Find out the answers to the most popular questions we receive about health insurance coverage.

FREQUENTLY ASKED QUESTIONS

If you have a question that is not provided below please contact us anytime.

Requesting a group quote is easy! The only information required to get started running quotes for your company are your business name, address and phone number, as well as names, birthdates, and zip codes of the employees and dependents who will be enrolling in the policy. You can contact us by phone or email and one of our group account managers will send you a pdf version of the census form to be completed and emailed or faxed back. Or, you can click here to get started on requesting a quote and we’ll follow up with getting the employee information later.

Group health insurance rates are based on a combination of the following (depending on the insurance company):

  • Demographics—the age, gender, and location of the individuals that are going to be enrolled in the health plan.
  • Current and renewal rates—used by the insurance company to help determine the risk of the group.
  • Claims history—typically only required for large groups with previous coverage, or used internally by insurance companies when determining the renewal rates for a group already enrolled with them.
  • Overall health of a group—only used by self-funded health insurance companies who require health risk forms to provide rates based on the health of a group.

Insurance companies use statistics to determine the overall “risk” they are taking on by insuring a group. Rates are based off the insurance company’s assessment of that risk.

Besides meeting the Affordable Care Act Employer Shared Responsibility provisions for large employers, both large and small employers who offer group health insurance coverage to their employees experience greater employee retention, as well as tax incentives.

As an employer it is important to weigh the costs of health insurance against the benefits you want to offer. The richer the benefits are the higher the premiums.

Some important questions to ask yourself to determine what kind of plan you are looking for:

Who will be covered on this plan?
It is important to find a plan that will suit the diverse medical and financial needs of everyone on the plan(s). Ask is any of the employees already have coverage through a spouse or parent. If anyone is receiving a premium tax credit for an individual plan, they will no longer qualify for that (in most cases) if you offer a group plan that they are eligible to enroll in.
How much cost-sharing can you afford?
Employers are typically required to coverage at least 50%-75% of employee premiums.
Would employees rather pay more up front and less when sick, or vice versa?
Less expensive plans typically require individuals to pay more costs upfront. Higher costing plans typically have lower upfront costs.
What kinds of benefits are most important to you and your employees?
Federal privacy laws prevent employers from asking employees about personal medical information, however you may still ask employees what kinds of benefits they consider most valuable.

HRAs are accounts funded solely by an employer that allow employees to be reimbursed tax free for qualified medical expenses. When offered in conjunction with a higher deductible health plan, it is a practical solution for both the employer and employees.

Employers can elect higher deductible health plans, saving on premiums, and the HRA benefits the employees by absorbing some of the upfront medical costs that may be associated with a high deductible. Where employees may pay co-pays on a Gold plan, on a Silver or Bronze level, there may be benefits that are subject to the deductible, in some cases, the employee would have to pay 100% toward certain services before their deductible is met. With an HRA in place, the employee can be reimbursed for qualified expenses as a result of the higher deductible plan.

There are a multitude of services that would be classified as a “qualified medical expense” for which an employee could seek reimbursement.

The reimbursements could apply to not only the employee’s qualified medical expenses, but also the employees spouse or dependents qualified medical expenses.

According to the IRS, “Medical expenses are the costs of diagnosis, cure, mitigation, treatment, or prevention of disease, and the costs for treatments affecting any part or function of the body. These expenses include payments for legal medical services rendered by physicians, surgeons, dentists, and other medical practitioners. They include the costs of equipment, supplies, and diagnostic devices needed for these purposes. Medical care expenses must be primarily to alleviate or prevent a physical or mental defect or illness. They don’t include expenses that are merely beneficial to general health, such as vitamins or a vacation.”

There are no additional 1040 reporting requirements for HRAs and employees are not required to pay federal income taxes or employment taxes on an HRA contribution. There are also no maximum contribution limits for employers on HRAs. However, there are maximum dollar amounts allowed to be reimbursed during a specific coverage period.

https://www.irs.gov/pub/irs-pdf/p502.pdf

An association health plan is an arrangement in which an insurance policy is held by an association to cover its members. An association may be a legitimate professional or trade association which incidentally offers health insurance to its members as a benefit. Alternatively, an association may be established by an independent entity, like a professional employer organization, that exists to market a range of products including health insurance.

If you are switching from one group policy to another February 1-December 1, you can transfer any amount of the deductible you have met during the year to the new plan.

Typically speaking you will need to submit a deductible credit form, along with your most recent Explanation of Benefits, to the new insurer within 60 days of the effective date of the new plan.

Yes. Health insurance contracts are unilateral. That means you can end the contract with your current health insurance company any time you would like, without consequence, and switch to another company.

In order for premiums to be pre-tax a group must have a Section 125 plan document in place. There are a number of ways a business can obtain a Section 125 plan document:

  • They can speak with their accountant/CPA, who may be able to set this up for them as a part of their services.
  • They can go to the following website and pay (roughly $100) for the Section 125 plan document: http://www.flexaffiliates.com/plan/WaAgency/.

When an employer establishes a group health insurance plan they are required to specify a waiting period that new hires will have to meet before they can enroll in the group benefits. The Affordable Care Act requires that probation period cannot be longer than 90 days. Since the majority of insurance companies will not prorate premiums, the longest probation period generally offered is the first of the month following 60 days (since the first of the month following 90 days would exceed the 90 day limit). However, the insurance companies that will prorate premiums will offer a 90 day probation period.

When an employee meets their probation period they must enroll, or wait until the next open enrollment period of the policy. The reason the insurance company does not allow people to enroll anytime they want after meeting the probation period is because they want to avoid having people wait to enroll until they become sick or need a service.

One thing to note: It does appear that an employer can establish a one month orientation period before the probation period begins. The orientation period cannot exceed one month. In most cases the enrollment form should reflect their full time date of hire as the day after they meet this orientation period.

For more information please visit the Department of Labor Website: “Ninety-Day Period Limitation,” http://webapps.dol.gov/FederalRegister/HtmlDisplay.aspx?DocId=27660&AgencyId=8&DocumentType=2.

There are certain circumstances which enable an employee or dependent to enroll in a group policy outside of open enrollment or when the individual missed their eligibility date after meeting their probation period. These circumstances are called qualifying events and include (but are not limited to) an involuntary loss of coverage, a marriage, a birth, and a divorce. Typically speaking you will need to provide proof to the insurance company of the qualifying event.

Usually the effective date of the coverage will be the first of the month following the qualifying event. If you are enrolling a newborn onto a policy, the effective date will be the date of birth.

Insurance companies require employers to contribute a certain amount to employee premiums. This requirement is designed to avoid “adverse selection” by encouraging the majority of employees to enroll. Most insurance companies require that an employer contribute at least 75% of the employee premium, however there are several insurers that only require a 50% contribution.

Insurance companies require a certain percentage of employees, who are eligible, to enroll in a group policy. Normally the requirement is 75%.

In a fully insured plan, estimated annual claims, risk charges and administrative costs are spread out over 12 roughly equal payments. If you spend more than what was estimated in claims, the insurance company pays the excess. Plus, your rates are likely to increase at your next year.

In a self-insured plan, employers manage their own health plan as opposed to purchasing a fully-insured plan from an insurance carrier. This allows the employer to save the profit margin that an insurance company adds to its premium for a fully-insured plan; however it also exposes the employer to a larger risk in the event that more claims than expected must be paid.

