How to Avoid Healthcare Plan Penalties While Helping Employees

No matter what you think of "Obamacare"—for it or against it—business owners have to confront it. It is the elephant in the room. In the five years since the Affordable Care Act was made law, employers understood that eventually they would have to deal with it. The time is now.

Have you avoided purchasing health insurance? Are you not offering insurance coverage to your employees? Perhaps you are reimbursing employees incorrectly for their personal healthcare plan?

Going without health insurance may never be a good idea, but new penalties are making it a more costly decision, especially for growing businesses.

Here are three things to know right now:

1. The tax penalty for not having health insurance jumps to $325 per individual ($167 for children) or two percent of your taxable income—whatever is higher. There are lots of exemptions, and the calculation can be tricky, so use a penalty calculator to help you get it right.
2. A recent ruling by the Internal Revenue Service gives small businesses that are currently using Health Reimbursement Accounts and related services as a vehicle to purchase health insurance extra time to meet the Affordable Care Act’s compliance standards. As a business owner, you can’t just add a monthly amount to an employee’s paycheck each month and call it "insurance reimbursement." Many people do it that way, but it is against the law. Businesses now have until June 30, 2015, to create compliant plans. Penalties for not structuring these plans the right way are $100/day, per employee!
3. Businesses with more than 50 employees will now be known as Applicable Large Employers (ALE). An ALE is subject to reporting requirements under the ACA, and if a business has more than 100 employees, they are subject to penalties for the 2015 year. In 2016, an ALE with more than 50 full-time employees must provide coverage, or pay penalties.

Here are few tips to help you make the best decision:

• If you offer plans with high deductibles, and those that are aligned with a Health Savings Account (HSA), health insurance premiums will be lower and funds contributed to the HSA by either the employer or the employee can accumulate tax-deferred and can be used for a variety of medical-related expenses by the insured. TIP: Add a supplemental plan that provides accident and critical illness protection. For those who are concerned about cash-flow issues if they are hurt in an accident or diagnosed with a serious disease, these affordable plans can pay medical costs that are not covered with a $2,500 or $5,000 deductible health plan.
• As a business owner, you are able to provide wellness discounts and reward employees for good health habits that can save up to 30% on premiums. This is not allowed for individual plans, but is permitted for group health insurance.
• Finally, having a healthcare plan for your employees makes everyone part of one team. Studies show that a well-structured benefit plan improves worker productivity, improves job satisfaction, and reduces turnover.

Growing businesses need a proactive strategy for dealing with healthcare costs. They should shop around at online comparison websites to get an estimate of potential costs. And they should engage their employees to discuss what type of health benefit plan fits the culture of the company, and its long-term values.

Remember: There are tax penalties for you and your employees if they don’t have health insurance. And benefits for you—and them—if you structure a healthcare plan that meets your needs, and is consistent with the values of your company.