Health Insurance Marketplace for Employers
If you are seeking regular group health insurance, click on this: Employer Group Health Plans
What is the Health Insurance Marketplace?
The Patient Protection and Affordable Care Act, which was signed into law in March 2010, required the development of two health insurance exchange programs: 1) a Health Insurance Marketplace for Individuals, and 2) a Health Insurance Marketplace for Businesses.
The Health Insurance Marketplace for Individuals gives those who are not offered health care coverage through their employers (or who opt out of employer sponsored health care coverage) a place to shop for affordable health care plans that meet minimum coverage requirements under the new Health Care Reform laws.
The Health Insurance Marketplace for Businesses gives small businesses (defined as having less than 50 full time equivalent employees), who would like to offer health care benefits to their employees, a place to shop for reasonably priced employer-sponsored group health plans. See: Small Business Health Options Program (SHOP) below.
How Does The Health Insurance Marketplace Affect Employers?
100 or More Full Time Equivalent Employees: Under the Employer Shared Responsibility Provisions of the new health care reform law, businesses with an average of 100 or more full time equivalent employees are required to provide health insurance to employees, or else make a “shared responsibility payment” (i.e. pay a penalty). As of 2015, businesses that had an average of 100 or more full time equivalent employees in 2014 must offer health coverage to at least 70% of full time employees. Businesses with an average of 100 or more full-time employees in 2015 and beyond must offer coverage to at least 95% of full time employees in 2016 and subsequent years to avoid paying a penalty.
50-99 Full Time Equivalent Employees: Under the Employer Shared Responsibility Provisions of the new health care reform law, businesses with more than 50 but less than 100 full time equivalent employees on average in 2015 are required to provide health insurance to employees in 2016, or else make a “shared responsibility payment” (i.e. pay a penalty). Businesses with an average of 50-99 full time equivalent employees in 2015 and beyond must offer health coverage to at least 95% of full time employees in 2016 and subsequent years to avoid paying a penalty.
Do I Have to Offer Health Coverage to My Employees?
The answer to this question will depend largely on your number of full time equivalent employees you had on average in the previous year, and whether they qualify for government insurance subsidies. If you had 50 or more full time equivalent employees on average during the previous year, do not offer affordable group health coverage, and at least one employee qualifies to receive health insurance subsidies through the Federal Marketplace, then you will have to make a “shared responsibility payment” (i.e. a pay a penalty).
49 or Fewer Employees: Businesses with 49 or fewer full time equivalent employees are not required to offer health insurance to employees.
Employer Shared Responsibility Provisions: Beginning in 2016, businesses with 50 or more full-time equivalent employees on average during the previous year must offer minimum affordable health insurance to their employees and dependents, if at least one employee qualifies for a premium tax credit.
Premium tax credits are government subsidies paid to individuals and families with incomes under 400% off the poverty level who buy insurance through the Health Insurance Marketplace. If a business with 50 or more full time equivalent employees on average during the previous year has a full-time employee that qualifies for a premium tax credit and does not offer insurance that is both affordable (the employee’s only share of the premium is less than 9.5% of the employee’s wages) and meets minimum value, the business will be assessed a penalty.
See: U.S. Treasury Department Fact Sheet for Employer Shared Responsibility under ACA for 2015
Employer Shared Responsibility Provisions apply to: For-profit, non-profit and government employers.
What is the definition of a Full Time Equivalent Employee?
A full time employee is one who works 30 hours or more per week. A full time “equivalent” employee = two or more part-time employees whose hours “total” 30 hours or more per week. For example, if you have 49 employees that work 30 hours per week and 2 employees that each work 15 hours per week on average during the previous year, you have 50 full time equivalent employees, and may be required to offer health insurance, or pay a penalty.
Volunteers who work for a government or tax-exempt entity are not considered full-time employees. Seasonal workers who work 6 months or less during the year are not considered full time employees. On the other hand, teachers and educational employees are NOT to be treated as part-time simply because their school operates on a limited schedule during summer. A calculator to help you determine the number of full time equivalent employees you have on staff is available here.
How do I determine whether or not one of my employees qualifies for a premium tax credit?
There is no way for an employer to determine with 100% accuracy whether employees will qualify for a premium tax credit. Qualification for the tax credit is based on Federal Poverty Guidelines, which take into account personal information an employer is not often privy to, such as the gross income for the family (including income from the spouse), and the number of household dependents (i.e. children or elderly adults). Employees are not required to disclose this private information to employers.
The current threshold set for receiving a premium tax credit is 400% of the Federal poverty level. The maximum qualifying gross income for receiving the credit varies by family size and is updated annually. Guidelines from the previous year are used in determining premium tax credit eligibility for the following year. So the 2015 Federal Poverty Guidelines are used in determining 2016 premium tax credit eligibility.
As of 2016, individuals who make $47,520 or less per year may qualify to receive a premium tax credit in 2017.
As of 2016, a family of four with a gross income of $97,200 or less per year may qualify to receive a premium tax credit in 2017.
How do I know if my group insurance is considered “affordable” and meets “minimum value”?
Under the new Health Care Reform laws, if your business offers group insurance to employees, it must be both affordable and meet minimum value. Affordable is defined as premiums that do not exceed 9.5% of the employee’s annual wages. Minimum value is defined as health care plans that cover at least 60% of the total costs of covered services.
Employees who opt out of employer-sponsored plans that are affordable and offer minimum value will not be able to qualify for premium tax credits.
How much will I have to pay if I don’t offer insurance or my insurance doesn’t meet the law’s requirements?
