The Affordable Care Act s Employer Mandate

Transcription

1 The Affordable Care Act s Employer Mandate 1

2 Presentation Outline 1. The Need for Health Reform 2. The Affordable Care Act: Increasing Access to Affordable Health Coverage 3. The Employer Mandate: What it Means for New York Employers Examples: Does the mandate apply to my business? 3 Scenarios Triggering Employer Penalties 2 Different Penalty Calculations Example: Does the penalty apply to my business? 2

3 The Need for Health Reform 3

4 The coverage crisis 2.8 million (15%) New Yorkers lack health insurance (50 million in US); half work full-time jobs Employers face barriers to offering health insurance - High cost of premiums: Between 2000 and 2009, health insurance premiums in NY grew by 92%, while median earnings only rose by 14% - Shopping for insurance is complex: Over 15,000 small group products in New York 4

5 The Affordable Care Act: Increasing Access to Affordable Health Coverage 5

6 The ACA: How does it work? It s like a 3-legged stool: 1. Access to Tax Credits 2. Health Benefit Exchanges SHOP Individual 3. Individual and Employer Mandates 6

7 Tax credits Employer tax credits are currently available for up to 35% of premium costs Credits increase to 50% in 2014 for Exchange coverage Requirements: Less than 25 full-time employees Average annual wages of less than $50,000 Employer pays at least 50% of premium cost Non-profits also eligible 7

8 NY Individual and SHOP Exchanges Exchanges are online marketplaces like Orbitz with an interface like Turbo Tax SHOP is only for small employers (2-50 employees) Up to 100 employees in 2016 Sole proprietors will get coverage through Individual Exchange Open enrollment for both starts October 1, 2013 Coverage begins January 1, ,000 small business employees may get covered in the Exchange 8

9 Individual Mandate Coverage required for most people Penalties: $ $ $695 Penalties are bigger for families 9

10 The ACA s Employer Mandate: What it means for New York employers 10

11 Employer Mandate Basics NO mandate for small employers Only for employers with 50 or more full time equivalent employees (FTEs) - FTEs calculated on a 30 hour work week - Seasonal employees (up to 4 months) excluded Penalties for 50+ employers that: - Do not offer coverage; or - Offer unaffordable coverage; or - Do not offer minimum value coverage 11

12 Examples: Does the mandate apply to my business? 12

13 Example 1: Determining whether the mandate applies Sandra owns 10 nail salons across New York City and Long Island. She has 20 full-time employees and 40 part-time employees who average 90 hours of service each month. Does the mandate apply to Sandra s business? 13

14 Example 1: Doing the math A full-time employee works 30 or more hours per week 20 full-time Part-time employee hours are added per month and divided by 120 (30 hours x 4 weeks) 40 x 90 3,600 3, FTEs With 50 total employees per month, the mandate applies to Sandra s business. 14

15 Example 2: What about a business with seasonal workers? Marty and Jan own a summer resort in Western New York. They employ 40 full-time employees for the entire calendar year. In addition, they also have 80 seasonal full-time workers who work from May through August. J F M A M J J A S O N D The mandate does not apply to Marty and Jan s business because their seasonal employees are not counted. 15

16 Triggering the Employer Mandate Scenario 1: A 50+ employer fails to offer coverage A 50+ employer does not offer full-time employees coverage AND One or more employees get tax credits for coverage purchased on the Individual Exchange 16

17 Triggering the Employer Mandate Scenario 2: A 50+ employer offers unaffordable coverage A 50+ employer offers coverage but the employee s premium cost (for self-coverage only) exceeds 9.5% of his gross household income AND One or more employees get tax credits for coverage purchased on the Individual Exchange 17

18 Triggering the Employer Mandate Scenario 3: A 50+ employer fails to offer minimum value coverage A 50+ employer offers coverage but the plan covers less than 60% of an employee s cost of benefits AND One or more employees get tax credits for coverage purchased on the Individual Exchange 18

19 2 Different Penalty Calculations 1: Penalty for no coverage 2: Penalty for unaffordable coverage or for coverage that lacks minimum value $2,000 times the total number of full-time employees minus the first 30 employees The lesser of $3,000 times the number of full-time employees receiving a premium tax credit / cost-sharing assistance or the penalty under calculation 1 $2,000 x (FTEs 30) = Penalty $3,000 x (FTEs w/ credits) = Penalty 19

20 Example 3: When is coverage unaffordable? Eric owns a lumber store that employs 55 full-time workers. Eric offers health insurance to his employees, but his assistant, Sarah, goes to the Exchange for coverage and receives a tax credit because her portion of her premium is more than 9.5 percent of her income. Eric will have to pay a $3,000 penalty. But, Eric might fall under a safe harbor rule and should talk to his accountant. 20

21 Employer Penalty Payment process IRS will contact employers to inform them of their potential liability Employers will have a chance to respond to IRS before a payment demand is made IRS contact will occur after tax season Payments in response to a notice and demand not on any tax return Talk to your accountant! 21

22 Help For All New Yorkers Assistance for Small Businesses and Consumers 22

23 More Resources NY State Health Benefit Exchange: Health Care For All New York: Community Health Advocates: Hotline: (888) HHS Information: Congressional Budget Office: Kaiser Family Foundation: Community Catalyst: ACA: 23

24 The End / Questions 24