With major provisions of the Affordable Care Act (ACA) set to kick in, 2014 will be an important year for nonprofit employers. Key building blocks, such as the state Medicaid expansions and insurance exchanges, have already been laid. But in the year ahead, a host of regulations covering other elements of the ACA will begin to take effect — and nonprofit employers will need to be on their toes.
Some things to keep in mind:
Know what’s coming.
Although the employer mandate has been delayed by one year until January 1, 2015, many other ACA provisions are effective on January 1, 2014. For fiscal year plans, they are effective the first day of the plan year following January 1. For example, lifetime and annual benefit limitations and plan provisions providing for exclusion of coverage for pre-existing conditions are not permitted after January 1, 2014.
Certain preventive service benefits must be offered through most group health plans, and nondiscrimination rules for fully insured plans are effective in 2014. Prior to the January 1 deadline, therefore, employers that offer group health plan benefits to their employees should make sure their self-funded and fully insured plans comply with the ACA provisions that will become effective in 2014. This means examining and, in some cases, amending plan and insurance contract provisions.
Every state will have an Affordable Insurance Exchange, or “Marketplace,” beginning in January 2014. Under SHOP (the Small Business Health Options Program), individuals and small nonprofits with 50 or fewer employees can access health insurance through competitive marketplaces (formerly referred to as “exchanges”). Users can compare benefits and costs of different plans and purchase health insurance online. Coverage can begin starting in January 2014, with monthly start dates for annual plans thereafter.
Spread the cost.
In addition, low and moderate income individuals can receive premium and cost-sharing subsidies to help offset monthly premiums that will only be available through Marketplaces. Certain individuals who purchase insurance through a health exchange available in their state will be eligible for subsidies to help with the cost if their household income is below 400 percent of the federal poverty level ($94,200 for a family of four in 2013) and they are not eligible for Medicaid.
Exercise your options.
If your nonprofit currently provides coverage, you can elect to stay with your existing insurer. And since enrollment in the Marketplaces is on a rolling monthly basis (beginning January 1, 2014), your nonprofit can elect to access health insurance through the Marketplace at a later date. Your nonprofit and its employees will also be able to enroll through an agent, broker, or directly through the Marketplace websites or by calling a toll-free phone hotline.
Notify, notify, notify.
At this point, you should have provided notice to your employees of the health insurance coverage options available through the state Marketplaces. Notice was required no later than October 1, 2013, and notice is then also required for each new employee at the time of hire after that date. The notice requirement is for all employees, whether they are part-time or full-time. Note that very small nonprofits that are not subject to the Fair Labor Standards Act, such as those with less than $500,000 in annual revenue, are not covered by this requirement.
Check up on HSAs/FSAs.
Nonprofit employers can continue to offer Flexible Spending Accounts (FSAs) and Health Savings Accounts (HSAs), but there are a few changes. Employee contributions to an FSA are now limited to $2,500 a year. Small employers may offer HSAs, but they must be connected to a high-deductible insurance plan that meets the new ACA limits on deductibles and cost-sharing, offers no-cost preventive care, and covers a required set of health benefits.
Provide a summary.
You must provide employees with a Summary of Benefits and Coverage (SBC) from your insurer, clearly explaining what the plan covers and what it costs. Likewise, employers must report health insurance costs to employees on W-2 forms. Note: At this time, employers with fewer than 250 W-2 employees are exempt from this requirement.
Take a tax break.
Nonprofits that employ fewer than 25 employees may be eligible for a tax credit to defray the cost of premiums if employees earn less than $50,000 on average (this threshold will be adjusted for inflation beginning in 2014). For 2013, the Small Employer Health Credit is 25 percent for nonprofits and will rise to 35 percent for 2014. Because tax-exempt organizations do not pay income tax to the IRS, the “credit” is in the form of a refund on employee income tax withholdings.
The credit is claimed by filing a revised Form 990-T (Exempt Organization Business Income Tax Return), even if your organization doesn’t have any unrelated business taxable income. The credit is refundable but cannot be greater than the amount of the organization’s payroll taxes (income-tax withholding and Medicare tax liability).
Tap some resources.
Your state association of nonprofits may have helpful resources posted on its website or offer special guidance programs in your state. The National Council of Nonprofits (http://councilofnonprofits.org) has posted Affordable Care Act FAQs and information on the Small Employer Health Care Tax Credit. Other helpful online resources include:
> The Affordable Care Act – https://healthcare.gov
> Small Business Administration – http:/sba.gov/healthcare
> Department of Labor – http://dol.gov/ebsa/healthreform/
> Small Business Majority – http://healthcoverageguide.org
> Internal Revenue Service – http://irs.gov/uac/Affordable-Care-Act-Tax-Provisions-Home
Keep It in Perspective
Finally, keep healthcare reform in perspective. Yes, 2014 will be a year of change, and there will probably be some confusion and some cost. But the Affordable Care Act also creates new opportunities that may benefit small nonprofits that already provide health insurance, as well as those that want to start.
Our experienced professionals can provide the guidance your organization needs to meet the challenges and opportunities of the Affordable Care Act.
In the year ahead, a host of regulations covering other elements of the ACA will begin to take effect — and nonprofit employers will need to be on their toes.