Affordable Care 101: What the Healthcare Law Means for Small Employers
Table of Contents
- Michaela: Good afternoon ladies and gentlemen.
- Equivalents and average annual wages of less than 25,000 are eligible for the maximum amount.
- Enroll.
- Important to know which employers are covered by these rules and then weíll talk about...
- To at least 95% of their full-time folks and their dependents.
- The SHOP Marketplace are based off of age and location.
00:06
Michaela: Good afternoon ladies and gentlemen,
thank you so much for joining todayís webinar
on the Affordable Care Act and what the health
care law means for small businesses. My name
is Michaela Hahn Burris, and Iím the Midwest
Outreach Manager here at Small Business Majority.
Weíre pleased to be presenting this ongoing
series with our partners at Centers for Medicare
and Medicaid Services and the Small Business
Administration. Iím happy to be joined by
representatives from each of these organizations,
Meredith from the SBA and Brook from CMS who
will be delivering the presentation.
Before we get started, however, I do have
a couple of quick housekeeping announcements.
First, Iíd like to know that this call is
off the record and not for press purposes.
If you are a member of the press and youíd
like to speak to someone about the Affordable
Care Act, please respond to any of the emails
you have received about todayís presentation
and you will be connected with an expert.
Second, we will be sharing the slides up on
the basis of todayís presentation via email
following the presentation, so keep an eye
on your inbox for that email, also, included
01:08
in that email will be the registration links
for the next few webinars on this topic. This
is part of an ongoing series and we will present
this information every Thursday at 2 pm Eastern.
If youíd like to hear the program again or
know someone who would benefit, please feel
free to share the registration link.
Finally, we will be taking questions throughout
the presentation today and we will answer
as many as possible at the end of the webinar.
Please enter your questions in the chat box
on the lower left hand corner of your screen.
With that, Iíd like to turn it over to Meredith
of the SBA.
Meredith: Thanks so much and thanks to Small
Business Majority for hosting us, itís a
pleasure to be here. Todayís presentation
will cover the Affordable Care Act 101, what
the health care law means for small employers.
We are providing this information today for
your educational purposes only and not as
tax or legal advice. We can encourage you
to consult your tax or legal professionals
to determine how these matters relate to your
own individual business circumstances.
Just a roadmap for todayís presentation,
02:13
so weíll cover three main topics, first is
small business health care tax credit. Second,
weíll cover the new Marketplaces both for
small employers, the Marketplace known as
SHOP or the small business health options
Marketplace under the Affordable Care Act.
Then on the individual side for self-employed
folks with no employees the individual Marketplace.
The enrolment process is a little different
and weíll talk about both aspects of the
Marketplace.
Then third we will talk about the new employer
shared responsibility requirements, which
takes effect for the first time on January
1st, 2015. We'll talk about which employers
are subject to those rules and how the employer
shared responsibility payments work.
Then weíll cover in a few remaining slides
some other key provisions that youíll want
to know about as small business owners or
folks that work with small business owners.
Then as Michael mentioned, weíll take your
questions in about the last 10 minutes or
so. With that, weíll go ahead and get started.
03:20
For so many years, small business owners have
had a lot of challenges that theyíve wanted
to provide coverage to their employees, and
the small group market on average of small
employers, wanted to offer coverage. They
were paying up to 18% more in premiums in
larger competitors. Weíre going to look at
some of the ways in which the Affordable Care
Act is helping to level that playing field
for small employers through some key market
reforms as well as some other provisions which
weíll talk about in more detail today.
Just a quick snapshot of the landscape before
the Affordable Care Act and then once the
law was passed in 2010 for the small group
market. Prior to the Affordable Care Act,
as I mentioned, there were a lot of obstacles
to small employers who were choosing to provide
coverage to their employees including fewer
choices in the small group market, higher
premiums and unpredictable rate increases,
higher rates for groups with women, those
with older workers, those with employees with
chronic health concerns, often longer waiting
04:25
periods or no coverage at all for individuals
with pre-existing conditions.
Under the Affordable Care Act several market
reforms took effect that are helping to address
those inequities both on the individual side
of the market as well as small group market.
For example, insurance companies under the
Affordable Care Act now face limits on administrative
spending. What that means practically is that
insurance companies have to spend at least
80% of consumer dollars on providing actual
medical care as opposed to overhead cost,
salaries, or other administrative cost. If
they donít provide that at least 80% they
have to rebate the difference to consumers
and employers.
Also, under the second bullet on the right
hand side, insurance companies now must disclose
and justify any proposed rate hikes of 10%
or more in a process called rate review. Also,
insurance companies can no longer charge higher
rates or deny coverage because of pre-existing
05:28
conditions. They likewise canít charge higher
rates for women and face limits on charging
additional premiums for older employees.
