The Affordable Care Act: What's in it for my small business?

1. December 10, 2013 The Affordable Care Act: What's in it for my small business? Mitchell Stein Policy Director Consumers for Affordable Health Care

2. Employer Specifics • Notice of Marketplace Options (samples available on DoLwebsite: http://www.dol.gov/ebsa/healthreform/) • Medical Loss Ratio (MLR) Rebates • First ones mailed in July 2012, distribution depends on who pays the premium (employer or employee) • Summary of Benefits and Coverage (SBC) • For insured plans should be created by insurer and given to the employer to distribute • Applies to all individual and group plans (no exception for grandfathered plans) www.mainecahc.org

3. Employer SpecificsAdditional Items (cont.) • New hire waiting period cannot exceed 90 days (all plans, grandfathered or not) • W2 disclosure of benefit costs began January 2013 (for 2012 year) • If issued less than 250 W2s in January 2012, exempt in 2013 • Note this is NOT taxable income. For informational purposes only similar to the 401k box on current forms www.mainecahc.org

4. Employer SpecificsAdditional Items (cont.) • Flexible Spending Account (FSA) limit of $2,500 including Health and Dependent Care FSAs. HRA and HSA not impacted by new limit (begins in 2013) but are impacted by new regulations • Medicare Tax Increase for income over $200,000 for individuals and $250,000 for joint filers • Patient Centered Outcomes Research Institute Fee (First annual fee payable by July 2013 ) • First year, $1 per covered life, second year $2 per covered life, thereafter the $2 is indexed for Medical Inflation www.mainecahc.org

5. Employer SpecificsAdditional Items (cont.) • Simple Cafeteria Plans (2014 plan year) • Congress amended the Internal Revenue Code to allow eligible employers' cafeteria plans to qualify as simple cafeteria plans. Simple cafeteria plans are treated as meeting certain nondiscrimination requirements and benefits for cafeteria plans making the process simpler. www.mainecahc.org

6. Health Insurance Marketplace: Subsidies Who can get an individual subsidy? • If NO access to employer coverage: • Household income between 100 and 400% FPL (under 100% FPL legally present non-citizens) • If YES access to employer coverage: Income between 100 and 400% FPL (under 100% FPL legally present non-citizens) AND • Employer plan coverage less than 60% of average expenses or • Employer plan for employee costs more than 9.5% of income • Sample 2013 FPLs: 100% Single - $11,490, Family of 4 - $23,550 400% Single - $45,960, Family of 4 - $94,200 www.mainecahc.org

7. Source: http://www.cbpp.org/files/premium-credit-webinar.pdf www.mainecahc.org

8. Other Financial Help Income Level Actuarial Value* increased to… 100-150% FPL 94% 150-200% FPL 87% 200-250% FPL 73% *Actuarial Value is percent of average individual’s medical costs covered by the plan • Cost-sharing subsidies (only if Silver plan purchased): • Out-of-pocket spending limits • For insured plans sold on or off the Exchange, maximum individual out-of-pocket is $6,350 (will adjust each year) • Note OOP Max does not include premium costs and does not apply to out-of-network charges www.mainecahc.org

9. Affordability Issues: The Family Glitch If an INDIVIDUAL has access to affordable coverage at work (defined as costing less than 9.5% of household income for employee-only coverage), and the FAMILY is offered coverage from the employer (even if there is no employer contribution) then the FAMILY cannot access subsidies in the Marketplace However, if the cost of FAMILY coverage for the spouse and dependents of a covered employee exceeds 8% of the household income, they are exempt from the penalty www.mainecahc.org

10. Affordability Issues: Employee Coverage Subsidies are not available for employees as long as the employer’s coverage is deemed affordable (less than 9.5% ofhousehold income) and credible (60% actuarial value). Unlike individual coverage in the Marketplace, where subsidies vary be income level, employee premiums do not vary by income. www.mainecahc.org

11. Employer-sponsored Coverage: Common Issues/Questions • SHOP Delays • SHOP is live and options can be viewed • Enrollment function will be available 11/1 – still plenty of time for effective date of 1/1/14 and later • Enrollment now available through carriers • Sole Proprietors • They must use individual marketplace, not eligible for SHOP (even if they employ spouse)* • Partnerships are permitted to use the SHOP** *DOL regulation excludes, at 29 CFR § 2510-3.3(c)(1), a trade or business, whether incorporated or unincorporated, which is wholly owned by the individual or by the individual and his or her spouse **Although the ERISA regulations says those partnerships don't count as "employers," HIPAA made an express exception to allow them to buy small group coverage www.mainecahc.org

12. Employer-sponsored Coverage: Common Issues/Questions (cont.) • Employer Contributions to Individual Coverage • There may be a way for employees to buy coverage outside the Marketplace using a 125 salary reduction agreement. Recent guidance seems to indicate that employers can supplement this to a certain extent under certain circumstances. (See your broker/tax professional for details.) • However, there is no way for the employer to structure the plan so that the employee can use pre-tax contributions (from either the employer or employee) to purchase plans on the Marketplace and be eligible for individual subsidies www.mainecahc.org

13. To offer or partially offer or not to offer, that is the question Three options: Offer to Employee and Dependents Offer to Employees Only Do Not Offer www.mainecahc.org

14. To offer or partially offer or not to offer, that is the question Variables to consider • Employer’s cost • The coverage offered is tax deductible to the employer • Potential need to increase salary to compensate for the reduction in total compensation (if eliminating existing coverage) • Employee’s cost • The cost of individual coverage is NOT tax deductible to the employee (as opposed to their contribution to employer coverage which is tax deductible) • Coverage might be more expensive than their employer coverage is now, especially if they are not eligible for subsidies • If an INDIVIDUAL has access to affordable coverage at work (defined as costing less than 9.5% of income for individual coverage), then the FAMILY cannot access subsidies in the Marketplace • What is the competition doing • Impact of decision in attracting and retaining employees www.mainecahc.org

15. Businesses Specific Resources Government (business focused): http://business.usa.gov/healthcare Department of Labor FAQs: http://www.dol.gov/ebsa/faqs/ IRS: http://www.irs.gov/uac/Affordable-Care-Act-Tax-Provisions MaineBiz resource site: http://www.mainebiz.biz/article/20130822/NEWS07/130829974/1088 www.mainecahc.org