UGA MEACA Project SHOP Marketplace

1. Note: Transition relief means that employer responsibility payments will not be collected for 2014 UGA MEACA ProjectSHOP Marketplace www.uganavigators.org

2. Today’s Overview • Affordable Care Act (ACT) and Businesses • Employers • Employees • Small Businesses • Self-Employed • <50 Employees • SHOP Marketplace • Large Businesses • Action Steps for Employers

3. ACA and Businesses

4. 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. 

5. 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.

6. 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.

7. 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.

8. 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. 

9. 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.

10. 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

11. Small Businesses (< 50 Employees) Note: Transition relief means that employer responsibility payments will not be collected for 2014

12. 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

13. 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.

14. 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).

15. 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.

16. 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.

17. 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).

18. 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.

19. Large Businesses (> 50 Employees) Note: Transition relief means that employer responsibility payments will not be collected for 2014

20. 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

21. 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.

22. 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

23. 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.

24. 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/

25. Action Steps for Small Businesses

26. 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

27. 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/

28. 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

29. Kaiser Family Foundation Video: Health Reform Hits Main Street http://healthreform.kff.org/the-animation.aspx

30. Main Contacts • To Sign Up: • HealthCare.gov • For Assistance: • 706-542-6117 • For Resources: • www.MEACAProject.org

31. Thank You! www.MEACAProject.org