There are two main pillars of a self-insured plan: fixed costs and variable costs. The fixed costs include administrative fees, any stop-loss premiums, and any other set fees charged per employee. The variable costs include payment of health care claims. These costs vary from month to month based on health care use by covered persons. To limit risk, some employers use stop-loss or excess-loss insurance which reimburses the employer for claims that exceed a predetermined level.

Partially self-funded plans help reduce the overall exposure an employer takes on in a self-insured plan. A partially self-insured plan typically has an administrator and a reinsurer to reduce the risk to the company.

Like a self-insured plan there are two main pillars of a self-insured plan: fixed costs and variable costs. The fixed costs include administrative fees, any stop-loss premiums, and any other set fees charged per employee. The variable costs include payment of health care claims. These costs vary from month to month based on health care use by covered persons. To limit risk, some employers use stop-loss or excess-loss insurance which reimburses the employer for claims that exceed a predetermined level.

These plans will typically have a specific fund to pay incurred claims. If the claims are less than expected, the employer is usually reimbursed all or some of that money.

Employers are not required to contribute anything toward dependent premiums.

Adverse selection is when only those that are sick or are in need of medical services are motivated to enroll, thus creating a higher risk for the insurance company.

A valid waiver is an employee who is waiving health insurance coverage because they have another group plan they are enrolled in through another employer, a spouse plan, or a parent plan. Medicare and Medicaid are considered group plans.

Valid waivers do not typically count towards the employee participation requirements of a group plan.

After setting up a group policy employers should be sure they are in compliance with the Employee Retirement Income Security Act (ERISA) and the Affordable Care Act (ACA). Please visit our Compliance and Frequently Asked Questions sections.

The Employee Retirement Income Security Act (ERISA) is a federal law that sets minimum standards for most voluntarily established pension and health plans in private industry to provide protection for individuals in these plans. ERISA requires that plan participants are provided with plan information including; provides fiduciary responsibilities for those who manage and control plan assets; requires plans to establish a grievance and appeals process for participants to get benefits from their plans; and gives participants the right to sue for benefits and breaches of fiduciary duty.

There have been a number of amendments to ERISA, expanding the protections available to health benefit plan participants and beneficiaries, including Child Care Assistance, Compliance Assistance, Consumer Information on Health Plans, Continuation of Health Coverage (COBRA), Employee Retirement Income Security Act (ERISA), Fiduciary Responsibilities, Health Benefits Education, Mental Health Benefits, Newborns’ & Mothers’ Protections (Newborns’ Act), Participant Rights, Plan Information, Portability of Health Coverage (HIPAA), and Women’s’ Health & Cancer Rights Protections.

In general, ERISA does not cover group health plans established or maintained by governmental entities, churches for their employees, or plans which are maintained solely to comply with applicable workers compensation, unemployment, or disability laws.

In order to be in compliance with ERISA employers must meet the following requirements:

  • Comply with ERISA rules and regulations
  • Provide and/or file required documents and forms, including annual notices to employees.
    • Annual notices on Reporting and Disclosure; Fiduciary Responsibilities; Administration and Enforcement; COBRA and additional standards for group health plans; HIPPA, Newborn & Mothers Health Protection, Mental Health Parity Act, Woman’s Health and cancer Rights Act; etc.
    • Plan documents
    • Summary Plan Description (SPD) including any changes in plan benefits and entitlement benefits
    • Form 5500, including schedules and auditors report (if applicable)
    • Summary Annual Reports (SARs)
    • A full copy of the Fidelity Bond and/or Fiduciary liability insurance (if applicable)

    For more information please visit the Department of Labor website.

The Consolidated Omnibus Budget Reconciliation Act protects employees and their dependents if they lose their employer-sponsored health benefits. If the employer offers COBRA, and an employee and/or dependent qualify, they have the option of continuing your employer-sponsored health plan for a limited period of time.

For more information please visit the Department of Labor website.

Typically speaking only employers with 20 or more employees in the previous calendar year have to offer COBRA coverage.

For more information please visit the Department of Labor website.

The Health Insurance Portability and Accountability Act (HIPPA) provides the ability to transfer and continue health insurance coverage for millions of American workers and their families when they change or lose their jobs; reduces health care fraud and abuse; mandates industry-wide standards for health care information on electronic billing and other processes; and requires the protection and confidential handling of protected health information.

For more information please visit the Department of Labor website.

If you employ fewer than 25 full-time (or full-time equivalent) employees, if you pay at least 50% of the employee only premium, if you purchase a plan through the Small Business Health Options Program (SHOP), and if the average wage for your employees is less than $50,000 a year you may qualify for a small business tax credit. The maximum amount of credit you can receive is 50% of your share of premiums paid for small businesses, and 35% for tax-exempt businesses.

You should speak with your accountant to see if you qualify for a small business tax credit and the amount of credit you qualify for. You can also use the IRS Tax Credit Calculator to determine what your credit may be. The credit is only available to a group for two consecutive years. You must file with the IRS to claim the credit.

For more information please visit the IRS website: Small Business Health Care and the SHOP Marketplace.

To determine if you are a small or large employer, you need to add the number of full time employees you have (those who work 30 or more hours per week) to the number of full time equivalent employees you have. If this number is under 50 you are considered a small employer. Multiple companies under a common ownership should be treated as one company for the purpose of determining if they are a subject to the Shared Responsibility Provision. However, each entity under common ownership should submit the required information reporting individually.

To determine the number of full time equivalent employees you have should multiple the number of part time employees by the average hours worked per employee per month (do not include more than 120 hours of service per employee), then divide that number by 120.

Seasonal workers should be taken into account when determining the number of full-time employees. However, if an employer employs more than 50 full-time or full-time equivalent employees for 120 days or fewer during the calendar year, and the employees in excess of 50 are considered seasonal and worked no more than 120 days, the employer would not be considered a large employer. The IRS defines seasonal workers as “workers who perform labor or services on a seasonal basis as defined by the Secretary of Labor…For this purpose, employers may apply a reasonable, good faith interpretation of the term “seasonal worker.””

For more information please visit the IRS website: Determining if an Employer is an Applicable Large Employer.

Multiple companies under a common ownership should be treated as one company for the purpose of determining if they are a subject to the Shared Responsibility Provision. However, if it is determined that the total number of full-time and full-time equivalent employees is 50 or greater, each entity under the common ownership should submit the required information reporting individually.

For more information please visit the IRS website at: http://www.irs.gov/Affordable-Care-Act/Employers.

Generally speaking an employer should only take into account the work of full-time and full-time equivalents performed within the United States.

For more information please visit the IRS website at: http://www.irs.gov/Affordable-Care-Act/Employers.

Generally speaking an employer with full-time and full-time equivalent employees working abroad would only be subject to the Employer Shared Responsibility provision if it had at least 50 full-time/full-time equivalent employees working within the United States. In other words, employees only working abroad should NOT be taken into account when an employer is determining its group size.

For more information please visit the IRS website at: http://www.irs.gov/Affordable-Care-Act/Employers.

Large employers, those who employ 50 or more full time/full-time equivalent employees, are subject to the Employer Shared Responsibility provision of the Affordable Care Act. The IRS considers someone who works 30 or more hours per week to be full time. The Employer Shared Responsibility provision requires large employers to offer affordable health insurance coverage, which meets the minimum level of coverage, to full-time employees. If a large employer does not meet this requirement, they will be subject to an Employer Shared Responsibility payment.

