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June 11, 2015

ACA Mistakes? Protect Yourself with Liability Coverage

Many companies have been challenged with the regulations and requirements of the Affordable Care Act (ACA).  Starting in January 2015, companies with 100 or more full-time employees were required to provide health care to these employees and offer the coverage to their dependents in order to comply with the law.

The health care package must fit these standards:

  • The health care offered must include a number of basic elements, including:
  • preventive care
  • prescription drugs
  • hospital stays
  • The coverage must be affordable, not to exceed 9.5 percent of the wages of the employee
  • The benefits provided must meet “minimum values.”  (For a more detailed explanation of this, see Western Growers “Ag Employers Guide to Health Care Reform”)

If the employer fails to provide any coverage at all, they may be subject to “taxes” of up to $2,000 per employee.  If it offers coverage that fails to meet the minimum coverage requirements, the company may be subject to “taxes” of up to $3,000 for each employee.  Failure to adhere to the regulations can therefore cost an employer thousands of dollars.

The law gets even more complicated in January 2016 when the threshold for employers to offer coverage drops to 51 or more employees.  This will increase the number of affected employers significantly in 2016, and the regulations and penalties remain the same.

Most employers have worked very hard to understand the requirements of the ACA.  Western Growers has worked closely with many members in order to fully explain the new law and to help members to follow the regulations as closely as possible in order to avoid the fines that accompany violation of the new law.  But the law can be confusing and difficult to fully comprehend.

Many issues complicate the situation. Most common in the agriculture industry is the confusion surrounding how to identify the number of full-time employees.  Although it might seem that employees working more than 130 hours per month would appear to be full-time employees, the seasonal nature of agricultural workers makes calculating the number of full-time workers challenging.  The number of employees varies from month to month, and employers can use different methods for determining whether employees are full time workers, seasonal workers, or if some workers are exempt from ACA regulations.

A company can easily make a mistake in choosing the right coverage and making the right offer to its employees.  That’s where having the right experts on hand is key and Western Growers is here to help.

First and foremost, a company can get a lot of guidance from a well-educated and experienced insurance broker.  Western Growers has been immersed in the intricacies of the ACA since its inception in 2010.  Our staff is well trained and educated in the law’s unique features and requirements, especially as it relates to agriculture.  We work closely with member companies to help them select the proper coverage and communicate the benefit coverages to the employees of the company.  This helps to avoid most of the mistakes made regarding health benefits.

Even under the best conditions, though, mistakes can occur.  In those situations, companies can protect themselves by purchasing employee benefit liability coverage.  This is an endorsement that can be added to general liability coverage that will pay for losses as a result of an error made on an employee benefit program, including health benefits and the ACA.  This coverage pays any sums for which the company is legally liable due to acts, errors or omissions regarding employee benefit programs.

Employee benefit liability coverage can provide for coverage for ACA errors or omissions, and it can provide coverage for other benefit programs such as retirement plans, profit sharing, group life, group accident, stock ownership plans and other employee-related benefits.  The coverage pays for losses related to errors made by owners, managers or employees in administering and managing the programs.  It usually pays the amount of the loss as well as many expenses related to the claim including defense costs, all taxes, bonds and other items.  It does not, however, pay for workers’ compensation or ERISA plans, as those are covered by other insurance policies.

Employee benefits liability coverage can be an inexpensive way to increase protection for companies from issues that arise from ACA compliance.  Western Growers Insurance Services can secure this coverage through a number of its general liability providers.  If interested in more information, contact Greg Nelson.