BLOG: The American Rescue Plan, The ACA, and Your Health Benefits Strategy
IT and engineering staffing companies need to monitor changes to their health insurance policies consistently. Understanding the fundamental changes to the ACA and their implications is required to avoid penalties and take advantage of Individual Coverage Health Reimbursement Arrangements (ICHRAs).
An Overview of the American Rescue Plan Act
Within the latest stimulus package, there were some significant changes to employer group health plans. The ARPA provides a 100% subsidy of COBRA premiums from April 1, 2021, through September 30, 2021, for employees and their family members who lost health insurance due to the involuntary termination (or reduction in hours) of their employment.
Bob Gaydos, CEO & Founder of Pendella, TechServe’s health & benefits partner, recommends staffing firms avoid penalties by giving “COBRA administrators the list of terminated employees going back to November 1, 2019.”
The ARP Act makes significant changes to Dependent Care, increasing the FSA benefits and contribution limits. Due to the changes, premium tax credits are now available to individuals with incomes at or above 400% of the federal poverty level. The cost of individual health coverage through the Exchanges is limited to 8.5% regardless of household changes.
Understanding the Employer Penalties
IT and engineering staffing firms need to make the necessary changes expanding the eligibility to everyone who potentially qualifies for a federal premium subsidy. While these changes are currently only in effect through 2022, Gaydos expects them to be made permanent.
Not offering a minimum essential coverage plan could result in the penalties below:
- Penalty A - $2,700 (in 2021) per full-time employee (minus first 30) applies if one full-time employee receives a federal premium subsidy for marketplace coverage.
- Penalty B - Lesser of $4,060 (in 2021) per full-time employee receiving subsidy or $2,570 per full-time employee (minus first 30)
All employees are eligible for a subsidy regardless of income if their employer health plan does not pass the affordability test. Penalty B only applies when a person receives a subsidy, and the employer didn’t pass the affordability test (9.83% of household income for employee only plan.)
Individual Coverage HRA
The new Individual Coverage Health Reimbursement Arrangement (IC-HRA) is an employer-funded HRA that reimburses employees for individual health insurance premiums. The employee shops and enrolls in Individual ACA Health Insurance plan and submits receipts for reimbursement up to a defined amount.
Gaydos recommends firms interested in offering an ICHRA to use Take Command Health based in Austin, Texas, to run your numbers and design a customized plan.
What IT and Engineering Staffing Companies Need to Do Now
Deadlines regarding the subsidy for COBRA premiums and the expansion of ACA premiums are quickly approaching. IT and engineering staffing companies need to identify the employees who were laid off after November 1, 2019, and the employees that qualify for premiums under the new changes made in the ARP.
Tommy Poulin, REBC®, TechServe’s dedicated Benefits Advisor, keeps members up to date on changes to health care, ensuring they get the most out of their specific plan. To learn more or to schedule a brief virtual visit with Tommy, visit https://www.techservealliance.org/health-benefits-program/.
Members can access the The American Rescue Plan, The ACA, and Your Health Benefits Strategy webinar through the TechServe Online Learning Center.