Affordable Care Act
Small businesses with fewer than 50 full-time equivalent employees are not required by the Affordable Care Act (ACA) to provide health insurance for their employees and there is no penalty for small businesses.
However, we know attracting and retaining top talent is crucial for the growth of your business. As a small business owner investing in your business now will prepare you for the future and that’s one of the reasons you provide health insurance for your employees. The ACA has had a significant impact on the health plan designs, managing benefits, and the cost of health care for all small businesses offering health benefits. Some of the key changes which have impacted small business costs and health plans are:
The ACA contains mandates for health plans regarding pre-existing conditions, lifetime benefit limits, health benefits covered, dependent coverage, and more
Medical Loss Ratio (Click here)
The Medical Loss Ratio (MLR) was established by the ACA to help control health care costs and ensure members receive value for their health care premiums. The MLR rules require health insurance issuers to spend 80-85% of their premium dollars on medical care and health care quality improvement. These rules went into effect on January 1, 2011 and apply to insurance carriers offering group or individual health coverage. Insurance issuers who do not meet the MLR standard are required to provide rebates to members.
90-Day Waiting Period (Click here)
The ACA stipulates that an employee eligible for benefits under a group health plan cannot have a waiting period of more than 90 calendar days before their coverage begins. The 90-day waiting period limit went into effect on January 1, 2015. The rule applies to both non-grandfathered and grandfathered health plans.
Small Business Tax Credits (Click here)
Small businesses are able to receive a tax credit when offering health insurance to their employees that is purchased through the Small Business Health Program (SHOP). The SHOP is designed to make coverage more affordable for small businesses who qualify for the tax credit while allowing them to choose from a variety of health plans. To be eligible for the credit your business must have fewer than 25 full-time employees, average employee pay must be less than $50,800 a year, and the employer must contribute at least 50% of the employee’s premium cost, including dental and vision coverage offered.
The ACA contains mandates for health plans regarding pre-existing conditions, lifetime benefit limits, health benefits covered, dependent coverage, and more.
Large group employers who employ on average 50 or more full-time equivalent employees are required to provide affordable health coverage that meets the ACA’s minimum value requirement. If employers do not provide minimum value coverage they are subject to pay a tax penalty. This provision known as the employer shared responsibility provision or “Pay or Play” applies to for-profit, nonprofit, and government employers.
Effective Dates for Pay or Play (Click Here)
50-99 Employees: Compliance with this provision of the ACA has been delayed until 2016. Mid-sized businesses are required to report on number of employees and coverage in 2015, but have until 2016 before employer responsibility payments are due.
100+ Employees: Beginning January 1, 2015 large employers must offer coverage to 70% of their full-time employees in order to avoid penalties. In 2016 they must offer coverage to 95% of full-time employees.
The plan your company offers must also be affordable. In order to meet this requirement the employee contribution for single coverage must be less than 9.6% of their household income. If you offer more than one plan this standard must be met by the lowest cost option available to the employee.
Minimum Value Plans (Click Here)
In order to meet the requirements set forth by the ACA your group plan must meet a minimum value. The minimum value standard is defined as the plan paying for at least 60% of the covered costs under the plan. To ensure your group plan meets the minimum value use the U.S. Chamber of Commerce .