Navigating the New Health Care Law For Sole Proprietors and Small Businesses (50 employees or less) This presentation is intended for educational purposes only and not intended as a legal, tax, or insurance advice. Readers should consult their legal, tax, or healthcare advisors to discuss how these matters relate to their individual business circumstances. www.pasbdc.org/ppaca 1
Overview Affordable Care Act (ACA) requires healthcare coverage through individual mandates and employer shared responsibility Small businesses with fewer than 50 employees are exempt Individuals must obtain health insurance by January 1, 2014 www.pasbdc.org/ppaca 2
Self-Employed Starting October 1, 2013 business owners without a common law employee may purchase individual coverage through the Insurance Marketplace for coverage starting January 1, 2014 (www.healthcare.gov) Based on annual income self-employed individuals may qualify for individual tax credits/cost sharing reductions (http://kff.org/interactive/subsidy-calculator/) www.pasbdc.org/ppaca 3
Exemptions Important Definitions and Thresholds Individuals who cannot afford coverage (insurance premium is more than 8% of their annual income); Taxpayers with income below the filing threshold; Members of Indian tribes; Hardship; Individuals who experience short coverage gaps; Religious conscience; Members of a health care sharing ministry; Incarcerated individuals; and Individuals who are in the USA illegally www.pasbdc.org/ppaca 4
Premium Assistance Subsidy (Tax Credit) Household Income Level (% above Federal Poverty Level) *In 2013 the FPL is $11,490 for a family of one plus $4,020 for each additional person Maximum Premium as Percentage of Income Less than 133% 2.0% At least 133% but less than 150% 3.0% - 4.0% At least 150% but less than 200% 4.0% - 6.3% At least 200% but less than 250% 6.3% - 8.05% At least 250% but less than 300% 8.05% - 9.5% At least 300% but less than 400% 9.5% www.pasbdc.org/ppaca 5
Penalties Year Amount OR 2014 $95 per adult/$47.50 per child (up to $285 per family) 2015 $325 per adult/$162.50 per child (up to $975 per family) 1% of taxable income 2% of taxable income 2016 $695 per adult/$347.50 per child (up to $2,085 per family) 2.5% of taxable income After 2016 Increased annually by cost-of-living adjustment Increased annually by cost-of-living adjustment www.pasbdc.org/ppaca 6
Important Definitions and Thresholds Shared Responsibility Under the ACA, the Federal Government, State Governments, insurers, employers, and individuals are given shared responsibility to reform and improve the availability, quality, and affordability of health insurance coverage in the United States. Starting in 2014, the individual shared responsibility provision calls for each individual (including self-employed) to have minimum essential coverage, qualify for an exemption, or make a shared responsibility payment when filing a federal income tax return. Individuals will not have to make a penalty payment if coverage is unaffordable, if they spend less than three consecutive months without coverage, or if they qualify for one or more of the exemptions. Employees who are offered coverage by an employer are not eligible for premium credits unless: The value of an employer plan coverage is less than 60% Or if employee share of the premium exceeds 9.5% of his/her annual income www.pasbdc.org/ppaca 7
Important Definitions and Thresholds Minimum Essential Coverage The type of coverage an individual needs to have to meet the individual responsibility requirement under the Affordable Care Act. This includes individual market policies, job-based coverage, Medicare, Medicaid, CHIP, TRICARE and certain other coverage. Under the Affordable Care Act each state may decide whether or not to expand Medicaid coverage. The ACA requires that all non-grandfathered individual and small-group plans sold in a state, including those offered through the Exchange, cover certain defined health benefits. www.pasbdc.org/ppaca 8
ACA Benefit Tiers Plan Provides Benefit Cost Coverage Out-of-Pocket Limit Bronze Essential health benefits 60% Equal to Health Savings Account (HSA) Silver Essential health benefits 70% Equal to HSA Gold Essential health benefits 80% Equal to HSA Platinum Essential health benefits 90% Equal to HSA Catastrophic Coverage level set at HAS, except for prevention benefits and three PC visits Available to those under 30 years of age and exempt individuals Prevention benefits and three PC visits are exempt from the deductible www.pasbdc.org/ppaca 9
Small Businesses with <50 Employees Starting October 1, 2013 businesses with 50 or fewer employees are eligible to enroll in the SHOP for coverage starting January 1, 2014 and throughout the year on a monthly basis thereafter ACA exempts all firms with 50 or fewer employees from any employer shared responsibility requirements Once enrolled a business can grow and still remain in the SHOP Enroll directly through SHOP www.healthcare.gov or through a broker Based on the number of employees, a business might qualify for health care tax credit The amount of the credit works on a sliding scale: the smaller the business, the bigger the credit For more information, call 1-800-706-7893. www.pasbdc.org/ppaca 10
Important Definitions and Thresholds FTE is defined as an employee who works on average 30 hours per week or more A combination of employees, each of whom individually is not a full time employee because they are not employed at least 30 hours per week, but who, in combination are counted as the equivalent of a full time employee To figure average wages, divide total wages paid to employees by the number of FTEs www.pasbdc.org/ppaca 11
Small Business Health Care Tax Credit Available www.pasbdc.org/ppaca 12
Notice Requirements for Employers All Employers must give notice about Health Insurance Marketplace to all employees Deadline = October 1, 2013 If Business offers health insurance benefits: http:www.dol.gov/ebsa/pdf/flsawithplans.pdf If Business does not offer health insurance benefits: http:www.dol.gov/ebsa/pdf/flsawithoutplans.pdf www.pasbdc.org/ppaca 13
Where to Get Insurance Determine how employees are currently covered there may be spousal coverage, Medicaid or Medicare eligible employees Obtain insurance through the Small Business Health Options Program (SHOP) Employees may obtain insurance through federal marketplace (exchange) Maintain your current private insurance Contact chambers, business associations, insurance brokers www.pasbdc.org/ppaca 14
Current To Do List Conduct Census of employees and their insurance needs Remember that Individual business owners are required to purchase health insurance for themselves Develop budget for health insurance purchase Individual Employees Consult with licensed professionals Prepare and give notice of Health Insurance Marketplace to employees www.pasbdc.org/ppaca 15
Web Sites www.healthcare.gov HHS main resource for individuals and small businesses www.hhs.gov US Department of Health and Human Services www.sba.gov main resource for businesses and sole proprietors www.cms.gov/cciio - Center for Consumer Information and Insurance Oversight www.dol.gov/ebsa/healthreform - Department of Labor s dedicated ACA webpage www.healthcareandyou.org developed by a coalition of medical professionals and geared toward answering consumer questions about ACA and Health Care regulations www.pasbdc.org/ppaca 16
Consultants and Experts SBDC Consultants Benefits Consultants Accountants Insurance Brokers and Agents Note please subscribe to updates as specific compliance and reporting requirements are being revised and defined. This presentation is intended to highlight the more important aspects of ACA on small business. This is not intended to replace professional advice and it is strongly suggested that small business owners obtain the appropriate legal, tax, and insurance advice before making decisions on insurance coverage. www.pasbdc.org/ppaca 17