Then other key reforms under the Affordable
Care Act in the individual and small group
market are things like plans that are offered
must provide a core set of essential health
benefits so things like preventive care, ambulatory
care and the like. Weíll talk some of these
in more detail as we go forward today, but
we just wanted to provide a bigger context
around what the Affordable Care Act is bringing
to the small group market.
Then I wonít cover this slide in a lot of
detail because I do want to get into the heart
of the presentation but feel free to come
back at your convenience to take a look some
of these other reforms that are helping Americans
across the board in terms of providing higher
quality health care at a lower cost.
One key thing to keep in mind as we go through
the material today is that often what the
06:32
Affordable Care Act means to you as a small
employer is going to depend often in the first
instance on the size of your workforce. There
are a few key size standards if you will that
apply under the Affordable Care Act, and so
when we say small employer that definition
of what is a small employer under Affordable
Care Act is going to depend on a particular
provision.
Weíve organized content in a way around employerís
size. Similarly if you go to SBAís website
on our health care landing page, sba.gov/health
care, youíll see information filtered by
employer side as well and itís just a way
of helping you understand as a business owner
based on the size here are some of the provisions
that may apply to me and hereís how they
work, so thatís just a framing piece for
the purposes of the presentation today.
The first key bucket if you will, weíre going
to look at are those employers with 24 or
fewer employees. Generally speaking this is
07:35
a group that is eligible for the small business
health care tax credit. First, weíll look
at the criteria, the eligibility criteria
for the tax credit and then how it works.
There are three eligibility criteria for the
tax credit. The first is, again, size so you
must have 24 or fewer full-time equivalent
employees. The second criteria is you must
have average annual wages below 50,000 and
thatís indexed annually for inflation. Then
third, you must contribute at least 50% towards
your employeeís self only premium cost, so
these are the three eligibility criteria the
size standard, average wages below 50,000,
and contributing 50% or more towards single
coverage.
The credit works on a sliding scale. What
that means is the maximum tax credit is available
to those employers on the smaller end of the
eligible group so those with 10 or fewer full-time
08:37
equivalents and average annual wages of less
than 25,000 are eligible for the maximum amount.
Weíll talk in a moment about what that is.
Then for every employee above the 10 or 25,000
or more, the credit starts to slide down the
scale.
In terms of the criteria, we often get asked,
what is a full-time equivalent. Under the
tax credit rules, a full-time equivalent employee
is an employee who is not themselves working
full time, so 40 hours a week is the definition
of full time for the tax credit, but a combination
of employees who together would equal the
full time equivalent or the full-time employee.
For example, under the tax credit rules, two
employees working 20 hours a week would equal
a full-time equivalent.
The 40-hour work week definition of full time
is different than when weíre talking about
the SHOP Marketplaces and when weíre talking
about the employer shared responsibility rules
and so weíll be sure to flag what that definition
09:43
of full time or full-time equivalent looks
like when we get to those sections. For the
purposes of the tax credit, youíre going
to take into account all your folks that are
working 40 hours a week as well as folks working
less than 40 hours a week when combination
may equal a full-time equivalent to see if
you get to the 24 or fewer.
The other important thing to know in terms
of eligibility is that youíre not counting
the owner in that size count, any spouses
or family members of the owners in the size
calculation and the wage calculation. If youíre
not taking into account the wages or salaries
of the owners, spouses and family members.
Then the other thing to keep in mind in terms
of the credit is when the credit was initially
passed under the Affordable Care Act in 2010,
it was a credit of up to 35% of eligible small
employerís premium contribution, 25% for
tax-exempt employers. There were the initial
few years of a tax credit. Employers can take
10:50
the tax credit and still deduct the remainder
of their premium contribution and the credit
that initial credit of up to 35%, 25% if youíre
tax-exempt could be claimed through 2013.
If you think you may have been eligible for
prior year, there may still be an opportunity
to amend. Itís definitely worth checking
with your tax professional to see if that
might be an option.
Then the credit changed a little bit starting
this year. The two things that happened are
first the credit went up, so it rose to 50%,
35% for tax-exempt employers. Then the second
thing that happened is starting this tax year,
2014, in order to take advantage of the credit,
employees must enroll in coverage offered
by the business through the new SHOP Marketplace,
so thatís the additional component for 2014
in order to get the tax credit. Starting in
2014, youíd need to buy coverage for your
employees through the SHOP Marketplace. Weíre
going to talk about SHOP in a moment in a
lot more detail, but wanted to flag that here.
The 2014 tax credit can be claimed for any
11:56
two consecutive taxable years, so if you previously
claimed it and youíre still eligible and
buy coverage through SHOP starting in 2014,
you could claim the tax credit for 2014 and
2015 for example. There is a tax credit estimator
that employers can use to help determine if
theyíre eligible for the tax credit and if
so how much it might be worth to you as the
employer and that URL that you see on the
screen it said healthcare.gov, you can plug
in the number of your employees, average annual
wages, and your premium contributions and
it will do an estimate for you of what the
credit might look like.
