Healthcare and Small Business Without reform small business will spend approximately $2.4 trillion on healthcare for their employees in the next decade Reform could save small business an approximate $885 billion 80% of those not offering benefits is due to high cost

What is a SHOP Marketplace Small Business Health Option Program = SHOP Designed especially for small business and small non-profits A Marketplace is a competitive market place where insurers can offer their products if they meet specified criteria

Navigators will assist all enrollees through the process in and outside the SHOP There are two types of helpers, Navigators and Certified Application Councilors (CAC) You can find them listed and EnrollMichigan.com

Michigan is divided into 10 regions Each region will have a “lead Navigator” and many supporting entities Information is available at Enroll Michigan

What Plans will be Available in the Marketplace? The “Marketplace will offer 4 levels of coverage: Bronze- Covers 60% of healthcare cost Silver- Covers 70% of healthcare cost Gold – Covers 80% of healthcare cost Platinum – Covers 90% of healthcare cost

Marketplaces are mandated to be user friendly and offer support other than internet Language specific access Live phone support for those unable to utilize internet or lack computer access No wrong door for enrollment

Common Questions

What is a business? By federal definition: Must have employees Must not be immediate family members

Question? Do employers have to provide insurance coverage for their employees? Answer: There is no mandate for businesses under 50 full time equivalent employees (FTE’s) to provide coverage, but you may be able to qualify for tax credits if you do

Facts 85.1 % of Michigan Small Business would qualify for a tax credit 39.1% of those could qualify for the maximum tax credit There are 266 small businesses for every large business in Michigan

Self Employed Must conform to the individual mandate Can use the individual Marketplace Can use an agent or broker Has a broad choice for coverage options Do qualify for income-based tax credits

Self-Employed Tax Credits To receive tax credits, policies must be purchased through the Marketplace Policy premiums will be designed to keep cost between 2-9.5% of annual income Cost based on reported income tax filings Credits can be pre-paid

Small Business Business under 50 FTE’s are not required to provide benefits Will be able to access Navigators Do not have to change coverage** Medicaid – Medicare enrolled employees are not counted towards your FTE’s

Small Business Tax Credits Available to businesses of 25 or less Must pay at least 50% of premium cost (individual) Credit is based on business income tax IRS form 8941 to file for your credit

What are the Credits? = or < 10 employees (FTE’s) Pay at least 50% of the individual policy premium Average wage of < $25,000 Qualify for 35% from years Qualify for 50% from 2014 forward for any two years

Business Credits Continued Businesses employees Pays at least 50% of premium cost (individual) Qualifies for credits on a sliding scale Available for tax years forward for any two years

Firm Size$25,000$30,000$35,000$40,000$45,000$50, %20%15%10%5%0% 1123%18%13%8%3%0% 1222%17%12%7%2%0% 1320%15%10%5%0% 1418%13%8%3%0% 1517%12%7%2%0% 1615%10%5%0% 1713%8%3%0% 1812%7%2%0% 1910%5%0% 208%3%0% 217%2%0% 225%0% 233%0% 242%0% 250% Non-Profit tax credits

Firm Size $25,000$30,000$35,000$40,000$45,000$50, %28%21%14%7%0% 1133%26%19%12%5%0% 1230%23%16%9%2%0% 1328%21%14%7%0% 1426%19%12%5%0% 1523%16%9%2%0% 1621%14%7%0% 1719%12%5%0% 1816%9%2%0% 1914%7%0% 2012%5%0% 219%2%0% 227%0% 235%0% 242%0% 250% For-Profit tax credits Non-profit Years 2014 Forward

For-Profit tax credits 2014 forward for any two years Firm Size $25,000$30,000$35,000$40,000$45,000$50, %40%30%20%10%0% 1147%37%27%17%7%0% 1243%33%23%13%3%0% 1340%30%20%10%0% 1437%27%17%7%0% 1533%23%13%3%0% 1630%20%10%0% 1727%17%7%0% 1823%13%3%0% 1920%10%0% 2017%7%0% 2113%3%0% 2210%0% 237%0% 243%0% 250%

Benefit Explanations Under IRC section 105 and 106 Employee provided health benefits are generally excluded from income of employees If a plan discriminates in the favor of a highly compensated employee, that could be considered as a taxable income

ACA Employee Notifications Employee notification must include: Coverage options available in the new health insurance marketplaces Must provide its employees with written notice of the existence of a Marketplace Contact information for the Marketplace The services provided by a Marketplace

Notifications Continued That the employee may be eligible for a premium tax credit if the employee purchases coverage through a Marketplace That the employee may lose any employer contribution to a health benefit plan, if offered by that employer

Where can I get these forms Two forms are available from DOL One for companies who provide benefits One for those who do not offer benefits

Impact of ACA Depends on Business Size Large Employers (50+ workers) ◦ Access to SHOP Exchange (employers with more than 100 employees, will be eligible after 2016) ◦ Employer Assessment ◦ Coverage requirements

Large Business Under the PPACA a large business is 50 and larger FTE’s Mandates will be in effect 1/01/15 Assessments are calculated and enforced by the IRS Must provide a level of coverage that meets value and cost

What Are the Requirements? Required to provide minimum value coverage for full-time (more than 30 hrs./week) The plan must pay 60% of “expected” health care costs Must be “affordable” for full-time staff – no more than 9.5% of employee income (reported in box 1 of form W-2)

How do I know if my plan meets these thresholds? You can use the value calculator Navigators can help you For conversation, bronze level coverage

How do I count employees? Calculation – Total number of hours worked by PT employees, divided by 120 ◦ Organization has 35 FTE, plus an additional 20 part- time who all work 24 hours/week (96 hrs/month) ◦ 1920/120 = 16 part-time staff = 51 ◦ Equation: 20 employees working 24 per week = 96 hours per employee per month. 96 times 20 equals 1920 hours of part time labor per month. Divide 1920 by 120 (30 hours per week, 4 weeks per month) will equal your FTE’s. (16 in this case)

Important to Calculations It is very important to understand that calculations are rounded down FTE’s equal 49

Assessment equals number of full-time employees, minus 30, times $2,000 divided by 12 Example: 50 employees -30 employees = X $2000 = $40,000 $40,000 divided by 12 = $ per month Calculations Continued

Employer Assessment Example What happens if an Employer does not offer health insurance, and one or more employees purchases coverage on the Marketplace and receives a tax credit? An assessment may be levied

How will I know if I owe an Employer Shared Responsibility payment? The IRS will contact employers on potential liability Provide them with the opportunity to respond before any assessment is levied

Proposed Rules and Guidance Employee contributions If my employee is obligated to pay his/her contribution other than by payroll deduction and is late, am I required to still provide benefits for that month? Not for that month

Proposed Rules and Guidance If my employee has “elective deferrals” must the 9.5% affordability standard be met after these are calculated? NO Calculations are done prior to elective deferrals

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