Understand the ACA: HealthCare Reform Terms
The ACA exists to provide everyone with reasonable health care. While individuals who aren’t given employee-sponsored benefits must turn to other options to avoid penalties, businesses must also be familiar with what they’re now required to provide. This glossary of terms Understand the ACA: HealthCare Reform Terms is targeted to large businesses and the concerns they may face in light of the 2015 deadline:
ACA Terms for Large Businesses
- Health coverage. Payment or reimbursement for health care costs. This is generally provided through a contract with a health insurance company. Large businesses are required to provide minimum coverage for their employees.
- Affordable coverage. Employer coverage is deemed affordable if “the employee’s share of the annual premium for the lowest priced self-only plan is no greater than 9.56% of annual household income.” Understanding this is essential to avoiding penalties like the 2018 Excise Tax.
- Small business. An enterprise with fewer than 50 full-time employees.
- Large business. An enterprise with more than 50 full-time employees.
- Full-time equivalent employee (FTE). Used to calculate the number of eligible workers a company employs, FTE’s are those who work more than 30 hours per week for more than 120 days in a single year.
- Employer Shared Responsibility Payment. A tax penalty applied to large businesses who don’t offer minimum essential coverage by the 2015/2016 deadline. This fee is approximately calculated by multiplying the number of FTE’s by $2,000.
- 2018 Excise Tax. Slated for 2018 and alternately titled the “Cadillac Tax,” this penalty is applied to businesses whose healthcare offerings are deemed “high-cost benefits.”
- Minimum essential coverage. Coverage under an employer-sponsored plan. It excludes fixed indemnity, life insurance, and dental or vision coverage.
- Minimum value coverage. An employer-sponsored benefit that covers at least 60% of the costs expected to be charged under the plan.
- Transition relief. Conditions to help companies avoid fees related to the ACA’s deadline. There are currently eight provisions for 2015.
- Form 1095-C. This form reports information related to a company’s health insurance offerings. It must be provided to employees when they’re filing their tax returns.
- Form 1094-C. File this form to provide the IRS with aggregate employer-level data.
Understanding the ACA’s Impact on Your Business
This is just a sampling of the hundreds of legal definitions and terms the ACA puts forth. A business can understand its responsibilities under this legislature, but staying on top of employee data and compliance is a demanding job, especially for a growing company or one that extends across the nation. For more help understanding the ACA and what you need to do by the end of the year, peruse HealthCare.gov, and work with Balance Point to ensure complete compliance.
A full glossary of ACA terms is available here.
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