The next slide just summarizes the eligibility
criteria that weíve talked about today and
as well as what the credit looks like starting
in 2014, this tax year, if you are a tax-exempt
organization, the credit comes in the form
of a refund, so it works a little differently
13:02
for tax-exempt organizations. With that, letís
move next to our discussion about the new
Marketplaces and Iíll turn it over to Brook†Bell
with the Centers for Medicare and Medicaid
Services.
Brook: Thanks a lot Meredith, and thanks everyone
for joining us today. Next weíre going to
talk just a little bit more about the Marketplaces
and specifically whatís available for small
businesses. The small business health options
program was created as a part of the Affordable
Care Act to help small employers find and
purchase health insurance options for their
employees. The SHOP Marketplace specifically
is open to employers with one to 50 employees
and thatís also for non-profit and religious
organizations.
The goals of SHOP Marketplace are really to
provide new health and dental options for
those small employers who are looking to provide
coverage options to their employees. There
is difference in the individual Marketplace
14:10
focused for individuals and families. There
are no limitations on enrolment periods, so
small businesses can enroll at any time.
In addition, for small employers who offer
their employees coverage their SHOP and meet
the other eligibility requirements, they maybe
eligible for the small business health care
tax credit for providing SHOP Marketplace
coverage. Together we will see the SHOP Marketplace
working with many of the insurance reforms
involved with the Affordable Care Act to help
curb premium growth and spur competition for
small employers.
Healthcare.gov is the home of the SHOP Marketplace
for the 33 states that are using the federally
facilitated SHOP, 14 of those states this
year will be operating what we call employee
choice which allows small employers to offer
a choice of health plans like many large employers
already do.
15:14
Small employers who have 50 or fewer full-time
equivalent employees who maybe eligible to
purchase coverage through SHOP are not required
to offer SHOP Marketplace coverage or to participate
in providing coverage to their employees.
The SHOP Marketplace is really meant to offer
new options for those employers who choose
to do so.
Next, weíll talk just a little bit more about
who can purchase coverage through the federally
facilitated SHOP, so as Iíve said itís available
for those employers with one to 50 full-time
equivalent employees. When weíre talking
about full-time equivalents, weíre taking
into consideration both full and part-time
workers whose combined or total hours equal
at least 30 or more hours per week. At least
one employee must be on payroll who is not
a business partner or spouse in order for
a business to be eligible, and the small employer
must offer coverage to all of its employees
who work on average of 30 or more hours per
16:19
week.
To make it a little bit easier to determine
whether your business maybe eligible for SHOP,
weíve created another tool, the SHOP FTE
Calculator, which is also housed on healthcare.gov
to help small businesses or agents and brokers
to count their FTEs. The FTE calculator is
based off of the federal counting methodology,
so if youíre located in a state that may
be operating under a state-based SHOP, you
may use a different method of counting employees.
Until 2016, employers have the ability in
state-based SHOP state to count differently,
but eventually the states will all be using
the federal FTE counting method.
Then just quickly I want to highlight the
general rule of thumb for SHOP enrolments,
so as we said before, the SHOP Marketplace
accepts initial group enrolments throughout
the year. The general rule of thumb is that
17:23
if your application or your initial group
enrolment is submitted before the 15th day
of the month, coverage can take effect the
first day of the next month. For a coverage
or initial group enrolment submitted after
the 15th day of the month, coverage can take
effect the second following month.
Next, weíre going to talk just a little bit
about what we call minimum participation rates
or requirements that are in place for employers
who participate in SHOP. Before employees
can complete their enrolment in the federally
facilitated SHOP that employer will have to
meet what we call a minimum participation
rate that is set in their state.
Generally, for the states that are participating
in the federally facilitated SHOP that minimum
participation rate is 70%, so that means that
70% of employees who are offered coverage
must accept in order for the employer to fully
18:26
enroll.
There are a couple of states that are in the
federally facilitated SHOP with different
minimum participation rate to find out what
minimum participation rate maybe in place
in your state. Iíd encourage anyone to go
check healthcare.gov. We have the latest information
available there. There are some caveats to
the minimum participation rate requirement.
For employees who have other resources of
health care such as Medicare, Medicaid that
are in health service, in the InHealth Service,
or TriCare, those folks arenít taken into
consideration when determining your minimum
participation. There are some differences
for folks who have individual health insurance
plans or coverage through a spouse.
Itís important to highlight that there is
one month each year where folks can apply
for SHOP Marketplace coverage without having
to meet minimum participation. For this year
or for 2015 coverage that window has closed,
19:35
but for going forward the window to enroll
in SHOP Marketplace coverage is available
between November 15th and December 15th each
year. If your small business has a hard time
meeting minimum participation, there is that
option available for you for 2016 coverage.
Now, weíre going to talk just a little bit
more about how you SHOP for SHOP Marketplace
coverage. We really encourage small businesses
and agents and brokers who are helping them
to take advantage of the premium estimator
tool before getting too far into the process.
