Build Back Better Bill: What Is Driving Enrollments?
This week we are discussing the cause and effect of the Build Back Better Bill. Our current administration has put this into effect because they want to encourage Americans to enroll in the state exchange and receive a subsidy.
For some people, this is excellent news! Some people need a subsidy, or they're not offered coverage from their company or may not be eligible. These employees might work multiple part-time jobs, so they don't have access to employer-provided coverage.
Many of these folks don't understand that once they enroll in the state exchange, it puts their employer in a particular category with the IRS that could trigger an audit, and if the IRS determines that the employer is an Applicable Large Employer (ALE), they could be subject to hefty penalties.
Currently, we have a record number of people enrolling in state exchange healthcare programs. Over 14.5 million people have enrolled this year. That's a huge spike from last year.
Why are people enrolling?
Well, it's simple. The increased government subsidies are there to help. There are also very high enrollment rates in states with no Medicaid expansion.
The exchange health plan premiums can be up to 90% less than what's being offered to people on the open marketplace or from their company because the company is only offering a major medical plan to the full-time eligible workers with salaries that can justify spending that on their health plan. Instead, the state exchange ensures that people will not spend more than 8.5% of their household income on the health plan.
All workforce employers must offer a minimum essential coverage plan to at least 95% of their full-time equivalent employees. An audit will be triggered if those employees go to the state for coverage and get a subsidy. This will affect the employer because they will get an IRS Letter 226-J, and there will be a short window to respond, pay the penalty, get in compliance, and try to make sure that they don't get penalized the following year. Keep in mind that there's no statute of limitations on a company being out of compliance. Once you receive an audit, they'll go back as far as they can and get you for all those years.
There's been a spike in enrollment on the state healthcare exchange because of affordability. This is great for many people, but this can be an issue for employers. As an employee benefits advisor, you must protect your clients from this. You need to understand the Build Back Better Bill and why it's in place.
I would be happy to jump on a phone call and accompany you with your group as an extension of your team.
I hope that you all take this very seriously because when your group reaches out to you and says that they got a 226-J letter, they're going to be wondering why they even got it. You're their broker; you're supposed to be helping them and making sure this doesn't happen.
Reach out here with any questions: