Healthcare Reform: What is “Pay or Play?”

Healthcare Reform What is Pay or PlayWhile it’s only March now, 2014 will be here before you know it and proactive companies with more than 50 employees are already scrambling to create an effective health care reform strategy for their organization.

In 2014, companies will have to “Pay or Play,” but what does this actually mean? Effective 2014, the PPACA (Patient Protection and Affordable Care Act) will require companies that employ more than 50 full-time employees to provide health insurance coverage for their employees, or send employees to an Exchange and pay a penalty of $2000 per employee per year. This excludes the first 30 employees, but only if at least one employee goes to an Exchange and receives subsidized coverage.

An Exchange is a competitive marketplace for individuals and small businesses to purchase insurance. Exchanges will be operating in states by January 1, 2014 under the ACA (Affordable Care Act). Now, you may be thinking “why not just create a new hybrid health insurance plan for our organization that offers employees numerous options when it comes to health insurance and benefits?”

This is easier said than done, and PEO Advantage recommends that you calculate your Pay or Play options before making a decision. Employers who elect to provide health insurance for their employees could be penalized up to $3000 for any employee that finds their coverage unaffordable and receives an Exchange subsidiary in its place.   What’s considered “unaffordable?”  A premium that exceeds 9.5% of the employee’s wages.

Many companies are currently struggling to calculate Pay or Play options because there are still so many moving parts and unknowns – Will Exchange rates actually be lower than employer-sponsored plans? If I decide to send employees to an Exchange, will the Exchange offer comparable plans? How will my employees react to a change in benefits?

PEO Advantage reminds all companies of 50 or more employees that Professional Employer Organizations (PEOs) have very robust and cost effective benefits.PEOs have access to Fortune 500 quality health insurance packages, which can be much more competitive than what you are currently offering employees. To discuss your healthcare reform strategy and the year ahead, contact PEO Advantage at 877-636-9525.

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