The premium estimator tool is available on
healthcare.gov and is available to show small
businesses the health and dental plans that
are available in their area.
The price estimates are based off of the age
ranges of employees and the business location.
The [estimates 00:20:34] reflect the prices
for people who donít use tobacco, so if your
20:39
employees are tobacco users that extra surcharge
wonít be taken into considerate in the estimate.
It also doesnít allow for folks to provide
estimates on dependents. Thatís another thing
to take into consideration when youíre using
the tool.
The premium estimator tool does a really great
job at showing small businesses what plans
are available in their area and agents and
brokers and navigators can also help to look
at the plans and compare them.
Next, weíre going to talk a bit about options
for self-employed individuals, so as we said
the SHOP Marketplace is available for those
small employers with one to 50 employees,
but for sole proprietors and shareholders
of more than two percent of an S corporation
with no common-law employees, youíre really
not eligible to participate in SHOP.
What is available is the health insurance
21:42
Marketplace for individuals and families.
Depending on your level of income, you may
also qualify for tax credits through the individual
health insurance Marketplace. Difference in
the SHOP Marketplace, the health insurance
Marketplace for sole proprietors and self-employed
individuals only accepts applications for
coverage during open enrolment. For 2015 coverage,
the open enrolment period is available now.
it started on November 15th and will continue
until February 15th, of 2015.
Outside of open enrolment there is some flexibility
for folks if they missed that open enrolment
period. You could qualify for a special enrolment
period if you have what we call qualifying
life events, so any change in circumstance
with you and your family such as moving to
a new state, or changes in income could qualify
someone for a qualifying life event in special
enrolment period. For more information on
22:49
all of those things, please visit healthcare.gov
for more information.
Next, weíre going to look back to the federally-facilitated
SHOP Marketplace and talk a bit about some
of the new features that are available for
2015 coverage. Beginning on November 15th,
we launched the SHOP Marketplace on healthcare.gov
for the first time, so now small businesses
can select and offer coverage, health and
dental coverage to their employees, that begins
in 2015. Last year, we were relying on a paper-based
process and now all of our applications will
be submitted online through healthcare.gov.
Weíve also made some great enhancements to
help SHOP a registered agents and brokers
to provide more resources and assistance to
small businesses through the SHOP agent, broker
portal. Fourteen of the federally-facilitated
SHOP states were also offering a choice of
health plans which we call employee choice,
23:56
so one single employer can offer their employees
a choice of plans at a given coverage level.
Weíve also recently expanded our operations
for the SHOP call center to help provide small
businesses with additional resources.
Next, Iíd like to quickly talk about employee
choice and what it means to offer employee
choice to your employees. As Iíve said earlier,
14 of the federally-facilitated SHOP Marketplace
states are offering what we call employee
choice. The employer has the option to offer
a single health and dental plan to their employees
or to offer a choice of health and dental
plans at a given middle level. If an employer
chooses to take advantage of the employee
choice, they would select a reference plan
and determine a percentage which they would
like to contribute to the employeeís health
care.
Once a percentage is determined then the employee
25:01
has the ability to SHOP within any of the
health plans available at that coverage level,
so this applies for both health and dental
plans. One benefit for selecting employee
choice means that for employers who choose
to do this, they can offer additional choices
to their employees but also have the benefit
of paying one monthly bill, so the SHOP Marketplace
takes care of distributing all of the payments
to the issuers that are associated with the
account.
On the next slide, youíll see just a quick
chart of those states that are participating
in employee choice in a federally-facilitated
SHOP. Those 14 states that are participating
in employee choice are highlighted in dark
blue. The others in light blue will be transitioning
to employee choice in 2016, but in the meantime
weíll be offering a single health and dental
plan option through SHOP.
26:13
On the next slide, youíll just see some various
resources for folks to get assistance. As
I said the SHOP call center is ready and available
to answer any questions. Youíll see the number
for the call center on the slide there. We
are making available new weekend hours, so
for small businesses who are running into
questions or needing assistance on Saturday
or Sunday weíre ready to help you.
Then also, for folks who are needing assistance
in person, there are multiple ways to find
the assistance of an agent or broker. One
is through the SHOP application. You can find
a SHOP registered agent or broker in your
area and search for them that way. The other
way is through find local help on healthcare.gov.
You can also find SHOP registered agents and
brokers by doing as a code search.
As I said, sole proprietor and self-employed
individuals things are little different for
27:23
them but the call center for the individual
health insurance market place thatís ready
to help them is also on the slide.
With that, Iíll return back to Meredith for
the remainder of the presentation, thanks.
Meredith: Thanks so much Brook.
Now, weíre going to transition to the third
main topic, employer shared responsibility.
These provisions take effect on January 1st
for certain employers and then theyíre [faced
in 00:27:55] for another set of employers
until January†16th, so weíll talk about
how that works, how you figure out if youíre
covered by these rules, and then how the rules
work in terms of employer shared responsibility
payments.
