“Many health insurance acronyms float around these days. In the past, people counted on essentially two health care options. They included traditional group health insurance and, for seniors, Medicare. Today, you’ll find a number of health care options. Some of which specifically limit themselves to small businesses. The array of options may confuse you because of the many names used to describe them.
Health Insurance Acronyms for Small Businesses
Check out this list of health insurance acronyms that you need to know:
ACA (Affordable Care Act)
This federal law instituted the employer mandate. It requires companies with at least 50 or more full-time and full-time equivalent employees to provide affordable health coverage or pay a penalty. The individual mandate has essentially been repealed because of the end to any penalty for not having coverage. But the mandate still applies to employers.
AHPs (Association Health Plans)
Following an executive order in 2017, the U.S. Department of Labor issued a final rule to allow associations, such as trade groups and chambers of commerce, to offer health coverage regardless of where members were located. However, in March 2019, a federal court ruled that AHPs violated ACA. DOL has appealed the decision and also announced it would not pursue violations against employers’ good faith reliance on the DOL rule.
ALEs (Applicable Large Employers)
For purposes of ACA, these are employers with least 50 or more full-time and full-time equivalent employees. Such employers are subject to the employer mandate.
COBRA (Consolidated Omnibus Budget Reconciliation Act)
The acronym here described the law that created the health coverage option, and not the option itself. COBRA is the option to remain in an employer’s group health plan when an employee leaves the company (voluntarily or involuntarily other than for gross misconduct). Under federal law, it must be offered only by an employer with at least 20 employees. However, states may have “mini COBRA” requiring smaller employers to offer such coverage.
EBHRAs (Excepted Benefit Health Reimbursement Accounts)
Under a final rule issued jointly by the IRS, DOL, and HHS, starting in 2020, employers with traditional health coverage can offer these employer-funded plans to supplement their coverage. EBHRAs can be used by employees to pay for co-pays, deductibles, and other non-covered items, such as dental and vision care. The dollar limit per employee account in 2020 is $1,800.
HDHPs (High-Deductible Health Plans)
These are group health plans that require employees to pay the annual deductible before insurance coverage kicks in. Premiums for HDHPs are lower than traditional group health plans. HDHPs are a prerequisite to having health savings accounts.
HSAs (Health Savings Accounts)
These are IRA-like accounts that allow contributions to go in tax deductible, earnings to accumulate tax deferred, and distributions for qualified medical expenses to be tax free. HSAs can only be used by those covered by an HDHP. There are annual limits on contributions; the limits vary for self-only coverage and family coverage.
ICHRAs (Individual Coverage Health Reimbursement Accounts)
The IRS, DOL, and HHS jointly issued a final rule. So starting in 2020, employers without a group health plan can opt to reimburse employees for their individually-purchased health insurance. And this includes health insurance on or off a government Marketplace or Medicare. The employer sets the reimbursement limit. The employee must submit proof of coverage to be reimbursed. Employers can use ICHRAs whether or not subject to the employer mandate. But special rules apply to ALEs.
QSEHRAs (Qualified Small Employer Health Reimbursement Accounts)
The 21st Century Cures Act in 2016 created these accounts. Small employers (non-ALEs) without a group health plan can reimburse employees for their personal health insurance premiums up to set limits. For 2020, the limits amount to $5,150 for self-only coverage and $10,450 for family coverage.
Small business owners now need to be planning their health coverage strategy for 2020. Keep in mind that open enrollment for individuals for 2020 coverage runs from November 1, 2019, through December 15, 2019. And remember open enrollment for Medicare runs from October 15, 2019, through December 7, 2019. Still find yourself confused? Talk with a benefits expert to select the health coverage option that works best for your situation.