UGA MEACA PROJECT

SHOP MARKETPLACE

www.uganavigators.org

Note: Transition relief means that employer responsibility payments will not be collected for 2014

Today’s Overview

1. Affordable Care Act (ACT) and Businesses

Employers Employees

2. Small Businesses Self-Employed <50 Employees SHOP Marketplace

3. Large Businesses4. Action Steps for Employers

ACA and Businesses

ACA Recap

On March 23, 2010, President Obama signed the Affordable Care Act into law, putting in place comprehensive reforms to: improve access to affordable health

coverage for everyone; and, protect consumers from abusive insurance

company practices (abbreviated). Implementation of the Affordable Care Act

occurs in stages, with many of the reforms and requirements taking effect in 2013 and 2014. 

ACA and Businesses

The Affordable Care Act includes a variety of measures for businesses, specifically for small businesses, that help lower premium cost, growth and increase access to quality, affordable health insurance.

The ACA has an effect on small businesses: as employers of workers, and as employees of a small business.

Employer Key Definitions

Employer: includes for-profit, non-profit and government employers. Common law definition of “employee” and “employer”

applies. Full-Time Employee: is an employee who is employed

on average at least 30 hours per week. Full-Time-Equivalent (FTE) Employee: is a

combination of employees, each of whom individually is not a full-time employee because they are not employed on average at least 30 hours per week, but who, in combination, are counted as the equivalent of a full-time employee. For example, two employees, each of whom works 15 hours

per week, are the equivalent of one full-time employee.

ACA and Employers

Under the Affordable Care Act, employers covered by the Fair Labor Standards Act (generally, those firms that have at least one employee and at least $500,000 in annual dollar volume of business), must: provide notification to their employees about the new

Health Insurance Marketplace; inform employees that they may be eligible for a

premium tax credit if they purchase coverage through the Marketplace; and,

advise employees that if they purchase a plan through the Marketplace, they may lose the employer contribution (if any) to any health benefits plan offered by the employer.

ACA and Employers

Employers are required to provide employees with a standard “Summary of Benefits and Coverage” (SBC) form explaining what their plan covers and what it costs. 

The purpose of the SBC form is to help employees better understand and evaluate their health insurance options. 

Penalties may be imposed for non-compliance. 

ACA and Employers

The Affordable Care Act creates new incentives to promote employer wellness programs and encourage employers to take more opportunities to support healthier workplaces.

Under final rules that take effect on January 1, 2014, the maximum reward to employers using a health-contingent wellness program will increase from 20 percent to 30 percent of the cost of health coverage.

ACA and Employees

Beginning January 1, 2014, individuals who are eligible for employer-provided health coverage will not have to wait more than 90 days to begin coverage.

The maximum amount an employee may elect to contribute to health care flexible spending arrangements (FSAs) for any year will be capped at $2500, subject to cost-of-living adjustments. 

Note: Transition relief means that employer responsibility payments will not be collected for 2014

Small Businesses (< 50 Employees)

Note: Transition relief means that employer responsibility payments will not be collected for 2014

Self-Employed and Sole Proprietors

Self-employed people and sole proprietors are considered “individuals” and are subject to the ACA individual mandate.

Can shop for coverage for individual/family in the Marketplace or privately.

Compare cost of current individual policy (if any) to policies available in their state’s Marketplace. May have cost savings vs. policies offered in

private market

ACA Employer Provisions

Employers must offer adequate health insurance or Qualified Health Plans (QHPs).

Insurance is deemed adequate if it is a 60/40 plan. That is, no more than 40% of the total health care

costs in a year would be expected to be paid by the average person insured in this type of plan.

Many current employer-provided plans are 50/50 or even less.

ACA Employer Provisions

Small employers (< 50 FTE) are not mandated to offer health insurance to full-time employees. Workers may be mandated to purchase and

may likely do so with tax credits in the Marketplaces.

If employers offer insurance, it must be offered equally to everyone.

SHOP (Small Business Health Option Program) Exchange is available for small employers.

If < 25 employees and provide health insurance, 50% tax credit in 2014 (35 % for nonprofit organizations).

Small Business Tax Credit

The Small Business Health Care Tax Credit is designed to encourage small employers to offer health insurance coverage for the first time or maintain coverage they already have.

Small business tax credit requirements: Coverage must be purchased through the SHOP

Marketplace. The employer must cover at least 50% of the cost for

single (not family) coverage for each employee. The employer must have fewer than 25 full-time

equivalent employees. Employees’ average annual wages can be no more

than $50,000.

SHOP Marketplace

Beginning in 2014, small employers may offer insurance through the Small Business Health Option Program (SHOP) Marketplace. The employer-choice SHOP Marketplace. Eligible

employers can select one or more plans; their employees can choose coverage from these options.