The employer shared responsibility requirements
are those rules that say that employers of
a certain size have a choice to either provide
coverage that meet certain standards to their
full-time folks or if not make what called
an accessible payment to the IRS. First, itís
28:30
important to know which employers are covered
by these rules and then weíll talk about
breakdown how they work.
The employer shared responsibility provisions
apply to those employers with 50 or more full-time
employees including full-time equivalent so
itís a permanent rule. Thereís a transition
year for employers that have between 50 and
99 employees, so those employers have another
year until January of 2016 before these rules
take effect. Another way of saying this is
if you have 100 or more employees this will
take effect for you on January 1st and if
you have between 50 and 99 employees, they
will take effect for you starting on January
1st of 2016.
The first thing weíll talk about is how to
figure out if you meet that threshold and
Iím going to talk in terms of the permanent
rule, the 50 or more, but again just understand
that one year transition relief is yet between
50 and 99 employees.
29:34
Important to know that just in terms of the
number of employers subject to these rules
about 96% of firms in the US are below 50,
so itís about four percent of employers in
the US that are actually subject to the employer
shared responsibility requirements.
The first thing to know when youíre figuring
out, do I employ the 50 or more employees
and therefore covered by these requirements.
The first thing to know, the first key definition
is full-time employee, so I said under the
tax credit full-time was 40-hour individual
working 40 hours a week, so here itís a 30-hour
definition of full-time and so an employee
who is employed on average 30†hours or more
per week or at least 130 hours in a month
is considered full-time under the employer
shared responsibility provisions.
A full-time equivalent would be a combination
of employees who again arenít themselves
30:36
working the 30 hours a week but in combination
theyíd count as the equivalent of a full-time
employee, so using the 30-hour definition
full-time, two employees who work 15 hours
a week would be a full-time equivalent. You
are taking into account your full-time folks
and your full-time equivalent to figure out
if you get to that threshold of 50 or more.
Couple of other things to know about determining
if youíre covered by these rules if you have
50 or more employees is that the IRSí controlled
group rules apply and what those basically
say is employers of common owners or those
were otherwise related to one another are
aggregated together to figure out if they
meet the threshold of 50.
Another way of looking at this is if you,
letís say hypothetically an individual owns
80% or more of two businesses. They are [separate
identities 00:31:29] but because of the common
owner, the number of employees for both entities
will be counted together, and if collectively
31:39
both entities employ 50 or more even if individually
they donít, but if together they do, both
entities in this hypothetical would be subject
to the employer shared responsibility requirements.
That example is just one example of a controlled
group. There are many others. If you are part
of a controlled group youíve likely but filing
that way for tax purposes, but in any event
you should consult your tax professionals
to make that determination.
The other thing to know is when we talk about
the 50 as being the threshold for whether
or not these rules apply, thatís the average
over the course of the year, so that takes
into account fluctuation is one month. You
maybe above 50, another month below, but if
youíre averaging for each month over the
course of the year 50 employees or more, then
youíre subject to the shared responsibility
requirements.
Next, letís talk about how these rules work.
This slide summarizes what the employer shared
32:40
responsibility provisions look like and then
weíre going to break it down on the next
few slides. Again, if an employer has met
that threshold of being covered by these rules
so that 50 or more full-time including full-time
equivalent employees, then there are two scenarios
under which an employer are covered by these
rules [mail 00:33:02] a payment.
The first is that the employer doesnít offer
coverage to at least 95% of its full-time
employees and theyíre dependent, so itís
one scenario. The second would be that the
employer does offer coverage to its full time
folks but the coverage that it offers either
isnít affordable or doesnít provide minimum
value or a particular full-time employee was
not offered coverage, so theyíre basically
the two types of employers under this shared
responsibility of provisions.
The additional requirement is that at least
33:41
one full-time employee received the premium
tax credit in the individual Marketplace.
Another way of looking at this is in order
for the shared responsibility payments to
be triggered, either of the two scenarios
that I just mentioned must apply and at least
one of your full-time folks must receive a
premium tax credit in the individual Marketplace.
If none [of†this 00:34:09] the full-time
employees of the business goes to the Marketplace
to get coverage and is eligible for premium
tax credit, then the shared responsibility
payments are not triggered. Weíll talk about
this in a little more detail but we wanted
to provide an overview on this slide.
First, letís look at two of the definitions
I mentioned and Iíll just flip back, so under
the second scenario, this would be the case
where the employer does offer coverage to
its full-time employees but the coverage isnít
affordable or doesnít provide minimum value.
Those two definitions are outlined on this
slide. Providing minimum value means that
the plan that youíre offering to your employee
34:50
covers on average at least 60% of the planís
total cost, meaning that your employee is
covering 40% or less.
