Affordable & Compliant Benefits: Protecting Your Hourly Workforce and Your Bottom Line

As a mid-size or growing employer, you may be challenged to balance competitive benefits offerings at a reasonable cost in a compliant manner. The IRS regulations around Affordable Care Act (ACA) can be complicated for Applicable Large Employers (ALEs). The ACA defines ALEs as fifty full-time employees or the equivalent. There are strategies employers can use to both provide employees with key benefits while mitigating the severe financial risks of IRS penalties.

Key Risks: Cost, Utility, and Penalties

Employers of hourly workers face two critical challenges:

• Unaffordable Coverage & Low Utility: The high cost of traditional major medical care leads to low employee participation. While Minimum Essential Coverage (MEC) plans satisfy ACA Penalty A (for not offering coverage), they cover only preventative services and provide virtually no benefit for the sicknesses, injuries, and prescriptions employees use most frequently (the MEC Gap).
• Catastrophic ACA Penalty Risk: Failure to meet minimum standards exposes your company to severe financial liability. The ACA Penalty B is triggered when an eligible employee needs to look elsewhere for subsidized coverage on the government exchange (due to your plan failing the affordability test or lacking utility). IRS audits can look back several years, making compounding non-compliance fines a significant concern.

Practical Benefits Alternatives

There are viable options for employers looking beyond traditional, major medical insurance plans to ensure compliant, high-utility solutions that provide viable coverage for employees and help protect the business from IRS penalties.

Strategy 1: Wrapping MEC with Fixed Indemnity

This core strategy makes the MEC plan useful, mitigating Penalty B risk.

• Wrapping a fixed indemnity plan around the MEC to provide first dollar coverage for common needs like doctor visits and prescription drugs.
• This usable benefit significantly reduces the probability employees will enroll on the public exchange and trigger Penalty B.

Strategy 2: Minimum Value Plans (MVP)

For employers facing rising major medical costs, an MVP offers a compliant off-ramp.

• The MVP is a strategic solution designed to meet the minimum value threshold, satisfying both ACA Penalty A and B.
• It is a compliant, cost-effective base for comprehensive coverage.

In both strategies, documentation is crucial. The Applicable Large Employer must strictly maintain all documentation, especially waivers, as this is the non-negotiable evidence required to defend against an IRS audit.

Creating Strategic Solutions

The knowledgeable insurance benefits team at AssuredPartners provides assurance, delivering reliable alternative group health solutions. Our teams help your organization realize long-term success as your partner by:

• Diagnosing Your Needs: Focus on identifying your current pain points, such as budget, retention, and benefit gaps among hourly employees.
• Specialist Matching: Diagnose the need and match it to a compliant, cost-competitive insurance solution.
• Mitigating Future Impact: While IRS audits may reveal prior non-compliance, the future impact can be mitigated. We provide the strategic counsel needed to protect your business.

Contact your AssuredPartners account team for more information on affordable benefits options or to learn more about The Boon Group partners at Accretive.