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The Healthcare Law: What Is It and What Does It Mean for My Small Business? John Kabateck

The Healthcare Law: What Is It and What Does It Mean for My Small Business? John Kabateck Executive Director, NFIB/California. A L O H A. A Lot Of Healthcare Anxiety!!!!. About Us: The National Federation of Independent Business. The leading organization serving only small businesses

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The Healthcare Law: What Is It and What Does It Mean for My Small Business? John Kabateck

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  1. The Healthcare Law: What Is It and What Does It Mean for My Small Business? John Kabateck Executive Director, NFIB/California

  2. A L O H A

  3. A Lot Of Healthcare Anxiety!!!!

  4. About Us: The National Federation of Independent Business The leading organization serving only small businesses 350,000 members nationwide Mission Statement: To promote and protect the right of our members to own, operate and grow their businesses. All members balloted on every major policy issue Healthcare the #1 concern to members for the past 30 years

  5. Patient Protection and Affordable Care Act (PPACA)

  6. Hot Points What we’ll discuss today Overview of the law NFIB resources and information Plenty of time for Q&A Know that much of the law is still undefined and unanswered!

  7. Setting the Stage: Small Business and Healthcare -- The New Law Ensure that you are informed and compliant Make sure you know: What is the law – what does it prescribe? Timeline for implementation? Opportunities I can take advantage of? Costs and requirements I need to prepare for? How can I make this work for me, my business and employees?

  8. Snapshot of PPACA Signed by President Obama on March 23, 2010 The most significant healthcare overhaul since Medicare/Medicaid (1965) The goal was to reduce the number of uninsured in the United States It includes new mandates, subsidies and credits for employers and individuals The constitutionality of the Individual Mandate was challenged (NFIB v Sebelius) Upheld on June 28, 2012 Individual mandate is a tax on people choosing not to buy health insurance PPACA is the law NFIB is responsible for informing our members You as employers are responsible for informing employees

  9. PPACA Timeline: What’s in Play Small business tax credit Dependents can stay on parents’ insurance until 26 Indoor tanning service tax Summary of benefits and coverage requirement Over the counter drug tax HSA/FSA’s can’t be used for over the counter drugs Medical loss ratio

  10. PPACA Timeline: What’s Ahead {2013} New taxes on medical devices, Medicare surtaxes Medical expense deductible increases 7.5% - 10% Inform employees of value of coverage (W-2) Provide employees with information about exchanges and available options

  11. PPACA Timeline: What’s Ahead {2014} – “The Big Kahuna” Individual mandate Employer mandate Health insurance tax Essential health benefits/exchanges Deductible plans in small group markets Capped at $2,000 for individuals Capped at $4,000 for families

  12. PPACA Timeline: What’s Ahead {2016} States/Compacts {2018} Cadillac Tax Insurers of high-end employer-sponsored plans Excise Tax/Employer-sponsored health plans

  13. PPACA Timeline: What Didn’t Happen 1099 Reporting Requirement Result of NFIB efforts CLASS Act (long term care)

  14. PPACA: {Potential} Opportunities for Small Business State Healthcare Exchanges (2014) Regulated marketplace for insurance products May increase options, many unknowns Pricing between the two options may or may not be different Individuals American Health Benefits Exchange Employee subsidies only available Businesses w/o employees likely to need to shop for vendors Small businesses SHOP exchanges Federal gov’t allows business w/up to 100 employees to participate; states can limit to 50 employees

  15. PPACA: {Potential} Opportunities for Small Business (cont.) Small Business Health Insurance Tax Credit (2010) Temporary and complicated Percentage of businesses’ contribution to employee health insurance premiums Before 2014, the max is 35% After 2014, the max is 50% Only on policies purchased in new exchanges Businesses must pay at least 50% of employee premiums to qualify Phases out as the number of employees raises from 10-25 and the average annual salary increases from $25,000 - $50,000

  16. PPACA: {Potential} Opportunities for Small Business (cont.) Increased coverage, consumer protections (2014) Insurance market reforms No restrictions for pre-existing conditions Costs could rise Possibly divorce employers from health insurance Pay tax instead Less burden

  17. PPACA: Costs to Small Business Individual mandate (2014) Most citizens/legal residents must have qualifying health insurance coverage or pay a tax Limited exceptions – must cover to-be-determined essential health benefits The Tax Whatever is more – dollar amount or % of household taxable income 2014: $95/pp (up to 3 or $285) – OR – 1% of income 2015: $325/pp (up to 3 or $975) – OR – 2% of income 2016: $695/pp (up to 3 or $2,085) – OR – 2.5% of income 2017 and beyond: 2016 calculations + cost of living

  18. Employer mandate (2014) Don’t participate, pay $2,000; subsidy, pay $3,000 Less than 50 full-time employees You are not required to provide health insurance; no penalty If you already provide – or choose to provide – insurance, complete paperwork, W-2 requirements 50 of more full-time employees You are required to provide health insurance, or pay penalty $2,000/employee (minus first 30) $3,000 for every subsidized Applies to businesses w/more than 50 or more full-time employees (120 hours/month) Only applies to businesses if one or more employees receive gov’t subsidy (individual exchange) PPACA: Costs to Small Business (cont.)