Most employer plans do meet that minimum value
standard, so thatís the standard that must
be met in order to meet minimum value requirements
under these rules. Then affordability, so
what does it mean to offer a plan thatís
affordable? Itís based on household income,
but there are additional safe harbors or approved
methods the IRSí said employers can use to
determine affordability. Weíll talk about
the household income tax and then the safe
harbors that are approved by the IRS for the
purposes of determining affordability.
Coverage is considered unaffordable under
these rules. Itís a full-time employeeís
share of the lowest cost self only coverage
is more than 9.5% of his or her household
income. Recognizing that many employers may
35:53
not know the household income of their employees,
the IRS is provided three safe harbors or
alternative methods. Weíve outlined one on
this slide and then Iíll mention the other
two.
The first safe harbor on this slide is the
W-2 and what that means is if the cost to
the employee of a self-only plan is no more
than 9.5% of his or her wages on the W-2,
itís considered affordable, so thatís one
safe harbor. Thereís also a safe harbor based
on the federal poverty line and one based
on your employees rate of pay. Again, these
are three alternative methods, approved methods
you can use to figure out affordability.
Then next letís talk about the employer shared
responsibility payments and what they look
like based on these two scenarios. Again,
the first scenario weíll talk about on the
left hand column, on the second scenario on
the right column. The first scenario would
be those employers that are not offering coverage
36:56
to at least 95% of their full-time folks and
their dependents. We have in parenthesis 70%
in 2015 thatís another transition relief
thatís offered to employers, so itís a requirement
of 70% offering coverage to 70% of full-time
folks in 2015. Then the permanent role kicks
in in 2016.
Under this scenario, payment would apply,
again, if anyone of your full-time employees
receive the premium tax credit to purchase
coverage in the individual Marketplace and
if that is the case, the payment owed would
be $2,000 annually times the number of full-time
employees in the business in excess of three,
so you subtract out 30 of your employees when
youíre making that calculation, itís an
offset.
The payment is calculated separately for each
month in which coverage is then offered, so
the monthly breakdown would be approximately
$166 a month, which is the $2,000 annual payment
divided by 12. Again, the payment is based
38:02
on the employerís full-time folks, so thatís
the first type or category of employer.
The second scenario would be the employer
that offered coverage to its full-time folks
but the coverage wasnít affordable using
the test that I just mentioned or didnít
meet that minimum value of 60% or more. In
that case, the payment owed would be $3,000
per year times only those full-time folks
that actually received the premium tax credit
through the Marketplace. In contrast to the
first scenario we talked about where the payment
is based on all of your full-time folks in
excess of 30, the payment under scenario two
is based on only those full-time folks who
actually received the premium tax credit.
Then also important to know that the payment
in this second type of scenario is capped
at whatever the payment would have been under
the first scenario, so in other words the
payment that might be owed by an employer
who does offer coverage but the coverage isnít
39:07
affordable or doesnít meet minimum value,
whatever that payment amount is can never
be greater than the payment that would have
been owed if the employer just hadnít offered
coverage at all to his or her full-time folks.
Couple of other key things to know and these
are based on a lot of questions we get about
shared responsibility, first whether an employer
will owe a payment depends on whether it offers
coverage and the quality that offer rather
than whether an employee accepts the offer
of coverage, so itís the offer of affordable
coverage that meets minimum value that is
important for the purposes of the shared responsibility
payment. Also, no employer payment is owed
for part-time employees even if they get a
premium tax credit in the Marketplace. These
rules and the payments only apply to full-time
employees those working 30 hours per week
or more.
Third, itís only the receipt of the premium
tax credits through the individual Marketplaces
under the Affordable Care Act that triggers
these payments. An employee who gets coverage
40:14
through a spouse, for example, would not trigger
a shared responsibility payment for the employer.
Again, itís the employee going to the new
Marketplace and being eligible for premium
tax credit that triggers the shared responsibility
payments.
Then finally in order not to be subject to
a payment, employers that offer coverage to
their full-time employees must also offer
coverage to the dependents of those employees
or kids under the age of 26.
I mentioned some transition relief already.
This slide just highlights the transition
relief in order to qualify for that additional
year before these rules take effect if you
have between 50 and 99 employees then you
must meet a certain certification requirements
including that you didnít reduce the number
of your employees or their hours in order
to qualify for that additional year and that
you maintained any previously offered coverage
to your employees.
There are other types of transition relief.
I flagged at least one of them when we were
41:19
going through the slides, but definitely encourage
you to check out additional list of resources,
weíll mention again at the end, but particularly
for tax-related provisions under the affordable
care act and good set of resources are located
at the IRS website, which is IRS.gov/aca,
Affordable care at, IRS.gov/aca.
Just a few additional slides before we transition
to your questions. The first thing we want
to flag for the additional remaining slides
are weíve talked a little bit about self-employed
business owners today and the opportunity
if you choose to buy coverage through the
individual side of the Marketplace, so Iíll
cover the first two bullets on this slide
in a little more detail and that is a requirement
that as an individual, most individuals in
the US be covered or have minimum essential
health coverage for each month starting in
January of this year of 2014, qualify for
an exemption.