For more information please visit the IRS website at: http://www.irs.gov/Affordable-Care-Act/Employers.

Generally speaking, if you have fewer than 50 full-time/full-time equivalent employees you are not subject to the Employer Shared Responsibility provision that requires large employers to provide their employees with affordable, minimum value, health insurance.

However, the Affordable Care Act may still affect you—particularly when it comes to reporting requirements and accessing affordable health coverage for your employees. The first step you need to take is determining whether or not you are a small or large employer.

Although small employers are not required to offer health insurance to their employees, if they do offer health insurance they are required to report certain information.

Additional Medicare Tax:

In 2013 an additional Medicare tax was established under the provisions of the Affordable Care Act. The additional tax applies to those individuals who earn an income over a certain threshold. Employers are responsible for withholding the tax on wages and railroad retirement compensation in certain circumstances. The tax is an additional 0.9%. See the below chart, taken from the IRS website, on income thresholds.

Filing Status Threshold Amount
Married filing jointly $250,000
Married filing separate $125,000
Single $200,000
Head of household (with qualifying person) $200,000
Qualifying widow(er) with dependent child $200,000

Please visit the IRS website for more information: Questions and Answers for the Additional Medicare Tax.

W-2 reporting:

Employers that provide employer sponsored health insurance are required to report the cost of the coverage in box 12 of the W-2 form. The cost of coverage should include both the employer and employee contributions. This number is for information purposes only, so that the employee has consumer information. The below chart, taken from the IRS website lists the types of coverage the employer must report on the Form W-2 (the items listed in the optional column are based on transition relief that may be available to a group.) Please be advised this chart is only for Form W-2 box 12 reporting—it has no impact on reporting required in other boxes on the form W-2.

Form W-2 Reporting of Employer-Sponsored Health Coverage

Coverage Type Form W-2, Box 12, Code DD
Report Do Not Report Optional
Major medical X
Dental or vision plan not integrated into another medical or health plan X
Dental or vision plan which gives the choice of declining or electing and paying an additional premium X
Health Flexible Spending Arrangement (FSA) funded solely by salary-reduction amounts X
Health FSA value for the plan year in excess of employee’s cafeteria plan salary reductions for all qualified benefits X
Health Reimbursement Arrangement (HRA) contributions X
Health Savings Arrangement (HSA) contributions (employer or employee) X
Archer Medical Savings Account (Archer MSA) contributions (employer or employee) X
Hospital indemnity or specified illness (insured or self-funded), paid on after-tax basis X
Hospital indemnity or specified illness (insured or self-funded), paid through salary reduction (pre-tax) or by employer X
Employee Assistance Plan (EAP) providing applicable employer-sponsored healthcare coverage Required if employer charges COBRA premium Optional if employer does not charge COBRA premium
On-site medical clinics providing applicable employer-sponsored healthcare coverage
Wellness programs providing applicable employer-sponsored healthcare coverage
Multi-employer plans X
Domestic partner coverage included in gross income X
Governmental plans providing coverage primarily for members of the military and their families X
Federally recognized Indian tribal government plans and plans of tribally charted corporations wholly owned by a federally recognized Indian tribal government X
Self-funded plans not subject to Federal COBRA X
Accident or disability income X
Long-term care X
Liability insurance X
Supplemental liability insurance X
Workers’ compensation X
Automobile medical payment insurance X
Credit-only insurance X
Excess reimbursement to highly compensated individual, included in gross income X
Payment/reimbursement of health insurance premiums for 2% shareholder-employee, included in gross income X
Other Situations Report Do Not Report Optional
Employers required to file fewer than 250 Forms W-2 for the preceding calendar year (determined without application of any entity aggregation rules for related employers) X
Forms W-2 furnished to employees who terminate before the end of a calendar year and request, in writing, a Form W-2 before the end of that year X
Forms W-2 provided by third-party sick-pay provider to employees of other employers

Please see the IRS website for more information: Form W-2 Reporting of Employer-Sponsored Health Coverage.

Form 1094-B and Form 1095-B for Self-Insured Employer Sponsored Coverage:

Small businesses who sponsor self-insured plans are required to file Forms 1094-B and 1095-B with the IRS no later than February 28 (March 31, if filing electronically) for the proceeding calendar year. Employers are also required to provide each “responsible party” (i.e. employee, former employee, etc.) with a copy of Form 1095-B.

For more information on Forms 1094-B and 1095-B please visit the IRS website: Questions and Answers on Information Reporting by Health Coverage Providers (Section 6055).

In addition to the requirements for all small businesses that offer health insurance to their employees (see above questions), self-funded plan sponsors must also file the below information with the IRS:

Form 1094-B and Form 1095-B for Self-Insured Employer Sponsored Coverage:

Small businesses who sponsor self-insured plans are required to file Forms 1094-B and 1095-B with the IRS no later than February 28 (March 31, if filing electronically) for the proceeding calendar year. Employers are also required to provide each “responsible party” (i.e. employee, former employee, etc.) with a copy of Form 1095-B.

For more information on Forms 1094-B and 1095-B please visit the IRS website: Questions and Answers on Information Reporting by Health Coverage Providers (Section 6055)

On June 29, 2015 President Obama signed the Trade Preferences Extension Act of 2015, which increased the penalties for insurance companies and employers who do not comply with the Affordable Care Act (ACA) Minimum Essential Coverage (MEC) and Large Employer reporting requirements.

Penalty Amount
Failure to file/furnish an annual IRS return or provide individual statements to all full-time employees $250
Annual cap on penalties $3,000,000
Failure to file/furnish when corrected within 30 days of the required filing date $50
Annual cap on penalties when corrected within 30 days of required filing date $500,000
Failure to file/furnish when corrected by August 1 of the year in which the required filing date occurs $100
Cap on penalties when corrected by August 1 of the year in which the required filing date occurs $1,500,000
Lesser cap for entities with gross receipts of not more than $5,000,000 $1,000,000
Lesser cap for entities with gross receipts of not more than $5,000,000 when corrected within 30 days of required filing date $175,000
Lesser cap for entities with gross receipts of not more than $5,000,000 when corrected by August 1 of the year in which the required filing date occurs $500,000
Penalty per filing in case of intentional disregard. No cap applies in this case. $500

Employer sponsors of self-insured health plans are required to pay a PCORI fee to help fund the Patient-Centered Outcomes Research Institute. The institute is responsible for assisting in making informed health decisions by advancing evidence-based medicine. The PCORI fee is set to expire October 2019. To calculate the amount of the fee employers should take the average number of lives covered during the policy year and multiply that number by the dollar amount indicated for that year.

For plan years ending after September 30, 2013 and before October 1, 2014 the dollar amount is $2. For plan years ending after September 30, 2014 and before October 1, 2015 the dollar amount is $2.08. The dollar amount for future years will be adjusted to National Health Expenditures inflation.

Employers of self-insured sponsored plans need to file Form 720 (Quarterly Federal Excise Tax Return) to report and pay the fee.

Please see IRS website for more information: Patient-Centered Outcomes Research Trust Fund Fee (IRC 4375, 4376 and 4377): Questions and Answers.

