Small Business Private Exchange

What you need to know about Health Reform 

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Small Business Q&A

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Business Requirements

Is my business required to offer health insurance to my employees?

No. Under the Affordable Care Act, a Small Business (less than 50 full-time equivilent employees) will not be charged any penalties for not offering health insurance. But some Small Businesses might qualify for a Small Business Tax Credit if they do.

 

Since you aren't required to offer group health insurance, you have choices. You can either offer your employees group health through the Private Exchange or you can give employees access to purchase their own plans through the Individual and Family Private Exchange. 

What is the Individual and Family Private Exchange? How can that help my employees?

The Individual and Family Private Exchange is an online marketplace where your employees could enroll in private coverage for themsevles or their family. 

 

No health insurance company can turn them down or charge them extra premium because of pre-existing conditions, gender or how often they use their plan. Pre-exisiting conditions and pregancy are always covered. 

 

And they might qualify for lower rates based on household income. If their household income is less than 400% Federal Poverty Level (about $98,000 per year for a family of four), then they will qualify for some level of tax subsidy to be used to lower their Individual or Family health insurance premium and out-of-pockets costs on things like deductibles and copays. Premiums are on a sliding scale to keep them affordable for everyone based on family size and household income. 

What is considered a full-time equivalent employee?

A full-time equivilent employee is a true employee of your business, generally getting a W-2, who works 30 or more hours per week. 

 

 

Why is it important to know how many full-time equivalent employees work for my business?

The Affordable Care Act divides businesses into two categories: Small (less than 50 FTEs) or Large (50 or more FTEs). The compliance rules, pricing, benefits, and how plans are issued form insurance companies is very different for each category. 

 

Our calculators can determine exactly how many FTEs are employed by your business.  

Do part-time or seasonal workers count toward my number of full-time equivalent employees?

They can partially count toward your total number of FTEs employed by your business. 

 

Seasonal employees must work 120 or more days per year to be counted. For every 30 hours worked by part-time employees, they collective count as one full-time equivilent employee. For example, if you have two part-time employees who work 15 hours per week each, then together they count as one FTE when you are trying to determine if you are a Small (less than 50 FTEs) or Large (50 or more FTEs) Business under the Health Reform law.

 

Even though part-time or seasonal employees could count toward your total number of FTEs, you do not have to offer them benefits. 

What is the Small Business Health Care Tax Credit? And do I qualify?

The small business Health Care Tax Credit helps small employers afford the cost of health care coverage for their employees and is specifically targeted for those employers with low- and moderate-income workers.

 

The credit is designed to encourage small employers to offer health insurance coverage for the first time or maintain coverage they already have. Since 2010, businesses that have fewer than 25 full-time equivalent employees (FTEs), pay average annual wages below $50,000, and that contribute 50% or more toward employees’ self-only health insurance premiums may qualify for a small business tax credit. 

 

The credit is up to 35% to help offset the costs of insurance - issued on a sliding scale based on average employee incomes at your business.  In 2014, this tax credit goes up to 50% and is available to qualified small employers that participate in the Small Business Health Options Program (SHOP). Eligible small employers can claim the current credit through 2013, and the enhanced credit can be claimed for any two consecutive taxable years beginning in 2014 through the SHOP.

 

We can help you determine if you might qualify for a Small Business Health Care Tax Credit and help you secure coverage through the SHOP. 

What is the Small Business Health Options Program (SHOP)?

Starting in 2014, small employers with generally up to 50 employees will have access to the new health care insurance marketplaces through the Small Business Health Options Program (SHOP).  If you qualify for a Small Business Health Care Tax Credit (business less than 25 employees, average income less than $50,000 annually, employer pays 50% of employee premium), then you will only be able to apply that credit when purchasing plans offered through the SHOP.

 

We can show you SHOP plans and other Small Business plans side-by-side and help you decide which option is best for your business. 

 

In the past, small businesses might pay about 18% more than big businesses for health insurance because of administrative costs.  SHOP will offer small employers increased purchasing power to obtain a better choice of high-quality coverage at a lower cost.  Costs are lowered because small employers can pool their risk. To enroll, eligible employers must have an office within the service area of the SHOP and offer SHOP coverage to all full-time employees.  Plan options, insurance company choices, and doctor/provider networks will likely be more limited on SHOP plans than other Small Business plans.

 

In 2016, employers with up to 100 employees will be able to participate in SHOP.  

What is the Employer Notification to Employees about New Health Insurance Marketplace

Originally, under the Affordable Care Act, employers covered by the Fair Labor Standards Act (generally, those firms that have at least one employee and at least $500,000 in annual dollar volume of business), were required to provide notification to their employees about the new Health Insurance Marketplace.