  19. To receive the gov’t subsidy, employee’s household income must be less than 400% of the Federal poverty level Employee’s portion of insurance premium on employer plan must be more than 9.5% of their household income To get the subsidy, employees opt out of employer’s insurance and purchase in the state exchange IRS regulations not finalized, but likely multiple companies with the same owner are counted as the same entity – even if the companies aren’t related. PPACA: Costs to Small Business (cont.)

  20. You may not provide coverage for yourself/some and not others Non-discrimination provision If you own one business w/50 or more employees, and consider breaking it into several businesses… The IRS will determine if that is for business purposes, or to skirt the law If you own multiple businesses – each w/fewer than 50 employees (but together equaling 50 or more)… The IRS will determine how and what coverage you should provide If you have 50 or more full-time employees (and you choose not to provide health insurance or pay a penalty) you are allowed to lay off or convert full-time staff to part-time and remain within the law PPACA: Costs to Small Business (cont.)

  21. PPACA: Costs to Small Business (cont.) Small Business Health Insurance Tax (2014) Essential Health Benefits (2014) Compliance measures (ongoing) W-2 reporting Notifying employees IRS reporting

  22. Questions from NFIB Members Will PPCA’s key institutions be up and running in 2014? Who will establish my state’s exchanges? Will my state expand Medicaid? How many Americans will pay the individual mandate tax vs purchase coverage? How will the individual mandate affect wages? How many employers will choose to pay the employer mandate penalty instead of providing coverage? Which services will my insurance policy cover, and who decides? Will I be able to self-insure?

  23. Questions from NFIB Members (cont.) Is my business “small” or “large” with respect to the employer mandate? How expensive and time-consuming will PPACA’s paperwork requirements be? Will insurers still be around once the exchanges are open? Will provider shortages drive up costs? Will the U.S. head over the Fiscal Cliff in 2013?

  24. RTOA Member Questions How does – or will – PPACA affect my workers’ comp? What if President Obama isn’t re-elected? How will – or could – that affect implementation? Something for managers – explaining who will pay for this and how it affects part-time employee hours? Something to post? Can I provide “carve out” insurance to certain employees?

  25. RTOA Member Questions (cont.) What are the guidelines for monitoring/controlling employee hours in 2013 to comply – to determine full-time employee #’s in 2014? What process will determine hours (timesheets/clock-in-and-out records) from POS or W-2’s? How can I find out whether our organization is going to be affected by this law (or not)? How do I calculate the number of qualified employees? What will the cost of insurance be for the average employee (without family)? Which of my corporations would be liable for health coverage (I have three separate) with different shareholder mixes in each?

  26. RTOA Member Questions (cont.) Are we financially liable for the extended family members of the insured employees? How much of the health coverage cost can we pass along to the employee? Do officers of the company get counted into the hours worked for full-time employees? Why does the 120-hour credit get calculated on a monthly basis – but the hours we calculate to determine how many FTE we have is calculated on a weekly basis?

  27. RTOA Member Questions (cont.) Are we allowed to provide coverage to some eligible employees while paying the penalty on other eligible employees we choose to not cover? If so, what rules – if any – must be followed in discriminating who we choose to cover and those we choose to pay the penalty on? With respect to those eligible employees that we choose not to cover and for which we pay the $2,000 penalty, what help will they get to purchase their own insurance? Would they be able to go on to their parents’ or spouses' plan if eligible and available? If they still choose not to buy health insurance, what are the ramifications to both the employer and employee?

  28. RTOA Member Questions (cont.) Is it true that in many cases it would be cheaper to just pay the penalty than to provide the healthcare program? If so, are there changes being don’t to rectify this, or is the penalty actually just another funding source?

  29. Q & A

  30. NFIB State Directors • California • John Kabateck • 916-448-9904 | john.kabateck@nfib.org • Hawaii • Melissa Pavlicek • 808-447-1840 | melissa.pavlicek@nfib.org • Nevada • Randi Thompson • 775-830-8847 | randi.thompson@nfib.org • Washington • Patrick Connor • 360-786-8675 | patrick.connor@nfib.org • Oregon • Jan Meekcoms • 503-364-4450 | jan.meekcoms@nfib.org

  31. NFIB Federal Team • Address: • 1201 F Street NW, Suite 200 | Washington, DC 20004 • Phone: 202-314-2000 (ask for appropriate staff below) • Online: http://www.nfib.com/advocacy/healthcare • Questions about the Law/Policy • Kevin Kuhlman, Mgr., Legislative Affairs (House) | kevin.kuhlman@nfib.org • Amanda Austin, Dir., Federal Public Policy (Senate) | amanda.austin@nfib.org • Questions about the Court Case • Small Business Legal Center • Karen Harned, Executive Director | karen.harned@nfib.org • Health Care Data/Information • NFIB Research Foundation • Dr. Bob Graboyes, Sr. Fellow for Health and Economics | bob.graboyes@nfib.org

  32. Thank You – and Mahalo!

  33. MAHALO

  34. MauiAndHealthcareAdviceLongOverdue!!!

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