The Transitional Reinsurance Fee, which was established as a part of the Affordable Care Act, is a program established to stabilize premiums in the individual market inside and outside of the Marketplaces. Under the Transitional Reinsurance Fee program, group health plans must make contributions designed to stabilize premiums in the individual health insurance market. This fee is in effect 2014 through 2016. Groups covered by fully-insured plans do not need to make payment, as the health insurance companies include this fee in the rates, and pay the fees to the IRS directly. Employers who sponsor self-funded plans must pay this fee themselves, since it is not included in the insurance rates.

In 2014 the Transition Reinsurance fee was $5.25 per covered life, per month. In 2015 the Transition Reinsurance fee was $3.67 per covered life, per month. Sponsors (the employer) of self-funded group health insurance plans must submit an annual enrollment count of the plan’s average number of covered lives to the Department of Health and Human Services (“HHS”) by November 15 of each year. Contributions will be paid in two installments, with the first installment reflecting the actual reinsurance contribution and the second reflecting payments allocated to the U.S. Treasury. The first installment will be invoiced in the fourth quarter of the calendar year, and the second installment in the fourth quarter of the following calendar year, with payment for each installment due within 30 days after the invoice date.

Employers are not able to reimburse employees with pre-tax funds to buy an individual health insurance policy. Doing so can result in a fine of $100 a day, per employee. However, there is no rule against employers paying their employees extra taxable income, which their employees can use to purchase an individual health insurance policy.

Pros:

  • Employees would have extra money they can use to pay for an individual policy.
  • Employees can pick an individual plan that best fits their needs.

Cons:

  • If you have 50 or more full time equivalent employees you will be subject to an Employer Shared Responsibility penalty for not providing health insurance to your employees.
  • Employers cannot control how their employees will use the extra income. The employee may choose not to purchase an individual policy with the extra income.
  • Giving employees extra income may disqualify them from receiving a tax credit towards their insurance premiums, which they may otherwise have been eligible for.
  • There may be other tax consequences, since the extra income is taxable (versus group health insurance premiums, which are typically pre-tax).

This law has been in place since January 1, 2014; however, it was not enforced until July 1, 2015. We recommend those employers who are reimbursing employees for individual policy premiums, or paying the insurance company directly for employee premiums, end that practice in order to be in compliance with the Affordable Care Act.

For more information please visit the IRS website.

If employer sponsored coverage is available to an employee, they do not qualify for a tax credit, unless their portion of the employee premium is greater than 9.5% of their household income. Part time, seasonal, or temporary employees who do not meet the minimum requirements to enroll in a group policy are still eligible for a tax credit. Those who are working at least the minimum number of hours and have met the probation period do NOT qualify for tax credits. The only exception to this is Apple Health (state Medicaid program). Those who qualify for Apple Health based on income can waive their group sponsored coverage and enroll in Apple Health. Apple Health is considered a “valid” waiver.

If an individual is offered coverage through an employer that his/her dependents can enroll in, the dependents do not qualify for tax credits through the Marketplace (Healthplanfinder), unless the portion that the employee is required to pay for the employee premium ONLY (not including the dependent costs) is greater than 9.5% of the family income. For the majority of families, this makes their dependents ineligible for tax credits toward individual coverage through the Healthplanfinder.

The following is a link that will give you more information on this: https://www.healthcare.gov/have-job-based-coverage/change-to-marketplace-plan/

Dependents can enroll in Apple Health (state Medicaid program that offers free health care for low income families), even if employer sponsored coverage is available.

Dependents that are not eligible for tax credits because their spouse/parent have employer offered coverage that is considered “affordable” (9.5% rule) can choose to pay the full cost of an individual plan, or they can enroll in the group policy.

  • Ambulatory patient services
  • Emergency services
  • Hospitalization
  • Maternity and newborn care
  • Mental health and substance use disorder services
  • Prescription drugs
  • Rehabilitative and rehabilitative services and devices
  • Laboratory services
  • Preventive and wellness services and chronic disease management
  • Pediatric services, including oral and vision care.

A health plan is considered affordable if the cost of the employee portion of the employee premium is less than 9.5% of the household income. Since it is likely that an employer does not know the household income of its employees, there are three “safe harbors” an employer can take advantage of.

    1. Form W-2 wages safe harbor: the employer can calculate the affordability of the plan using the employees income only (as reported on W-2).
    2. Rate of pay safe harbor: the employer can calculate the affordability of the plan using the employee’s monthly hourly or salary income.
    3. Federal poverty line safe harbor: the employer can calculate the affordability of the plan using the federal poverty line for a single individual.

Please visit the IRS website to learn more: Questions and Answers on Employer Shared Responsibility Provisions Under the Affordable Care Act.

A health plan is considered to provide minimum value if it covers at least 60 percent of the total allowed costs that are expected to be incurred under the plan. Employers can use the IRS Minimum Value Calculator to determine if their plan meets the minimum value.

Please see the IRS website to learn more: Questions and Answers on Employer Shared Responsibility Provisions Under the Affordable Care Act.

There are two circumstances in which an employer can be fined under the Shared Responsibility Provision.

A large employer may owe a Shared Responsibility payment to the IRS if they do not offer affordable, minimum value, health insurance coverage to at least 95% of their employees. You can calculate this fine by multiplying $2,000 by all your full-time employees (minus 30).

Employers may also be fined if they have one or more employee who receives a tax credit through the Exchange. That fine is calculated on a monthly basis by taking 1/12 of $3,000 and multiplying it by the number of employees receiving a tax credit.

Please see the IRS website for more information: Questions and Answers on Employer Shared Responsibility Provisions Under the Affordable Care Act.

Beginning December 31, 2017 an additional tax will be assessed on high costing employer sponsored health plans. If the collective cost of the coverage provided to an employee surpasses a statutory amount (revised annually), the excess will be taxed at 40%.

The employer will not be subject to a Employer Shared Responsibility payment unless a full-time employee receives a premium tax credit for an individual policy through the Marketplace. If the full-time employee pays for the full cost of an individual policy though the Marketplace, or enrolls in Medicare or Medicaid, the employer will not be responsible for a Employer Shared Responsibility payment. Generally speaking an employee is not eligible for a tax credit if the employer has offered that employee affordable health coverage that meets the minimum value.

For more information please visit the IRS website at: http://www.irs.gov/Affordable-Care-Act/Employers.

The Employer Shared Responsibility payment will be equal to the number of full-time employees the employer employed for the year, minus the first 30, multiplied by $2,000—as long as at least one employee receives a premium tax credit through the Marketplace.

If an employer offered coverage to its full-time employees for at least some months, the payment is calculated for each month by taking the number of full-time employees employed for the month, minus the first 30, multiplied by 1/12 of $2,000.

For more information please visit the IRS website at: http://www.irs.gov/Affordable-Care-Act/Employers.

The IRS will ensure that employers will receive certification that one or more of its employees received a premium tax credit, and will give employers a chance to respond before any liability is assessed or payment is requested. Contact will occur after employees have filed their individual returns.

There are eight forms of transition relief that a large employer can apply for in 2015.