The employee-choice SHOP Marketplace. Eligible employees can select from four options: bronze, silver, gold and platinum. Employees can select any plans offered at that level in their state. Delayed until 2015 in the Federally facilitated SHOP.

SHOP Marketplace A small business owner has to attest that the

business: is located in a SHOP Marketplace’s service area

(generally a state).

offers health coverage to all full-time employees (FTE), or those working an average of 30 or more hours per week.

has at least one eligible employee on their payroll.

has less than 50 FTE employees on their payroll in 2014. In 2016, employers with up to 100 employees will be able to

participate in SHOP.

Have at least 70% of his full-time employees enroll in the SHOP Marketplace plan (may vary by state).

Insurance Affordability for Employees

If self-only plan is deemed unaffordable, employees are eligible for tax credits through the Marketplace.

Insurance is deemed affordable if the annual premium for a self-only plan (not a family plan) costs less than 9.5% of a person’s annual household gross income.

Large Businesses (> 50 Employees)

Note: Transition relief means that employer responsibility payments will not be collected for 2014

ACA “Pay or Play” Rules

Individual Shared Responsibility: “Everyone must have health insurance…..or pay a federal government penalty” (certain exceptions apply).

Employer Shared Responsibility: “Employers must offer their workers adequate and affordable insurance if they have 50 or more employees, including seasonal ones, working 30 hours a week for more than 120 days…..or pay a federal government penalty”.

Note: Transition relief means that employer responsibility payments will not be collected for 2014

Determining Employer Shared Responsibility

An employer is subject to Employer Shared Responsibility if it averaged a combination of full-time employees (including seasonal employees) and full-time equivalents that equals at least 50. Example: Company X has 40 full-time employees working

40 hours per week, along with 20 part-time employees working 15 hours per week. The 20 part-time employees are counted as 10 full-time equivalent employees. Company X has 50 full-time employees and is subject to the employer shared responsibility provisions.

To determine whether it is subject to Employer Shared Responsibility for a given calendar year, the employer looks to the size of its workforce in the prior calendar year.

Employers with > 50 Employees: 2 Potential Penalties DELAYED UNTIL JANUARY

2015

Penalty for not providing health care coverage $2,000 per year for each full time employee starting at employee #31 Example: 60 employees: 60 – 30 = 30 x $2,000 = $60,000 per year

penalty for not providing health coverage Penalty will increase with rising insurance premiums

Penalty for not providing affordable and adequate health care coverage If any employee has to pay > 9.5% of income for employer’s

coverage AND/OR If coverage does not pay at least 60% of covered health care expenses $3,000 per year for each full time employee receiving a tax credit up to

maximum of $2,000 per year x number of full time employees starting at employee #31

Penalty will increase with rising insurance premiums

Large Employer Options That Make “Business Sense”

There is little reason to believe that, when the employer mandate fines kick in, that employers won’t do one of two things: Either not offer insurance at all and pay the

smaller fine OR Make sure that the insurance they offer

meets the criteria of being affordable and adequate.

ACA Employer Facts

Department of Health and Human Services: “96% of all businesses will be exempt from the law”

Only 0.2% of U.S. businesses with 50+ employees do not provide health insurance to FT employees Resources

http://buffalo.ynn.com/content/653580/how-the-affordable-care-act-could-impact-farmers/

http://www.forbes.com/sites/theyec/2013/04/22/is-the-affordable-care-act-really-bad-for-business/

Action Steps for Small Businesses

Action Steps for Employers

Compare current insurance (especially individual policies) with state Exchanges

Consult with a professional advisor if business is close to 50 FTE employees Do the math: pay or play? Develop a plan to optimize mandate requirements within

the business model (e.g., more part-time, less full-time, limiting surges of workers to < 120 days)

Obtain a health insurance plan (if business decides to cover employees). Make sure it both: meets the 60/40 rule costs less than 9.5% of the least (lowest) paid employee’s

annual (household) income

ACA Dates to Remember

Employer mandate enforcement delayed until 2015

All are still subject to ACA individual mandate in 2014

Six-month initial enrollment period for Exchanges: October 1, 2013-March 31, 2014

Subsequent years enrollment dates: October 15 to December 7. Resources:

https://www.healthcare.gov/what-key-dates-do-i-need-to-know/

More Resources

Healthcare.gov Small Business: https://www.healthcare.gov/small-businesses/

ACA Employer Penalties: http://www.benefitscafe.com/newsletter/03-calculating-aca-tax-penalty.html and http://www.fas.org/sgp/crs/misc/R41159.pdf

Kaiser Family Foundation Video: Health Reform Hits Main Street

http://healthreform.kff.org/the-animation.aspx

Main Contacts

To Sign Up:

• HealthCare.gov For Assistance:

• 706-542-6117

For Resources:

• www.MEACAProject.org

Thank You!www.MEACAProject.org