Many of our prevailing wage clients have been asking about the requirements for providing coverage to their employees under Obamacare. Specifically, one of the biggest questions we’re getting asked is:
Does an employer have to offer coverage to dependents and spouses of their employees?
And thanks to the simplicity of the Affordable Care Act, the definitive answer we always give is “It all depends!” Why? Because, under the Affordable Care Act, there are 2 very different scenarios which determine the correct answer to the question…which is just one more reason that a knowledgeable employee benefits consultant is a good friend to have in times like these!
Scenario 1: Employers that have more than 50 employees!
There’s been a lot of coverage about the employer mandate, but there’s still a lot of confusion about this. If an employer has more than 50 full-time employees, then the mandate applies.
Under the Affordable Care Act’s employer mandate, companies are required to offer minimum value coverage to employees AND their employees’ dependents, but not spouses.
While this mandate does not require coverage to be offered to spouses, employers may choose to extend the coverage to the employee’s spouse.
The employer must also pay at least 50% of the employee-only premium of the lowest age band (under 30) for the lowest priced plan offered by the employer that meets the minimum value coverage requirements. That seems clear, right? Here’s a simple example:
An employer offers two health insurance plans: a $50 copay plan and a $1,500 deductible plan. The $1,500 deductible health plan is the lowest priced plan that meets minimum value coverage requirements for ACA. The employee-only premium of the less than 30 age band for the $1,500 deductible plan is $212. The employer must pay at least $106 toward each employee’s premium in order to meet the carrier’s premium contribution requirement under ObamaCare.
Scenario 2: Employers that have fewer than 50 employees!
For employers with fewer than 50 full-time employees, there is NO employer mandate to offer coverage to either employees, their spouses or their dependents.
But, of course, it’s not quite as simple as that because many employers with fewer than 50 employees do offer health insurance – and the Affordable Care Act has a lot to say on how those plans operate. We’ll continue that discussion in a future post. But bottom-line, when in doubt, reach out and ask us – providing employee benefits consulting services is what we do!