 

It was to inform employees that they may be eligible for a premium tax credit if they purchase coverage through the Marketplace; and advise employees that if they employee purchase a plan through the Marketplace, they may lose the employer contribution (if any) to any health benefits plan offered by the employer. Since then, this is no longer required and considered optional.

 

Employers could provide this notice to all current employees by October 1, 2013, and to each new employee at the time of hire beginning October 1, 2013, regardless of plan enrollment status (if applicable) or of part-time or full-time status. 

 

If you would like to provide this optional notificational, we'll be happy to handle that for you. 

Can insurance companies charge us whatever they want?

Under the Affordable Care Act, insurance companies must spend at least 80% of premium dollars on medical care, not administrative costs.  Insurers who do not meet this ratio are required to provide rebates to their policyholders, which is typically an employer who provides a group health plan. 

 

Employers who receive these premium rebates must determine whether the rebates constitute plan assets.  If treated as a plan asset, employers have discretion to determine a reasonable and fair allocation of the rebate.  

 

Contact us with any questions regarding your premium rebate.

Are there limits on Flexible Spending Account contributions?

For plan years beginning on or after January 2013, the maximum amount an employee may elect to contribute to health care flexible spending arrangements (FSAs) for any year will be capped at $2500, subject to cost-of-living adjustments. 

 

Please note that the limit only applies to elective employee contributions and does not extend to employer contributions.  

Are there additional tax withholdings for Medicare? What is the new Medicare Assessment on net investment income?

Beginning January 1, 2013, the Affordable Care Act increased the employee portion of the Medicare Part A Hospital Insurance (HI) withholdings by .9% (from 1.45% to 2.35%) on employees with incomes of over $200,000 for single filers and $250,000 for married joint filers.  If the employee earns less than that income amount, the tax will remain unchanged at 1.45%.

 

Also beginning January 1, 2013, a 3.8% tax was assessed on net investment income such as taxable capital gains, dividends, rents, royalties, and interest for taxpayers with Modified Adjusted Gross Income (MAGI) over $200,000 for single filers and $250,000 for married joint filers.  

What is the maximum waiting period for new hires to join my group health plan?

Starting January 1, 2014, no full-time equivilent employee will have to wait more than 90 days before being added to your group health insurance plan. 

What is the Transitional Reinsurance Program?

The Transitional Reinsurance Program is a three-year program, beginning in 2014 and continuing until 2016, that reimburses insurers in the individual insurance Marketplaces for high claims costs. 

 

The program is funded through fees to be paid by employers (for self-insured plans) and insurers (for insured plans).  HHS estimates that the fees for 2014 will be $5.25 a month (or $63 for the year) for each individual covered under a health care plan, with the required fee for the following two years to be somewhat lower.  The fee applies to all employer-sponsored plans providing major medical coverage, including retiree programs.  The U.S. Department of Labor has advised that for self-insured plans, these fees can be paid from plan assets.   

How will Wellness Program impact Health Reform?

The Affordable Care Act creates new incentives to promote employer wellness programs and encourage employers to take more opportunities to support healthier workplaces.

 

Health-contingent wellness programs generally require individuals to meet a specific standard related to their health to obtain a reward, such as programs that provide a reward to employees who don’t use, or decrease their use of, tobacco, and programs that reward employees who achieve a specified level or lower cholesterol.

 

Under final rules that take effect on January 1, 2014, the maximum reward to employers using a health-contingent wellness program will increase from 20 percent to 30 percent of the cost of health coverage. Additionally, the maximum reward for programs designed to prevent or reduce tobacco use will be as much as 50 percent. The final rules also allow for flexibility in the types of wellness programs employers can offer. 

Penalties and Reporting

What is the penalty for not offering health insurance to my employees?

There is no penalty for not offering health insurance to your employees if you are a Small Business (less than 50 full-time equivilent employees).

What is the penalty for not offering coverage that is affordable to my employees?

Small Businesses (less than 50 full-time equivilent employees) are not subject to penalties if your plan doesn't pass the Affordability Test for your employees based on their income.

What is the Employer Notification to Employees about New Health Insurance Marketplace?

Originally, under the Affordable Care Act, employers covered by the Fair Labor Standards Act (generally, those firms that have at least one employee and at least $500,000 in annual dollar volume of business), were required to provide notification to their employees about the new Health Insurance Marketplace.

 

It was to inform employees that they may be eligible for a premium tax credit if they purchase coverage through the Marketplace; and advise employees that if they employee purchase a plan through the Marketplace, they may lose the employer contribution (if any) to any health benefits plan offered by the employer. Since then, this is no longer required and considered optional.