  1. Large Employers with Fewer than 100 Employees:

    “ALE with fewer than 100 full-time employees (including full-time-equivalent employees) in 2014 will not be subject to the employer shared responsibility provisions in 2015 (and, in addition, for an employer with a non-calendar year plan year, for the months in 2016 that are part of the 2015 plan year), provided certain conditions are met regarding the employer’s maintenance of workforce and pre-existing health coverage. For more information on this relief, see section XV.D.6 of the preamble to the ESRP regulations. Even if an employer is eligible for this relief, the employer is still required to complete the related information reporting for 2015.”

  2. Shorter Period Permitted for Determining Large Employer Status for 2015:

    “Rather than being required to measure its ALE status based on the number of full-time employees (including full-time equivalent employees) for all twelve months of 2014, employers may instead base their ALE status on any consecutive six-month period – as chosen by the employer – during 2014. For more information on this relief, see section XV.D.3 of the preamble to the ESRP regulations.”

  3. Certain Non-Calendar Year Plans:

    “Transition relief is available for certain employers sponsoring non-calendar year plans for the months in 2015 prior to the beginning of the 2015 plan year with respect to certain employees, if the employer and plan meet various conditions. For more information on this relief, see section XV.D.1 of the preamble to the ESRP regulations.”

  4. Offers of Minimum Essential Coverage for Pay Periods in January 2015:

    “Generally, if an employer fails to offer minimum essential coverage to a full-time employee for any day of a calendar month, that employee is treated as not having been offered minimum essential coverage during the entire month.  Under this relief, however, if an ALE member offers minimum essential coverage to a full-time employee no later than the first day of the first payroll period that begins in January 2015, the employee will be treated as having been offered minimum essential coverage for January 2015 for purposes of the employer shared responsibility provisions. For more information on this relief, see section XV.D.4 of the preamble to the ESRP regulations.”

  5. Offers of Minimum Essential Coverage to Dependents:

    “In general, an employer is considered to have made an offer of minimum essential coverage to a full-time employee only if it also makes an offer of minimum essential coverage to the full-time employee’s dependents.  However, for the 2014 and 2015 plan years, relief is available for this requirement as long as the employer meets certain conditions, including taking steps to offer minimum essential coverage to dependents and not dropping current dependent coverage.  For more information on this relief, see section XV.D.5 of the preamble to the ESRP regulations.”

  6. Offers of Minimum Essential Coverage to at Least 70% of Full-Time Employees (and Their Dependents):

    “One of the two employer shared responsibility payments relates to whether an employer offered minimum essential coverage to at least 95 percent of its full-time employees (and their dependents).  For 2015 (and, in addition, for employers with a non-calendar year plan year, for the months in 2016 that are part of the 2015 plan year), 70 percent is substituted for 95 percent.  However, even if an employer offers minimum essential coverage to at least 70 percent of its full-time employees (and their dependents) for 2015, it may still be subject to the other type of employer shared responsibility payment that applies if a full-time employee receives the premium tax credit for purchasing coverage through the Health Insurance Marketplace.  For more information about this relief, see section XV.D.7.a of the preamble to the ESRP regulations.”

  7. Shorter Measurement Periods Permitted for Identifying Full-Time Employees:

    “Under the look-back measurement method for determining full-time employee status, in general, the length of the measurement period and stability period will be the same. However, for stability periods beginning in 2015, an employer may adopt a transition measurement period that is shorter than 12 consecutive months, but that is no less than six consecutive months, under certain conditions.  This transition measurement period can begin no later than July 1, 2014 and end no earlier than 90 days before the first day of the 2015 plan year.  For more information on this relief, see section XV.D.2 in the preamble to the ESRP regulations.”

  8. Calculation of Employer Shared Responsibility Payment for Large Employers with at Least 100 Full-Time Employees (Including Full-Time Equivalent Employees):

    “In general, if an ALE member is subject to the employer shared responsibility payment because it doesn’t offer minimum essential coverage to its full-time employees (and their dependents), the annual payment is $2,000 for each full-time employee (adjusted for inflation), after excluding the first 30 full-time employees from the calculation. For 2015 (and, for an employer with a non-calendar year plan year, the months in 2016 that are part of the 2015 plan year), if an ALE member that is part of an ALE with 100 or more full-time employees (including full-time-equivalent employees) is subject to this payment, the number of full-time employees used to calculate the payment will be reduced by 80 rather than 30. For more information on this relief, see section XV.D.7.b of the preamble to the ESRP regulations.”

To learn more about the different types of relief available for large employers please visit the IRS website: Transition Relief.

To determine if you are a small or large employer, you need to add the number of full time employees you have (those who work 30 or more hours per week) to the number of full time equivalent employees you have. If this number is under 50 you are considered a small employer. Multiple companies under a common ownership should be treated as one company for the purpose of determining if they are a subject to the Shared Responsibility Provision. However, each entity under common ownership should submit the required information reporting individually.

To determine the number of full time equivalent employees you have should multiple the number of part time employees by the average hours worked per employee per month (do not include more than 120 hours of service per employee), then divide that number by 120.

Seasonal workers should be taken into account when determining the number of full-time employees. However, if an employer employs more than 50 full-time or full-time equivalent employees for 120 days or fewer during the calendar year, and the employees in excess of 50 are considered seasonal and worked no more than 120 days, the employer would not be considered a large employer. The IRS defines seasonal workers as “workers who perform labor or services on a seasonal basis as defined by the Secretary of Labor…For this purpose, employers may apply a reasonable, good faith interpretation of the term “seasonal worker.””

For more information please visit the IRS website: Determining if an Employer is an Applicable Large Employer.

Multiple companies under a common ownership should be treated as one company for the purpose of determining if they are a subject to the Shared Responsibility Provision. However, if it is determined that the total number of full-time and full-time equivalent employees is 50 or greater, each entity under the common ownership should submit the required information reporting individually.

For more information please visit the IRS website at: http://www.irs.gov/Affordable-Care-Act/Employers.

Generally speaking an employer should only take into account the work of full-time and full-time equivalents performed within the United States.

For more information please visit the IRS website at: http://www.irs.gov/Affordable-Care-Act/Employers.

Generally speaking an employer with full-time and full-time equivalent employees working abroad would only be subject to the Employer Shared Responsibility provision if it had at least 50 full-time/full-time equivalent employees working within the United States. In other words, employees only working abroad should not be taken into account when an employer is determining its group size.

For more information please visit the IRS website at: http://www.irs.gov/Affordable-Care-Act/Employers.

Large employers, those who employ 50 or more full time/full-time equivalent employees, are subject to the Employer Shared Responsibility provision of the Affordable Care Act. The IRS considers someone who works 30 or more hours per week to be full time. The Employer Shared Responsibility provision requires large employers to offer affordable health insurance coverage, which meets the minimum level of coverage, to full-time employees. If a large employer does not meet this requirement, they will be subject to an Employer Shared Responsibility payment.

For more information please visit the IRS website at: http://www.irs.gov/Affordable-Care-Act/Employers.

As a rule, under the Shared Responsibility Provision of the Affordable Care Act employers who have 50 or more full-time/full-time equivalent employees are required to provide affordable health insurance coverage that meets the minimum value to their employees and dependent children, or they will be require to make a shared responsibility payment to the IRS.

Please visit the IRS website to learn more: Employer Shared Responsibility Provisions.

Additional Medicare Tax:

In 2013 an additional Medicare tax was established under the provisions of the Affordable Care Act. The additional tax applies to those individuals who earn an income over a certain threshold. Employers are responsible for withholding the tax on wages and railroad retirement compensation in certain circumstances. The tax is an additional 0.9%. See the below chart, taken from the IRS website, on income thresholds.

