Prevailing Wage Contractors and Employers of Hourly Workers Should Be Aware Of These Possible Changes
In this day and age, health care benefits come as a major financial concern for most if not all employees. Implementation of these healthcare benefits fall on the shoulders of employers.
Recently, a GOP Healthcare Bill was proposed by the Senate to replace the Affordable Care Act (ACA). This article aims to provide employers with a better understanding of its provisions and what it entails.
ACA at a Glance
ACA contains an employer shared responsibility provision stating that certain applicable large employers (or ALEs) must offer an affordable healthcare benefits coverage that provides minimum value to full-time employees or potentially make payment to the IRS.
Employer Provisions on ACA and GOP Healthcare Bills
- Tax Penalty and Reduction
One of the most important key differences between the ACA and GOP Healthcare Bill under employer mandate is the tax.
Employers with more than 50 full-time employees are required to provide ACA-compliant health care benefits to employees working for 30 hours or more per week. Otherwise, employers are required to pay a tax penalty. Under the proposed GOP Healthcare Bill, tax penalty to employers will no longer be applicable.
As for the Health Savings Account (HSA), tax for nonmedical expenses shall be reduced from 20 percent down to 10 percent following the new mandate.
- HSA Amended Guidelines
Apart from the tax reduction, there are further differences between the ACA and GOP Health Bill that is related to HSA. When it is only the account holder who may make a catch-up contribution on ACA, GOP will allow spouses age 55 or older to make catch-up contributions to the same HSA.
Further, where HSA funds may not be used for over-the-counter medical items without a prescription under ACA, it may now be allowed on GOP. There is also a condition on ACA that HSA may not reimburse expenses if incurred before the account was established. GOP may now allow reimbursement up to 60 days before the account is established if the employee was eligible to open an account during that period.
- Flexible Spending Account (FSA) Limit
Finally, ACA limits the amount an employee may contribute to a health FSA to $2600 for 2107. GOP Health Bill shall remove the contribution limit on FSA and allowing employers to cap employee contributions.
ARCHER JORDAN Would Help You Comply With Laws On Healthcare Benefits
Cited were some of the highlights on employer provisions under the current ACA and the picture of how it will turn to be on the GOP House Bill. Once everything sets in, transition phase can be confusing.
ARCHER JORDAN is committed to help you be aligned with the new employer obligations. This way, we keep you compliant and abreast with the latest changes on laws and ensure that you are covered.