Health insurance rules must be followed, or businesses face fines

Most business owners are worried about the rising cost of health insurance, but many are unaware of another looming financial burden — namely, the large fines they would need to pay if they have not complied with complex health insurance regulations.

This is because the federal government has ramped up its efforts to investigate employers who may have violated the Affordable Care Act and the Employee Retirement Income Security Act.

Obamacare infractions

Businesses violate the Affordable Care Act whenever they do not offer their full time employees health insurance coverage that is deemed affordable and adequate — and an employee qualifies for a subsidy.

Penalties range from $2,080 to $3,480 per affected employee, depending on the particular violation and the plan year in which it occurred.

After many delays, the Internal Revenue Service has finally finished gathering and reconciling information reported by large employers since 2015 and has started sending out penalty letters for ACA violations.

“These letters may come as a rude shock to many business owners, since employers could be penalized as far back as tax year 2015,” said Jerry Calistri, president and CEO of Swift Kennedy and Associates, an insurance brokerage firm specializing in group employee benefit plans and senior insurance needs.

ERISA errors

Violations of the Employee Retirement Income Security Act include failing to give a plan participant a Summary Plan Description and other documents within 30 days of an employee’s request, which can result in a penalty of $110 per day for each request.

The Department of Labor’s increased enforcement efforts and audits have resulted in a 72 percent increase in fines levied for ERISA violations from 2016 to 2017, with a total of $1.1 billion collected in 2017.

Solutions

How can a business owner avoid these violations and fines?

“The best way to prevent these problems is to consult with a health insurance broker to analyze your employee benefit plans for compliance with both ERISA and the Affordable Care Act,” Calistri said, who is a Certified Healthcare Reform Specialist.

For example, some brokers can help large employers to track their employees’ work status (whether they are full-time, part-time, seasonal, or have flex hours) and to file the proper tax forms (such as Form1094-C and 1095-C) in order to comply with the Affordable Care Act.

Brokers may also provide employers with Wrap SPDs and other Wrap plan documents that wrap around certificates of insurance and benefit plan booklets in order to satisfy ERISA requirements. In addition, some brokers generate ERISA-required benefit notices for business owners to distribute to their employees.

“It is important for employers to realize that the federal government now means business when it comes to enforcement of health insurance regulations and that failing to comply could lead to severe penalties,” said Calistri.

Swift Kennedy & Associates is a full service brokerage firm that helps businesses find affordable employee benefit plans, including medical, dental, vision, life, disability, and alternative funding options. The agency, which offers all health insurance carriers in Pennsylvania, also provides individual health and Medicare plans. It has offices in Williamsport, State College, DuBois, and Wilkes-Barre.