Please visit the IRS website for more information: Questions and Answers for the Additional Medicare Tax.

W-2 reporting:

Employers that provide employer sponsored health insurance are required to report the cost of the coverage in box 12 of the W-2 form. The cost of coverage should include both the employer and employee contributions. This number is for information purposes only, so that the employee has consumer information. The below chart, taken from the IRS website lists the types of coverage the employer must report on the Form W-2 (the items listed in the optional column are based on transition relief that may be available to a group.) Please be advised this chart is only for Form W-2 box 12 reporting—it has no impact on reporting required in other boxes on the form W-2.

Form W-2 Reporting of Employer-Sponsored Health Coverage

Coverage Type Form W-2, Box 12, Code DD
Report Do Not Report Optional
Major medical X
Dental or vision plan not integrated into another medical or health plan X
Dental or vision plan which gives the choice of declining or electing and paying an additional premium X
Health Flexible Spending Arrangement (FSA) funded solely by salary-reduction amounts X
Health FSA value for the plan year in excess of employee’s cafeteria plan salary reductions for all qualified benefits X
Health Reimbursement Arrangement (HRA) contributions X
Health Savings Arrangement (HSA) contributions (employer or employee) X
Archer Medical Savings Account (Archer MSA) contributions (employer or employee) X
Hospital indemnity or specified illness (insured or self-funded), paid on after-tax basis X
Hospital indemnity or specified illness (insured or self-funded), paid through salary reduction (pre-tax) or by employer X
Employee Assistance Plan (EAP) providing applicable employer-sponsored healthcare coverage Required if employer charges COBRA premium Optional if employer does not charge COBRA premium
On-site medical clinics providing applicable employer-sponsored healthcare coverage
Wellness programs providing applicable employer-sponsored healthcare coverage
Multi-employer plans X
Domestic partner coverage included in gross income X
Governmental plans providing coverage primarily for members of the military and their families X
Federally recognized Indian tribal government plans and plans of tribally charted corporations wholly owned by a federally recognized Indian tribal government X
Self-funded plans not subject to Federal COBRA X
Accident or disability income X
Long-term care X
Liability insurance X
Supplemental liability insurance X
Workers’ compensation X
Automobile medical payment insurance X
Credit-only insurance X
Excess reimbursement to highly compensated individual, included in gross income X
Payment/reimbursement of health insurance premiums for 2% shareholder-employee, included in gross income X
Other Situations Report Do Not Report Optional
Employers required to file fewer than 250 Forms W-2 for the preceding calendar year (determined without application of any entity aggregation rules for related employers) X
Forms W-2 furnished to employees who terminate before the end of a calendar year and request, in writing, a Form W-2 before the end of that year X
Forms W-2 provided by third-party sick-pay provider to employees of other employers

Please see the IRS website for more information: Form W-2 Reporting of Employer-Sponsored Health Coverage.

Form 1094-C and Form 1095-C:

Large employers are required to file Form 1094-C (Transmittal of Employer Provided Health Insurance Offer and Coverage Information Return) in conjunction with Forms 1095-C (Employer Provided Health Insurance Offer and Coverage) with the IRS, or pay a penalty, whether they have offered health insurance coverage or not. Employers must also provide a copy of Form 1095-C to each policy holder (i.e. employee, COBRA participant, etc.) for their records no later than January 31st.

Both forms assist the IRS with determining if coverage was offered, as well as if the employer will be required to make a shared responsibility payment (or not) and in what amount. Form 1094-C provides the IRS with summative information about the employer. Form 1095-C is used to report information about each employee to the IRS (such as health coverage offered, safe harbors/relief used by the employer, individuals enrolled in minimal essential coverage, etc.).

Employers must file no later than February 28 for the proceeding calendar year (Or March 31, if filing electronically).

Large employers who offer a self-insured health plan only need to submit forms 1094-C and 1095-C, not 1094-B and 1095-B.

Please see IRS website for more information: Information Reporting by Applicable Large Employers.

Notice of Coverage to Employees:

Beginning October 1, 2013 employers with 50 or more full-time/full-time equivalent employees are required to furnish a one-time notice of coverage to all employees (whether full time or part time), regardless of if coverage is provided or not. This notice should be a part of the employers new hire process moving forward.

The Notice of Coverage forms, accessible through the Department of Labor, are specific to whether or not coverage is offered:

  1. Notice of Coverage for Employers Who DO Offer Coverage
  2. Notice of Coverage for Employers Who DO NOT Offer Coverage

Large employers who sponsor a self-funded health insurance plan should submit forms 1094-C and 1095-C, instead of submitting 1094-B and 1095-B (required for small group self-funded sponsors). Employers are subject to all other applicable required reporting requirements of large groups.

Please see IRS website for more information: Information Reporting by Applicable Large Employers.

On June 29, 2015 President Obama signed the Trade Preferences Extension Act of 2015, which increased the penalties for insurance companies and employers who do not comply with the Affordable Care Act (ACA) Minimum Essential Coverage (MEC) and Large Employer reporting requirements.

Penalty Amount
Failure to file/furnish an annual IRS return or provide individual statements to all full-time employees $250
Annual cap on penalties $3,000,000
Failure to file/furnish when corrected within 30 days of the required filing date $50
Annual cap on penalties when corrected within 30 days of required filing date $500,000
Failure to file/furnish when corrected by August 1 of the year in which the required filing date occurs $100
Cap on penalties when corrected by August 1 of the year in which the required filing date occurs $1,500,000
Lesser cap for entities with gross receipts of not more than $5,000,000 $1,000,000
Lesser cap for entities with gross receipts of not more than $5,000,000 when corrected within 30 days of required filing date $175,000
Lesser cap for entities with gross receipts of not more than $5,000,000 when corrected by August 1 of the year in which the required filing date occurs $500,000
Penalty per filing in case of intentional disregard. No cap applies in this case. $500

Employer sponsors of self-insured health plans are required to pay a PCORI fee to help fund the Patient-Centered Outcomes Research Institute. The institute is responsible for assisting in making informed health decisions by advancing evidence-based medicine. The PCORI fee is set to expire October 2019. To calculate the amount of the fee employers should take the average number of lives covered during the policy year and multiply that number by the dollar amount indicated for that year.

For plan years ending after September 30, 2013 and before October 1, 2014 the dollar amount is $2. For plan years ending after September 30, 2014 and before October 1, 2015 the dollar amount is $2.08. The dollar amount for future years will be adjusted to National Health Expenditures inflation.

Employers of self-insured sponsored plans need to file Form 720 (Quarterly Federal Excise Tax Return) to report and pay the fee.

Please see IRS website for more information: Patient-Centered Outcomes Research Trust Fund Fee (IRC 4375, 4376 and 4377): Questions and Answers.

The Transitional Reinsurance Fee, which was established as a part of the Affordable Care Act, is a program established to stabilize premiums in the individual market inside and outside of the Marketplaces. Under the Transitional Reinsurance Fee program, group health plans must make contributions designed to stabilize premiums in the individual health insurance market. This fee is in effect 2014 through 2016. Groups covered by fully-insured plans do not need to make payment, as the health insurance companies include this fee in the rates, and pay the fees to the IRS directly. Employers who sponsor self-funded plans must pay this fee themselves, since it is not included in the insurance rates.

