12 penalties Obamacare can slap employers with

From HRBenefitsAlert.com


You’re well aware of the two most costly Obamacare penalties: the $2,000-per-employee penalty for not offering healthcare coverage, and the $3,000-per-worker penalty for offering “unaffordable” coverage. Both apply to large employers. But there are plenty of other health reform penalties that can wreak havoc on any employer’s bottom line.

Many of the healthcare reform law’s provisions come with a general non-compliance penalty of $100 per day that can be slapped on employers.

The feds require firms to correct non-compliance issues within 30 days of discovering them or pay the penalty for each day the company failed to comply, and the penalty must be reported on IRS Form 8928.

That $100 per day fine can get expensive depending on the length of time an employer is not in compliance and the number of employees impacted. In some cases, the fines can total as much as $500,000.

Non-compliance penalties

Here are 12 Obamacare regs that carry $100-per-day penalties for non-compliance:

1. Violating Obamacare’s limits restrictions. As benefits pros are well aware, group health plans may not establish any annual or lifetime dollar limits on essential health benefits — beginning on Jan. 1, 2014. Doing so will trigger the non-compliance penalty.

2. Not extending coverage to dependents up to the age of 26. Coverage of dependents up to the age of 26 was among the first wave of Obamacare provisions to kick in for companies sponsoring health plans, and failing to comply continues triggers a $100-per day penalty for each individual affected by the violation.

3. Retroactive rescission of benefits. Health plans can’t cancel or discontinue coverage retroactively except in cases where premiums/contributions aren’t paid.

4. Not covering the preventive care required under the law. Obamacare includes a host of preventative services that plans must cover without imposing co-pays or cost-sharing on participants — and failing to do so subjects firms to the non-compliance penalty.

5. Failing to have a revised appeal process (including external appeals). The requirement to provide an appeal process was detailed in the Obamacare regs and was created to protect patients whose insurance claims were denied by their healthcare providers.

6. Not providing timely notices. There are a slew of notices all employers are responsible for providing under Obamacare. Right around the corner, there’s the exchange notice requirement, which HR Benefits Alert detailed previously and must be satisfied by Oct. 1, 2013. Firms will be hit with the general penalty for not furnishing these documents in a timely manner.

7. Disregarding the reform law’s rules on emergency room visits. The law includes a number of patient safeguards when it comes to ER visits — such as the elimination of prior-authorization — and failing to comply also triggers the Obamacare penalty.

8. Violating the reform law’s rules on the designation of primary care physicians. If employers’ health plans require employees to select a primary care physician, they must tell employees they can choose any participating provider.

9. Imposing pre-existing condition exclusions. Beginning in 2014, health plans will no longer be allowed to deny coverage to workers because they have a preexisting medical condition.

10. Failing to abide by new out-of-pocket costs. Plans can’t exceed the out-of-pocket limits set forth in the health reform law — or they’ll be penalized. However, as HR Benefits Alert just reported, a glitch in the law makes the out-of-limit amount much higher than originally anticipated for some plans.

11. Violating the health reform law’s 90-day waiting period limit for coverage. Employers offering health coverage to employees can’t make employees wait longer than 90 days to be eligible for that coverage. The feds just issued new guidance on this provision.

12. Nondiscrimination rule violations. Essentially, the nondiscrimination rules prohibit employers from offering current or former workers healthcare coverage levels that aren’t available to all employees within the company. (Note: The feds haven’t released the final nondiscrimination rules yet — but they’re expected to do so early in 2014.)