The Affordable Care Act – What does it mean for you

and your business?

Ashli Watts

Manager of Public Affairs

Background

• The Patient Protection and Affordable Care Act (PPACA) was signed into law on March 23, 2010

• 2,409 pages long• At least 40 agencies in PPACA that will be

involved in rulemaking to implement the legislation

When does the ACA go into effect?

• Employer mandate to offer health insurance coverage does not take effect until January 1, 2015.

• This provision was originally January 1, 2014, but the Obama administration delayed it a year on July 2, 2013.

Individual Mandate• The mandate that each individual must

have health insurance goes into effect January 1, 2014

Penalties• 2014-$95 or 1% of income• 2015-$325 or 2% of income• 2016-$695 or 2.5% of income

Who does the ACA affect?• Under the ACA businesses that employ at

least 50 full time workers (or the equivalent, including part time workers) MUST offer health insurance to staffers who work at least 30 hours per week.

• Businesses do not have to offer part time employees health insurance.

Who does this affect?• Nearly half of retailers, restaurants and

hotels will be affected by the law. These businesses employ large numbers of part time and seasonal employees, including many who work about 30 hours a week

• Full time employee is considered anyone working 30 hours or more a week.

Changes in Access• Beginning in 2014, all health insurance

plans must guarantee the availability and renewal of coverage regardless of health status.

Essential Health BenefitsEffective in 2014

• Ambulatory patient services• Emergency services• Hospitalization• Maternity and newborn care• Mental health and substance use disorder services, including

behavioral health treatments• Prescription drugs• Rehabilitative and habilitative services and devices• Laboratory services• Preventative and wellness services and chronic disease management• Pediatric services including dental and vision care

Who offers insurance now?• 57% of small businesses with 50 or fewer

workers offered health benefits to employees compared to…

• 92% of businesses with 51 to 100 workers• 97% of businesses with 101 or more

workers

Is this required?

• The ACA does not require employers to offer insurance coverage to their employees, but it imposes a penalty on businesses that fail to insure their employees in certain circumstances

What is the penalty?• Businesses with 51 or more full time employees

will be fined $2,000 per employee (excluding the first 30 employees) if they do not offer coverage for employees who average 30 or more hours per week.

• There is NO penalty for part time employees not offered coverage.

What does this mean for your business?

• Many businesses plan to bring on more part time workers next year, trim the hours of full time workers or postpone hiring

• The implementation of the ACA will particularly affect companies with 40-45 employees that plan to expand and hire.

• Many may hold off so they don’t cross the 50 employee threshold.

Affordability-Guidelines• Under the ACA employees must pay no more

than 9.5% of their wage in insurance premiums, possibly having businesses contribute significantly more than they do for higher wage workers.

• If it does not meet this affordability standard, employees may receive tax credits to purchase insurance through the exchange.

• If the coverage does not meet the affordability standard, small employers will either have to pay $3,000 per employee receiving the tax credit, or $2,000 per employee excluding the first 30 workers, whichever amount is less

Out of Pocket Costs

• The limit on out-of-pocket costs, including deductibles and co-payments, was originally not supposed to exceed $6,350 for an individual and $12,700 for a family. In Feb. 2013, the U.S. Labor Department posted on their website this would be delayed a year.

Small Business Tax Credits

• 52,800 small businesses in Kentucky may be eligible for the new small business tax credit that makes it easier for businesses to provide coverage to their workers and makes premiums more affordable.

• Small businesses pay, on average 18% more than large businesses for the same coverage, and health insurance premiums have gone up three times faster than wages in the past 10 years.

How do I qualify?

• To qualify for these tax credits your business must have average annual wages below $50,000, 25 employees or less and must pay at least half of the cost of their employee’s health insurance.

Tax Credit 2014 and onward

• Eligible employers may receive a tax credit of 50% of the employer’s contribution towards insurance premiums

• Tax Exempt businesses may receive 35%

Employee Enrollment • The ACA requires small businesses to limit

waiting periods for health insurance for employees to no more than 90 days.

• Employers with more than 200 employees who offer a health plan must automatically enroll employees into one of the plans offered, though employees may opt out.

Employee Notification• On Oct. 1, employers must notify

employees of their options for health insurance, including public exchange

• Visit DOL.gov for notices you can fill out and give to employees

• Must mail, email or hand to each employee

Kentucky Health Benefit Exchange

• Created by Executive Order (2010-587) signed by Governor Beshear July 17, 2012 created the Exchange.

• Exchange is under Cabinet for Health and Family Services and can have no more than 30 employees.

• Executive Director-Carrie Banahan

Kentucky Health Benefit Exchange

• In 2014, individuals and small businesses will be able to purchase private health insurance through state-based competitive marketplaces.

• Individuals will be able to find out if they are eligible for advance payments of tax credits and cost sharing reductions

• Small businesses will be eligible for the tax credit for

coverage purchased through the Exchange.

Medicaid Expansion• Gov. Beshear announced on May 9, 2013 that Kentucky

will accept Medicaid expansion via Executive Order• Expands Medicaid population to 138% of the federal

poverty level• Could cover as many as 400,000 additional Kentuckians• Will go into effect January 1, 2014• Federal government covers 100% of the costs for the

first 3 years• Phases out until KY will eventually pay 10%

Have a Question about Health Care Reform?

• www.kychamber.com/healthreform• healthreform@kychamber.com•   Call 502-848-8721