well as services including
fillings, bridges, and crowns. Fully insured small
groups must include pediatric dental coverage as
an EHB in 2015 for children up to age 19.
• Employers who already offer dental to their
employees under a separate plan can complete
an attestation form to document that this EHB is
taken care of elsewhere.
• Employers who do not offer pediatric dental
separately can add one of BCBSIL’s stand-alone
dental plans to provide the required coverage.
Employers who don’t complete the attestation
form will have a low-allocation pediatric dental
plan automatically added to their policies.
Pediatric dental has a separate OOPM, not to
exceed $700 for coverage of one child and
$1,400 for coverage of two or more children.
