Clarification for Small Business Owners

Clarification for Small Business Owners
A high percentage of small business owners do not understand the Affordable Care Act (ACA) health insurance mandate, according to recent surveys.
Following is clarification of the ACA mandate for the small business owner:
  1. Small groups do not need to offer or provide coverage.
  2. Large groups must offer coverage to full time employees and dependents (defined as children not spouses) or be subject to a penalty. (often referred to as Play or Pay)
  3. Individuals must have coverage (the “individual mandate”) unless they are covered through their employer or some other source.  If they do not have coverage, the penalty in 2014 is $95 or 1% of income for each individual.
Q. What is a Large Group for determining if they must offer coverage?
A.  A Large Group is a company that has 50 or more Full Time Equivalent employees.  Full Time Equivalent means a combination of full time employees (average 30 hours/week) and part time employees. Thus, for example, a group with 30 full time employees and 40 half time employees would equal 50 Full Time Equivalent Employees and would be required to offer coverage.
Q. Must a Large Group employer cover or provide coverage for all employees and dependents?
 
A. No. The Large Group employer must offer minimum value, affordable coverage to all Full Time employees and their dependents (defined as children not spouses). Offer means that the full time employees are given an opportunity to enroll. Minimum value coverage means that the plan covers at least 60% of medical expenses. Affordable means that the cost of employee only coverage cannot exceed 9.5% of that employee’s W-2 wages. 
Please contact us for more information about Employer Shared Responsibility/Play or Pay.
Surveys also reveal that a majority of small business owners are not able to define the meaning of an Exchange.
(In California the Exchange is called Covered California.)
Q. What is an Exchange?
 
A. In general, an Exchange is a marketplace where individuals or small groups can buy health insurance.   The Exchange is an alternative to the traditional private marketplace.  There are two types of Exchanges under Covered California.  The Individual Exchange and the SHOP (Small Group Health Options) Exchange.
Q. Who will sell insurance within Covered California?
 
A. Although not yet finalized, some of the insurance carriers, but not all, who sell insurance currently in the private market, will also offer health insurance through Covered California. 
Q. Will there be savings for small employers in the SHOP Exchange?
 
A. Rate information is not yet available.  The SHOP Exchange officially opens for enrollments October 1, 2013.
Q. Are Small Groups required to purchase their coverage through the Exchange?
 
A. No. Small Groups and individuals are not required to go through the Exchange for coverage. They have the right to continue obtaining insurance in the private market as they have prior to the reform law.
Q. Will there be savings for individuals who purchase health insurance through the Exchange?
 
A.  For those whose income is up to 400% of the Federal Poverty Level, financial assistance may be available when health insurance is purchased through the Exchange.
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