Health Insurance Marketplace for Employers

What is the Health Insurance Marketplace?

In March 2010, The Patient Protection and Affordable Care Act (ACA) became law. ACA required the creation of two health insurance programs:

An Health Insurance Marketplace for Individuals A SHOP Marketplace for Small Businesses

The Health Insurance Marketplace for Individuals offers affordable health care plans to people without employer health benefits (or those who prefer not to use their employer’s health coverage) that meet minimum coverage requirements established under the ACA.

The SHOP Marketplace for Businesses offers small businesses who want to offer their employees health care benefits a place to shop for affordably priced group health plans.

How Does The Affordable Care Act Affect Employers?

Under the Employer Shared Responsibility Provisions of the new health care reform law…

100 or More Full Time Equivalent Employees: Every business that has a minimum of 100 full time equivalent employees during a calendar year must offer their employees health insurance in the following calendar year, or else pay a penalty known as a Shared Responsibility Payment. The law first went into effect in 2015 and was gradually phased in:

Businesses that had 100 or greater full time equivalent employees in 2014 must offer health coverage to a minimum of 70% of their full time employees in 2015.

Businesses that had 100 or greater full-time equivalent employees in 2015 must offer health coverage to at least 95% of full time employees in 2016.

Businesses with 100 or greater full-time equivalent employees in 2016 and beyond must continue to offer health coverage to at least 95% of full time employees in subsequent calendar years.

Note: Although 95% is the minimum standard, it is recommended that you offer coverage to 100% of full-time employees to avoid being fined a penalty. If JUST ONE of the 5% of full time employees not offered health coverage qualifies for a premium tax credit, you will be required to make a Shared Responsibility Payment (i.e. pay a penalty) – even though you offered coverage to 95% per ACA guidelines!

50-99 Full Time Equivalent Employees: Starting in 2016, businesses with between 50-99 full time equivalent employees (as determined by the previous calendar year), must provide health insurance to at least 95% of their full time employees to avoid paying a penalty.

Note: Although 95% is the minimum standard, it is recommended that you offer coverage to 100% of full-time employees to avoid being fined a penalty. If JUST ONE of the 5% of full time employees not offered health coverage qualifies for a premium tax credit, you will be required to make a Shared Responsibility Payment (i.e. pay a penalty) – even though you offered coverage to 95% per ACA guidelines!

Is it Necessary to Provide Health Coverage to My Employees?

It all depends on how many full time equivalent employees you have, and if they qualify for government insurance subsidies. If you have 50 or more full time equivalent employees in 2015 or beyond, and you do not offer affordable group health coverage in the following year (2016 and beyond), and at least one full time employee qualifies to receive health insurance subsidies through the Federal Marketplace, then you will have to make a "shared responsibility payment" (i.e. pay a penalty).

49 or Lesser Full Time Equivalent Employees: Businesses with 49 full time equivalent employees or less during a calendar year are not mandated to provide health insurance the following year. If you increase your number of full time equivalent employees to greater than 49 during a calendar year, you will not be required to provide group coverage during that year, but will be required to offer coverage in the following year. Likewise, if you reduce your number for full time equivalent employees to 49 or less during a calendar year, you will still have to continue offering group coverage for the remainder of that calendar year, but will no longer be required to offer coverage the following year.

Employer Shared Responsibility Provisions: Employer Shared Responsibility Provisions are assessed based on the number of full time equivalent employees in the previous calendar year. In 2016 and beyond, all businesses with 50 or more full time equivalent employees (as determined by the previous calendar year) that do not offer health insurance that meets ACA affordability guidelines (premiums are less than 9.5% of the employee’s wages to cover just the employee), will be assessed a penalty if at least one full time employee qualifies for a premium tax credit through the Health Insurance Marketplace.

Employer Shared Responsibility Provisions apply to non-profit, government and for-profit businesses. Penalties will be assessed separately for each month. For information on how penalties are calculated, see the IRS.gov Calculation of Employer Shared Responsibility Payment.

What is a Full Time Equivalent Employee?

A full time employee is someone who works at least 30 hours per week. Under the Affordable Care Act, a full time equivalent employee is two or more part-time employees whose hours add up to 30 hours or more per week. In other words, if you have 49 full time employees that work 30 hours per week and 2 part time employees who each work 15 hours per week, you have 50 full time equivalent employees.

Voluntary workers who work for a government or tax-exempt entity should not be regarded as full time employees. Full time employees generally do not include seasonal workers who work 6 months or less per year. However, teachers and educational employees are NOT to be considered part-time simply because their school operates on a limited schedule during summer. You can use this calculator to help determine the number of full time equivalent employees you have.

How do I determine if one my employees qualifies for a health insurance premium tax credit?

It is impossible for an employer to know for sure if one of their 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 aware of , 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 obligated to share this private information with employers.

The maximum qualifying gross income for getting a premium tax credit (i.e. insurance subsidy) differs according to family size and is based on annual Federal Poverty Guidelines. An individual or family may make up to 400% of the Federal poverty level and qualify for the credit.

Individuals who make up to $47,520 or less per year may qualify to receive a premium tax credit in 2016.

A family of four with a gross income of $97,200 or less may qualify to receive a premium tax credit in 2016.

Premium tax credits will not be offered to employees who opt out of employer-sponsored plans that are affordable and offer minimum value. If you offer ACA compliant health coverage and one of your employees opts to purchase their own individual plan, they will not qualify to receive premium assistance, you will not be fined , and you are not required to cover any portion of their premium.

How do I know if my group health insurance is ACA compliant ("affordable" and meets "minimum value")?

The Affordable Care Act requires group insurance to be both affordable and meet minimum value. Insurance is considered affordable if premiums to cover just the employee do not exceed 9.5 percent of the employee’s annual wages. Minimum value is defined as an insurance plan that covers at least 60% of the cost of covered medical services.

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 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 / The Asheville Blue Cross and Blue Shield of North Carolina® Store 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

hospitalization

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 50 or more full time equivalent employees 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.

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.

SHOP

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 / The Asheville Blue Cross and Blue Shield of North Carolina® Store 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 / The Asheville Blue Cross and Blue Shield of North Carolina® Store 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. —