The majority of Americans, including many small business owners, are still confused about the health reform legislation, according to Health Partners America, a broker training and education organization. Here are 10 FAQs about the Affordable Care Act and its implications for small businesses.
1. Whats the ACA definition of small employer?
This is complicated, but essentially when determining the rules insurance companies must follow for health plans, they generally count all employees (full- and part-time) and companies with 50 or fewer total employees as small groups in most states (although in some states the cut-off is 100 employees), according to HPAs new white paper 10 ACA FAQs for Small Employers. The group notes that for 2016, companies with 100 or fewer total employees will be classified as a small employer in every state.
2. How does the ACA change the health plans small employers are offering to employees?
Companies with non-grandfathered plans in the small-group market will change in terms of essential health benefits (they must offer plans that cover the 10 essential benefits with no annual or lifetime dollar limits), cost sharing limitations (they must follow actuarial values, out-of-pocket limits and deductible limits) and modified community rating rule (this is the biggest change for small businesses, as insurance companies can no longer rate based on group size, industry, gender or health status). This will, of course, have an impact on the premiums for small group plans, HPAs report states.
3. Will small-group health plans be more expensive?
This depends, HPA writes. Some small employers those that have paid above-average rates in the past based on their groups characteristics are actually enjoying a premium decrease this year. Others those with younger, healthier employees that paid below-average premiums in the past could end up paying significantly more starting with their 2014 plan renewal date.
4. Are small groups required to provide insurance to employees under the ACA?
No! the HPA report reads. Employers with fewer than 50 full-time equivalent staffers are not required to provide health coverage and will not be penalized if they do not do so.
5. Is there financial assistance available if a small employer does decide to offer or continue offering health coverage?
Those that do [offer coverage] may be eligible for a small group tax credit depending on the number of employees they have and the average wages of those employees, HPA writes. The credit is available for employers with 25 or fewer full-time equivalent employees and $50,000 or less in average wages, though the available credit begins to decline on a sliding scale for companies with more than 10 employees or more than $25,000 in average wages.
6. Do small employers have to purchase coverage on SHOP?
The Small Employer Health Options Program exchanges, known as SHOP, are available in each state for enrollment by paper or call center. Online enrollment is slated to be open in November 2014. Small employers claiming the tax credit will be required to purchase coverage through the SHOP, the HPA report says. Small employers not claiming the tax credit are not required to use the SHOP, and it is unlikely that many will.
7. Does it benefit the employees when a small employer offers health insurance?
Employers use health benefits to attract and retain employees and small businesses are no different, HPA explains. Employees can benefit from an employer contribution to their health premiums, also, employees have the option of paying for their share of the employee and dependent premiums with pre-tax dollars if the employer has an IRS Section 125 plan in place, HPAs report states. However, in some cases employees might be better off purchasing health coverage on the ACA's public exchanges and small businesses should consult a broker to discuss the advantages/disadvantages of these scenarios.
8. Is there any reason a small employer should not offer health coverage?
As mentioned in No.7, in some cases employees might be better off receiving government assistance on the public exchanges. If their small employer still offers insurance, however, they would be ineligible for the subsidy, causing many employers to re-think their group health plan, especially if they have a number of lower-paid workers who would otherwise qualify for a subsidy, according to HPA.
9. Can a small employer drop its group health coverage and reimburse employees for the cost of individual health insurance policies?
The federal government issued guidance in September of 2013 indicating that most reimbursement arrangements would not only disqualify individuals from receiving a premium tax credit but would be out of compliance with the laws requirement to offer up-front preventive care and to cover essential benefits with no annual dollar limit, HPA writes.
10. How can a small employer help employees sign up on the public exchanges if they dont offer coverage or are dropping coverage?
Employers can show employees the state and federal websites available for consumers to obtain coverage and inform them that utilizing a broker for help in getting coverage is free of charge.
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