In 2014 the Transition Reinsurance fee was $5.25 per covered life, per month. In 2015 the Transition Reinsurance fee was $3.67 per covered life, per month. Sponsors (the employer) of self-funded group health insurance plans must submit an annual enrollment count of the plan’s average number of covered lives to the Department of Health and Human Services (“HHS”) by November 15 of each year. Contributions will be paid in two installments, with the first installment reflecting the actual reinsurance contribution and the second reflecting payments allocated to the U.S. Treasury. The first installment will be invoiced in the fourth quarter of the calendar year, and the second installment in the fourth quarter of the following calendar year, with payment for each installment due within 30 days after the invoice date.

Employers are not able to reimburse employees with pre-tax funds to buy an individual health insurance policy. Doing so can result in a fine of $100 a day, per employee. However, there is no rule against employers paying their employees extra taxable income, which their employees can use to purchase an individual health insurance policy.

Pros:

  • Employees would have extra money they can use to pay for an individual policy.
  • Employees can pick an individual plan that best fits their needs.

Cons:

 

  • If you have 50 or more full time equivalent employees you will be subject to an Employer Shared Responsibility provision penalty for not providing health insurance to your employees.
  • Employers cannot control how their employees will use the extra income. The employee may choose not to purchase an individual policy with the extra income.
  • Giving employees extra income may disqualify them from receiving a tax credit towards their insurance premiums, which they may otherwise have been eligible for.
  • There may be other tax consequences, since the extra income is taxable (versus group health insurance premiums, which are typically pre-tax).

 

This law has been in place since January 1, 2014; however, it was not enforced until July 1, 2015. We recommend those employers who are reimbursing employees for individual policy premiums, or paying the insurance company directly for employee premiums, end that practice in order to be in compliance with the Affordable Care Act.

If employer sponsored coverage is available to an employee, they do not qualify for a tax credit, unless their portion of the employee premium is greater than 9.5% of their household income. Part time, seasonal, or temporary employees who do not meet the minimum requirements to enroll in a group policy are still eligible for a tax credit. Those who are working at least the minimum number of hours and have met the probation period do NOT qualify for tax credits. The only exception to this is Apple Health (state Medicaid program). Those who qualify for Apple Health based on income can waive their group sponsored coverage and enroll in Apple Health. Apple Health is considered a “valid” waiver.

If an individual is offered coverage through an employer that his/her dependents can enroll in, the dependents do not qualify for tax credits through the Marketplace (Health Plan Finder), unless the portion that the employee is required to pay for the employee premium ONLY (not including the dependent costs) is greater than 9.5% of the family income. For the majority of families, this makes their dependents ineligible for tax credits toward individual coverage through the Health Plan Finder.

The following is a link that will give you more information on this: https://www.healthcare.gov/have-job-based-coverage/change-to-marketplace-plan/

Dependents can enroll in Apple Health (state Medicaid program that offers free health care for low income families), even if employer sponsored coverage is available.

Dependents that are not eligible for tax credits because their spouse/parent have employer offered coverage that is considered “affordable” (9.5% rule) can choose to pay the full cost of an individual plan, or they can enroll in the group policy.

  • Ambulatory patient services
  • Emergency services
  • Hospitalization
  • Maternity and newborn care
  • Mental health and substance use disorder services
  • Prescription drugs
  • Rehabilitative and rehabilitative services and devices
  • Laboratory services
  • Preventive and wellness services and chronic disease management
  • Pediatric services, including oral and vision care.

A broker (also referred to as an agent, or producer) has access to a variety of health insurance companies and can help individuals and businesses navigate the often complex health insurance landscape to find the best plan to fit the needs of their clients. Brokers are experts in their field and can help clients better understand health insurance.

A health insurance broker (also referred to as an agent or producer) is a licensed representative authorized to sell, solicit or negotiate health insurance.

Run Quotes to Ensure Quality Benefits at a Fair Price

Our agency is appointed with all of the carriers in Washington State. We will take your company’s census and run quotes with all of the applicable carriers, ensuring your company receives the benefits needed without overpaying.

Annual Review of ALL your Benefit Plans to Ensure Competitiveness

Once the quotes have been returned from the carriers, our Agency will review the information and build you a simplified Plan Comparison that will allow you to view and compare the top three most competitive options for business alongside what your current carrier’s renewal offering. Plan Comparisons contain the most common benefits offered by each carrier.

Schedule a Time to Review Plan Comparison – Make a Recommendation

If you would like a Benefits Advisor to go over the plan comparison and discuss our findings, we can schedule a time to meet with you, either in person or over the phone. During this time we will discuss our recommendation and can answer any questions you may have.

Prepare and Assist with Enrollment MaterialsBecause we offer a specific account manager for each of our groups, we ensure that we utilize the most up to date enrollment materials, making enrolling in your benefit plan as simple and efficient as can be.

Submit Enrollment Materials to Carriers

Our account managers handle all enrollment submissions and act as a liaison between the group administrator and the carrier. This process ensures that the group administrator is never bogged down with questions or issues that can be resolved through our office.

Deductible Credit Processing

Our Agency works behind the scenes to ensure all deductibles are credited to groups after initial enrollment. Your account manager will collect the necessary documents from employees and submit them to the new carrier. The group administrator does not need to take any additional steps, as your Account Manager will make this process seamless.

Employee Benefit Orientations

Groups are offered a benefit orientation for each enrolling employee. Your account manager can come to your office and provide clarification on plans, deductibles, networks, etc. as well as answer any questions your employees may have. Account managers offer this service during initial enrollment for the entire group, as well as with each newly enrolling employee. Educating employees at the onset of enrollment ensures more effective use of the their benefits.

Customer Service and Advocacy

After your policy is place we are there for you and your employees throughout the year. We complete new employee additions and cancellations, provide billing assistance and claims advocacy and keep you in loop regarding Health Care Legislation that affects your business.

With one call to our agency, you can get expert advice on the best health insurance coverage to meet your unique needs from start-to-finish. We are a full service agency, meaning that we can assist you in claims and billing issues as well.

No, our clients do not pay us for our services. We are paid commissions from the insurance company directly.

All health insurance rates include administrative fees. If you work with a producer the insurance company pays that producer a commission out of those administrative fees. If you do not work with a producer the insurance company keeps all the administration fees. The insurance company charges the same rate, whether you work with a producer or not.

No. The Washington Health Insurance agency is an independent agency.

We are partnered with all of the insurance companies in Washington State, which allows us to shop around with everyone to find you the best deal.

Call us at 360-464-1622.

We look forward to answering your questions and helping you choose the plan that’s best for you, your family, and/or your company.

Call us at 360-464-1622.

We look forward to answering your questions and helping with your health insurance plan.

The Affordable Care Act, referred to as Obama Care, refers to two separate pieces of legislation — the Patient Protection and Affordable Care Act (P.L. 111-148) and the Health Care and Education Reconciliation Act of 2010 (P.L. 111-152).

Together these acts expand Medicaid coverage to millions of low-income Americans and makes numerous improvements to both Medicaid and the Children’s Health Insurance Program (CHIP).

A deductible is a specified amount of money that the insured must pay before an insurance company will start paying claims.

Coinsurance refers to a parentage that the insured is required to pay on claims, after the deductible has been met.