The resumption is based on hardship or [legit
42:35
00:42:34] exemption, et cetera, or if you
donít have coverage and donít otherwise
qualify for an exemption, you may end up making
a payment called an individual shared responsibility
payment when you file your income tax return.
What is minimum essential coverage? That would
include employerís sponsored coverage like
Cobra, coverage through a spouse, coverage
in the individual Marketplace, Medicare, Medicaid,
SCHIP, et cetera. You can get more information
about the individual shared responsibility
provisions at IRS as well as healthcare.gov.
Then finally the last two slides do summarize
some additional provisions that impact small
employers. I wonít cover this in a lot of
detail because we do want to take your questions
and many of these went into effect earlier
in 2012 and 2013, so many of you may already
be familiar with some of these provisions.
I do want to focus on this last slide, the
last two provisions, because those will take
effect starting in 2015 so January, and those
43:42
are new information reporting requirements.
The third bullet applies to those employers
that are covered by the shared responsibility
rules that we just talked about, so if you
have 50 or more employees, you will also have
new information reporting requirements which
detail the full-time folks in your workforce
as well as the type of coverage and the quality
coverage that you offer. Those reports will
then be used by the IRS to help determine
if the employer have complied with the shared
responsibility requirements. The first reports
are due in early 2016 and you can get more
information again at the IRS website.
The fourth bullet applies to those employers
of any size that are self-funded, so if youíre
self-insured employer, youíll also have minimum
reporting requirements and these new reporting
requirements in bullet number four also applies
t issuers in health insurance. Again, as with
44:43
the first reports that I mentioned, these
new employer reporting requirements take effect
in January 2015 with first reports due in
early 2016.
With that, here are a few additional or just
a recap of the sites that weíve mentioned
today: the healthcare.gov site. Weíve talked
about at length. SBA site, I mentioned has
content for small employers organized around
employer size. All the provisions weíve talked
about today, you can find that on our website.
The IRSí website which Iíve mentioned and
then business.usa, which is another federal
website that compiles information for businesses
of all sizes across a variety of topic everywhere
from exporting and trade, and tax to health
care.
If you havenít been on that site before,
we definitely encourage you to take a look
and with that, we will go ahead and quickly
review your questions and take as many as
we can in about the last 10 minutes or so.
45:48
Michaela: Great, thank you so much Meredith
and Brook for presenting and thank you to
our participants for joining todayís webinar.
As a reminder, a copy of todayís slides will
be available after todayís presentation.
Weíll now be moving into the question-answer
portion of todayís presentation. If you have
a question, please type them in the lower
left hand screen and weíll try to get to
as many as possible.
With that, do you see any question Brook that
you would like to answer?
Brook: Sure, I will go ahead and tackle a
couple of these and let Meredith answer a
few as well.
The first question I see is about the premium
estimator tool and the prices that are reflected
when you use the tool. For those of you who
are familiar with the tool or new to it, itís
available through healthcare.gov and the employer
will be asked to input some information about
itself, so how many employees they have and
what the estimated ages are, as well as where
the business is located, so the rates within
46:56
the SHOP Marketplace are based off of age
and location.
Then the feedback that is given for the premium
estimator tool is really just an estimate.
There are a number of different things to
take into consideration when determining the
final price that will be in effect for providing
coverage. You would want to take into effect
any dependents and what the employerís contribution
would be.
The estimator tool just really shows the estimate
of the total price for folks who are looking
at providing a contribution, one thing to
remember is if you think you may be eligible
for the small business health care tax credit
that is available to employers who pay at
least 50% of the employee self-only premium
cost, but that would not be reflected. Any
employer contribution would not be reflected
in the premium estimator tool, so itís really
48:03
just a ballpark estimate for folks who are
considering SHOP Marketplace coverage.
I also see a couple of other questions here.
One question, is this webinar eligible for
continuing education credits?
Unfortunately, it is not available for a continuing
education credits, but we hope that you did
find it useful, so because itís not eligible
for credits there are no certificates available.
Thereís a question here about the medical
loss ratio. It says how would a typical small
business find out if their insurance company
is needing the criteria of spending at least
80% of premium dollars on medical care?
I believe insurance companies are required
to inform businesses of whatís their medical
loss ratio is at the end of plan year, so
if you have not heard from your insurance
49:08
company, I would encourage you to reach out
directly to them.
Then there is another question here about
minimum participation rates. It says, what
if an employer wants to offer coverage but
will not meet minimum participation?
I think in our presentation, we quickly discussed
this one month window thatís available to
small businesses who have struggled in the
past to meet minimum participation or who
may not be able to meet minimum participation.