Beginning in 2016, businesses with 50 or more full time equivalent employees on average in the previous year who do not offer insurance may have to pay an annual Employer Shared Responsibility payment of $2,000 per full-time employee (excluding the first 30 employees), if at least one employee qualifies for premium savings in the Health Insurance Marketplace.
OK. I Have To (or Want To) provide health insurance for my employees. How do I determine which is the best health insurance that I can afford to give them?
WNC Health Insurance is here to offer assistance in selecting the best group health insurance plan for your employees!
What is the difference between the Health Insurance Marketplace and the regular group health insurance that employers currently provide for employees?
Unlike traditional health care plans, the plans offered on the Health Insurance Marketplace must all offer the same minimal essential health benefits. This ensures that everyone who purchases a health care plan through the exchange receives the same quality of coverage. Rather than the type of coverage offered, the difference in price for plans will be based on the amount of medical expenses the plan pays. For example, plans with a lower premium will offer the same minimal essential health benefits as plans with a higher premium, but will require the insured to pay a higher percentage of the overall medical costs out of pocket.
Group health insurance plans offered outside of the Health Insurance Marketplace have traditionally established premiums based on the type of coverage offered, with increased premiums for services such as maternity care. As of January 2014, all individual and small group health insurance plans, even those not participating in the Health Insurance Marketplace, must offer the following minimal essential health benefits:
- ambulatory patient services
- emergency services
- maternity and newborn care
- mental health and substance use disorder services, including behavioral health treatment
- prescription drugs
- rehabilitative and habilitative services and devices
- laboratory services
- preventive and wellness services and chronic disease management
- pediatric services, including oral and vision care
Can I Keep My Current Business Insurance Provider?
If your business already offers insurance to its employees through an insurance provider, your business and your employees can stay with that insurer. You and your employees are not required to obtain insurance through the Health Insurance Marketplace if you are satisfied with your current insurance provider.
Businesses with more than 50 or more full time equivalent employees on average per year will want to ensure that their current insurance is considered affordable (premiums are less than 9.5% of an employee’s annual wages) and meets minimum value (covers 60% of the costs of benefits), to prevent paying a possible penalty in 2017.
If you currently contribute to a portion of the premium for your employees’ insurance through a group plan, and an employee opts to switch to an individual plan offered on the Health Insurance Marketplace, you are not required to contribute to the premium of the new individual plan.
How About Small Businesses Who Have 50 or Fewer Employees?
The Health Care Reform Bill contains several other provisions that impact small businesses and really, all businesses across the board. Two of these provisions are: SHOP, and the Small Business Healthcare Tax Credit.
The Health Insurance Marketplace for Small Business: Small Business Health Options Program (SHOP)
Similar to the individual Health Insurance Marketplace for individuals, the Affordable Care Act requires a special Health Insurance Marketplace just for small businesses. The business Marketplace is known as the Small Business Health Options Program (SHOP).
The purpose of SHOP is to allow smaller businesses, which generally pay higher overhead costs for obtaining insurance, to have access to better quality coverage for their employees at lower costs.
The SHOP marketplace is currently open to businesses with up to 50 full time equivalent employees.
How Can SHOP Benefit My Small Business?
SHOP is designed to give small businesses the same access to affordable employee coverage as larger businesses have traditionally received. Businesses with 25 or fewer employees may receive an extended Small Business Health Care Tax Credit for up to 50% of the premiums paid for group plans purchased through SHOP.
As of 2014, health insurance plans purchased through SHOP: 1) Can’t turn you down based on the health status of employees or their dependents, and 2) Can’t charge you higher premiums for women or increase your group’s premium for employees with high medical costs. These rights do not apply to grandfathered plans.
If you purchase a group plan through SHOP, you must offer coverage to all full-time employees. Business owners who are self-employed, with no employees, are not eligible for coverage through SHOP.
For more information, see: Small Business Health Options Program (SHOP)
Need help purchasing insurance through SHOP? WNC Health Insurance is here to help you find the best health insurance plan for your business!
Small Business Health Care Tax Credit
As part of the health care reform law, small businesses that opt to provide health insurance benefits to their employees may be eligible for an increased Small Business Healthcare Tax Credit to help offset the cost of offering insurance. As of 2014, businesses with fewer than 25 full-time equivalent employees that: pay annual wages of less than $50,000 per employee; contribute 50% or more towards the employee’s self-only health insurance premiums; and participate in the Small Business Health Options Program (SHOP) may be eligible to claim a 50% tax credit.
How do I get more details about the Small Business Health Care Tax Credit?
Additional information to help you determine whether your small business qualifies for the tax credit, and how much you can expect to receive, is available on the irs.gov website
What Other Provisions in the Health Care Bill Affect My Business?
If your business offers insurance, you must provide your employees with a Summary of Benefits Coverage (SBC) that discloses what their current insurance plan covers and costs.
If your business offers insurance and your insurer does not spend at least 80% of premium dollars on medical care, you will receive a premium rebate. Businesses that contribute to their employees’ insurance premiums as part of a group health plan may treat the rebate as a plan asset, and use their discretion to determine a fair allocation of the rebate.
As of January 1, 2014, employees who are eligible for employer-provided health insurance coverage may not be made to wait more than 90 days to begin coverage.
WNC Health Insurance is here to offer assistance in selecting the best health insurance options for you and your employees! Call us now or visit us at our new retail store!
— The information contained within this webpage is not to be construed as legal advice and is subject to change. —