During ASAE's Fly-In Visits, days after Federal Health Care Legislation passed, MSAE visited Congressman Gary Peters. Peters outlined some of the specifics of the legislation. Many associations are closer in size to small businesses so we believe this document outlines some of the forthcoming changes that will impact our member’s business operations in regards to health care. As MSAE receives more details, we will share them.
FAQs
1. Will I need to provide insurance for my employees under this bill?
If your organization employs less than 50 full time employees, you are not required to provide insurance under the bill and will not be subject to any fee or penalty for not providing insurance.
If your organization employs 50 or more full time employees, you will be subject to a penalty if you do not provide insurance and one of more or your employees is receiving an affordability credit in the exchange. The fee is $2,000 per full-time employee, with the first 30 full time employees subtracted from the payment calculation. (e.g. a firm with 51 workers that does not offer coverage will pay an amount equal to 51-30, or 21 times the fee).
2. What if I already offer health care coverage to my employees?
If the organization has more than 50 employees and you currently offer coverage that is considered “affordable,” you can continue providing that coverage without penalty or fee.
Affordable coverage means an employer plan with an actuarial value of at least 60% and the employee share of the premium does not exceed 9.8% of income. Employees who are offered coverage by an employer are not eligible for premium credits unless the coverage does not meet affordability standards.
If you offer coverage that does not meet affordability requirements, your employees may be eligible for an affordability credit to purchase coverage on the exchange. If at least one full-time employee is receiving a premium tax credit, you will pay the lesser of $3,000 for each employee receiving a premium credit or $750 for each full-time employee.
If you are under 25 employees and purchase coverage, you may be eligible for tax credits (see question 9). Businesses with fewer than 50 employees are exempt from all requirements and fees regarding employer provided coverage.
3. Will I be able to buy insurance for my business on the exchange?
Yes, organizations of 100 employees or fewer will be able to purchase insurance on the new exchange. Larger companies will be able to purchase insurance on the exchange in 2017.
4. What if my employer’s plan is unaffordable?
If an employer has over 50 employees and offers coverage that is determined to be “unaffordable” based on an employee’s income, the employee goes to the health insurance exchange for coverage, then the employer pays a fee per employee.
5. When do these requirements to offer and have insurance begin?
Insurance mandates and fees will begin in 2014.
6. How will the Cadillac Tax affect my business?
The tax on high-cost insurance plans or “Cadillac Plans” has been scaled back from earlier proposals. The tax will not take effect until 2018 and the threshold has been raised to $10,200 for single coverage and $27,500 for family coverage ($11,850 and $30,950 for retirees and employees in high risk professions). The thresholds are indexed to general inflation plus 1%. Dental and vision benefits are not included in the calculation.
The tax is equal to 40% of the value of the plan that exceeds the threshold amounts (so if the plan is $10,500 the tax only applies to $300) and is imposed on the issuer of the health insurance policy, which in the case of a self-insured plan is the plan administrator or, in some cases, the employer.
7. What is the effect of the health care bill on high income earners?
Households who earn more than $200,000 ($250,000 joint) per year will be required to pay an additional 0.9% in payroll taxes for Medicare, and a 2.9% tax on unearned income (interest, dividends, etc.) S-Corps are carved out.
8. Are there any health care tax credits available?
The bill provides employers with less than 25 employees and average annual wages of less than $50,000 that purchase health insurance for employees with a tax credit starting in 2010.
Phase 1: Immediately, a tax credit of up to 35% of the employer’s contribution is available to employers who contribute at least 50% to the total premium cost of an employee’s health insurance premium.
Phase 2: For 2014 and beyond, eligible small businesses that purchase coverage through the state Exchange are eligible for a tax credit of up to 50% of the employer’s contribution toward the employee’s health insurance premium if the employer contributes at least 50% of the total premium cost
9. How are full time workers defined?
Under the Senate bill, a full-time employee is defined as 390 hours per calendar quarter (13 weeks). This would take into account fluctuation in employee hours, and reduce the impact of employer responsibility requirements for industries with high turnover and that rely on part-time employees to sustain their business. Businesses must only pay penalties for full-time employees who receive insurance from the exchange.