That one month window is available from November
15th to December 15th each year and small
businesses are welcome to enroll in small
group coverage during that time without having
to meet minimum participation.
There is another question here about employee
choice. We do have a slide that shows all
of the employee choice states. I donít know
if we could go back to it quickly.
50:16
Just a little further to show all of the states.
These are the states that are offering employee
choice, the question came in I believe from
Virginia, so youíll see here that Virginia
does offer employee choice.
With that, Iíll go ahead and turn it back
over to Meredith.
Meredith, are there any questions that youíd
like to answer?
Meredith: Great, thanks Brook.
Couple on employer shared responsibility,
so first question just to clarify if you have
less than 24 employees youíre not required
to provide health insurance is that correct?
It is correct, again, those rules only apply
if you have 50 or more employees, but the
one caveat to keep in mind are the controlled
group rules that I mentioned, so if you are
part of a controlled group and you have letís
say less than 24 employees but other member
companies of the controlled group have employees
and together youíre equaling 50 or more,
then all of the member companies would be
subject to shared responsibility, so assuming
youíre not part of a controlled group then
yes. If you have the general rule, if youíre
51:32
fewer than 50 employees, youíre not required
to [offer 00:51:34] a health coverage. Again,
as weíve said today if you have the fewer
than 24, you may be eligible for the tax credit
assuming you meet the other criteria we mentioned.
Second, what kind of documentation must we
collect to prove insurance was offered?
Thatís a good question. This is where the
employer, the new employer reporting provisions
come into play. Again, these only apply if
you have the 50 or more employees because
those are the employers that maybe subject
to shared responsibility. Those employers
will now file new reports with the IRS and
submit those reports to their employees as
well that tell the employees in the IRS here
who my full-time folks are, hereís the kind
of coverage that was offered, hereís what
I offer to my full-time folks, here is the
minimum value and affordability components
of it, and then again, the IRS we use those
reports to determine if the shared responsibility
52:32
payment is owed.
You can get more information on those reports
and the forms that IRSí developed help employers
comply at irs.gov/aca.
The next question also on shared responsibility
I think relates to seasonal employees and
itís a great question that we hadnít covered
yet today. We are a construction company,
what if we have 50 employees for several months
but have less than 50 employees for the majority
of the time will we have to provide coverage
to our full-time folks under the shared responsibility
requirements?
Thatís going to depend on whatís called
Ö depending on probably many things because
I donít know all the facts that go into this
question, but the one thing that jumps out
at me is the seasonal worker exemption. What
that basically says is when you're trying
to figure out if youíre subject to shared
responsibility even if you have seasonal folks
who are going to count those folks toward
that threshold of 50 or more. In this instance,
you would still go through the exercise of
53:35
figuring out even with your seasonal workers,
are you meeting that threshold of 50 or more,
but then youíre going to take a second look
at whether youíre going up above the 50 for
120 days or less.
If thatís true and the only reason youíre
going above 50 for 120 days or less is because
of your seasonal workforce, then you would
be exempt from shared responsibility, so it
called the seasonal worker exemption. Itís
definitely worth consulting with your tax
or legal advisor if you think you may fall
into that scenario because it maybe the case
that youíre not subject to shared responsibility.
Again, without knowing all the facts we canít
get it definitive but it is something to flag
and be aware of and consult with your trusted
advisor on that point.
Then Brook, I donít know if you want to take
any more that may have come in on the SHOP
side?
I think Iíll cover one more that Iím seeing
54:44
and then maybe what we can look back on the
SHOP side.
Another question relates to the tax credit.
We mentioned that when youíre figure out
you need that threshold of 24 or fewer or
average annual wages that youíre not counting
owners, family members et cetera, so Iíve
gotten a question about do family members
include in-laws, such as cousin Ö or extended
family such as cousins, aunts, and uncles?
The answer is no. the following individuals
would not be considered employees for the
purposes of the size standard or the average
wages, so the owners such as sole proprietors,
partners, shareholders owning more than two
percent of an S†corp or more than five percent
of a C corp, spouses of those owners, and
family members which include children, grandchildren,
siblings, step-siblings, father and mom, mother-in-law,
nieces, nephews, aunts, uncles, et cetera.
Itís a very expansive definition of family
member under those requirements.
55:47
With that just quickly addressing the non-profit
aspect of the tax credit so I mentioned the
credit works a little differently if youíre
a tax exempt organization that comes in the
form of a refund taken against payroll taxes.
If youíre a non-profit entity, you would
file the form 990-T as in tom in order to
take advantage of the refund even if you normally
wouldnít file that form the 990-T, youíd
want to do it I no order to take advantage
of the tax credit as a tax-exempt organization.
With that, Iíll turn it over to Michaela
to wrap us up.
Michaela: Great, thank you so much Meredith
and Brook and thank you ladies and gentlemen
for joining todayís webinar. This concludes
todayís presentation. Please remember to
fill out our post webinar survey as youíre
closing out. Have a great day!