An out-of-pocket maximum is the maximum amount an insured will pay for claims for a calendar year.

A copayment, also known as copay, is a fixed dollar amount that the insured pays when they visit a doctor, fill a prescription, or receive a service.

A health care provider is a health care professional who is authorized to perform within the scope of their practice as defined by State law.

A provider network is a group of providers contracted with a specific insurer to provide services for those insured with the insurer at pre-negotiated prices and rates. This typically translates to significant savings for the insured.

If you see a provider outside of your insurer’s network your benefits will not cover as much as they would if you see a provider inside your insurer’s network.

Typically speaking you will have a higher out of network deductible, coinsurance, and out of pocket limit. Out of network doctors may charge more for a service than an in network provider would.

An EOB is a statement sent by a health insurance company to covered individuals explaining what medical treatments and/or services were paid for on their behalf.

Preferred Provider Organization (PPO) plans allow the insured to visit any in-network provider they wish without first requiring a referral from a primary care physician.

These plans also allow the insured to go outside of the insurer’s provider network, although the benefits are significantly less than what they would be for an in network provider.

Health Maintenance Organization (HMO) plans require the insured to choose a Primary Care Physician (PCP) from a network of local healthcare providers. All of the insured’s care will be coordinated through the PCP, who will refer the insured to an in-network specialists or hospital when necessary.

An HMO plan does not allow an insured to see an out of network provider.

A primary care physician is a doctor that the insured designated with an insurance company to be their first point of contact for undiagnosed health concern as well as continuing care of diagnosed medical conditions. The primary care physician would refer the insured to a specialist or hospital as needed.

A point-of-service plan is a hybrid between a PPO and HMO plan. POS plans require an insured to designate an in-network physician to be their primary care provider, but they also allow the insured to go out of network for serviced, although their benefits will be significantly less.

Indemnity plans allow you to obtain services from almost any doctor or hospital you choose. The insurance company then pays a set portion of your total charges. The insurance company will either pay the medical provider directly, or will reimburse the insured after they have filed a claim with the insurance company.

A Flexible Spending Account (FSA) is similar to a Health Reimbursement Account (HRA).  Employees can deduct money from their paychecks to deposit into a Flexible Spending Account. The money in the Flexible Spending Account can be used toward medical expenses (and sometimes child care costs) tax-free during the year. Flexible Spending Accounts are ‘use it or lose it.’ If the employee does not use the money by the end of the year, if goes back to the employer. Employers can also put money into Flexible Spending Accounts for their employees.

Any company can set a Flexible Spending Account with a third party administrator. You can have a Flexible Spending Account no matter what type of health insurance plan you have.

A Health Reimbursement Account (HRA) is similar to a Flexible Spending Account (FSA), however employees cannot make contributions into a Health Reimbursement Account. Only employers are able to make contributions.

If an employer wants to put money towards helping their employees with their deductible or for reimbursing their medical expenses, they will typically set up an HRA because it is easier and has lower administration set up costs.

Although employers can no longer reimburse for individual premiums due to the new Affordable Care Act laws, HRA’s can still reimburse for Medical/dental expenses by employee submitting an Explanation of Benefits statement to the Third Party Administrator that administers the HRA for the group (this confirms with the Privacy Act by making sure employer is not viewing sensitive medical claims information). Typically the TPA will review the claims to make sure the are eligible for HRA reimbursement and then either write a check to the employee (funded HRA) or will send an invoice to the employer to add the approved amount to the employee’s next paycheck (unfunded HRA). Unfunded HRA’s are the most popular for employers as they do not require the TPA hold money in escrow for HRA approved expenses and therefore have lower administration costs. To learn more or to set up an HRA to reimburse your employee’s medical/dental expenses, please contact your account manager.

A Health Reimbursement Account (HSA) must be coupled with a Health Reimbursement Account medical plan. The insured and/or an employer can make tax-free contributions into the Health Reimbursement Account. Unlike a Flexible Spending Account (FSA), funds roll over and accumulate year to year if not spent. Health Reimbursement Account funds can be used for qualified medical expenses. If the funds are used for something other than qualified expenses there are tax penalties.

In an HSA medical plan all services are subject to the deductible and coinsurance. The insured must reach the deductible and out of pocket limit before the insurance company pays for anything. HSA medical plans typically have a high deductible.

2016 Calendar Year
HSA Contribution Limit (employer and employee) Individual: $3,350
Family: $6,750
HSA Catch-Up Contributions (age 55 and older)* $1,000
High Deductible Health Plan Minimum Deductible Individual: $1,300
Family: $2,600
High Deductible Health Plan Minimum Out-Of-Pocket Limit Individual: $6,550
Family: $13,100
*Catch-up contributions can be made any time during the year in which the HSA participant turns 55.

Our office can contact the insurance company for you if we are your broker. All we need is the procedure codes (obtained from your provider’s office). Please contact our office at 360-464-1622.

You can also contact the customer service department of your insurance company to determine how the service(s) will be covered.

If an insured’s health insurance company does not cover a specific health care provider or service, the insured has the right to appeal the decision.

The insurance company must notify the insured (in writing) within a set amount of time to explain why coverage was denied. They also must let you know how the insured can appeal the decision(s).

It typically takes 10-14 business days after your completed enrollment forms are submitted to the insurance company to receive an ID card. If you need to see a doctor before your ID card arrives, and after the effective date of your plan, please give our office a call at 360-464-1622. We can contact the insurance company for you to see if an ID number has been generated. During especially busy times, an insurance company may take longer than normal to process an application and send out an ID card.

If you have to see a doctor before you are in the insurance company system, speak with your doctor’s office about their policy. Sometimes they will hold off on billing you until after the ID card arrives. However, there is also the chance they require payment up front. If you need to fill a prescription before you are in the insurance company system, you will have to pay out of pocket.

Emergency rooms never ask for payment at the time of service. Let the emergency room know that you are waiting on an ID card. They will either hold off on billing you until after the ID card arrives, or they will send you a bill. If they send you a bill hold onto it until your ID card arrives, then provide the emergency room with your ID card information so they can resubmit the claim to the insurance company.

If you pay for anything out of pocket you will need to save the receipts so that you can submit them to the insurance company for reimbursement.

If you were insured at the time the service was obtained or the prescription was filled, and had to pay out of pocket, the insurance company will reimburse you according to the benefits of your plan.

Usually you will be required to fill out a claim reimbursement form and submit it to the insurance company in order to receive the reimbursement.

Our office recommends you purchase travel insurance when going abroad. Typically speaking health insurance companies will not cover services received outside of the United States.

Payment should be made as soon as possible to avoid policy termination. However, most insurance companies have a grace period.

Contact our office at 360-464-1622 to determine what the grace period for your plan is.

A TPA is an organization that processes insurance billing, claims, enrollments, and other aspects of employee benefit plans for a separate entity, often an insurance company.

2016 Calendar Year
HSA Contribution Limit (employer and employee) Individual: $3,400
Family: $6,750
HSA Catch-Up Contributions (age 55 and older)* $1,000
High Deductible Health Plan Minimum Deductible Individual: $1,300
Family: $2,600
High Deductible Health Plan Minimum Out-Of-Pocket Limit Individual: $6,550
Family: $13,100
*Catch-up contributions can be made any time during the year in which the HSA participant turns 55.

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