 

Employers could provide this notice to all current employees by October 1, 2013, and to each new employee at the time of hire beginning October 1, 2013, regardless of plan enrollment status (if applicable) or of part-time or full-time status. 

 

If you would like to provide this optional notificational, we'll be happy to handle that for you. 

What are the Summary of Benefits and Coverage Disclosure Rules?

Employers should provide employees with a standard “Summary of Benefits and Coverage” form explaining what their plan covers and what it costs.  The purpose of the SBC form is to help employees better understand and evaluate their health insurance options.

 

We can provide you with this documentation for your employees.

What if my business offers a self-insured plan?

Self-insured plans aren't subject to the same rules that fully-insured plans are subject to under the Affordable Care Act. However, if you offer a self-insured plan to your employees, beginning with health coverage provided on or after January 1, 2014, your business must submit reports to the IRS detailing information for each covered individual.  The first of these reports must be filed in 2015.

 

If you offer a self-insured plan through the Private Exchange, we can take care of this reporting for your business.  

 

 

Exchanges

What is an exchange?

An exchange is really just a fancy word for website that shows you all your benefit options in one place, compares benefits and pricing side-by-side, and allows you to enroll online.

 

There are two types of exchanges: public and private. The public exchanges are either administered by the federal or state governments. If you are an individual consumer or Small Business (less than 50 full-time equivilent employees), you might qualify for tax subsidies or Small Business Tax Credits by purchasing public exchange plans.

 

American Health Insurance Exchange is an example of a private exchange. Individual consumers, the self-employed, small and large busineeses can all have access to coverage through the private exchange. Health insurance is offered as well as a catalog of other benefits ranging from dental and vision to tele-medicine and pet insurance. And the plans offered in the exchange are hand-selected and pre-negoiated to bring you the best plans from all the top insurance companies who are competing for your business.

 

Through American Health Insurance Exchange, you enroll in either public or private exchange plans. We'll show you both side-by-side and help you determine which option is best for your business. 

How can an exchange save me time and money?

Through the Private Exchange, your business will have access to everything you need to cut costs and streamline your administration, which will give you more time and money to re-invest in your business.

 

We negoiate the best value from all the top carriers, and you have the buying power of our nationwide network of agents.

 

We'll build a custom store full of better plan choices for your employees. A private exchange gives employees the power of choice and allows them to choose their own benefits and only enroll in the coverage they want and need. 

 

We'll develop a custom financial strategy for your business and show you, down to the penny, what option benefits you the most. Most businesses save 10%-20% in the first year.

 

We give you a custom benefits management system that can include online enrollment, payroll services, intra-office communication system, HR support, custom reports, and more. Employees can use it year-round to check or change information. Download the Private Exchange app to your smartphone, so you always have access to your important benefit information. 

 

We take care of all the reporting, calcuations and notifications that are required by the Affordable Care Act, preventing you from making a costly oversight. You have access to the top Health Reform experts in the country for questions or advice.

How do you decide what products go in my store?

We don't; you do. We provide all the best rates and benefit plan from the top insurance companies who are competing for your business. You just tell us what you'd like to have added to the aisles of your benefit supermarket, and we'll build it custom for you. Employees will login and make their selections - and that's it, enrollment's done.  

Can I keep my agent and still use American Health Insurance Exchange?

Sure. Our nationwide network of agents is expanding, and if your agent isn't already one of our partners, we'd love to talk to him or her about offering you a Private Exchange. Or, you can work directly with one of our expert agents. 

What makes this exchange better or different?

Several factors, including things we'll tell you about in the next few sections of the Business Exchange. But here's a few that really separate us from other private exchanges:

 

  • Our exchange was built by award-winning insurance agents who have been working closely with businesses just like yours for decades. We understand your problems so we developed a solution. Many private exchanges are built by technology gurus who have little to no experience in the employee benefits field.

 

  • Our exchange was built for all market segments: individual and families, Medicare-eligible consumers, the self-employed, small businesses, and large businesses. Many exchanges don't provide support for all markets, which can limit your choices or financial strategies.

 

  • We know that insurance is confusing and you don't want to spend hours figure out Employee Benefits. We provide a Your Virtual Insurance Agent experience that walks you through the benefits in everyday language, so your employees can quickly and comfortably make choices. 

General Information

When does the law begin?

The Patient Protection and Affordable Care Act was first passed in 2010 and is scheduled to be implemented over several years. Many of the key provisions start in 2014.

 

Please take a look at our Health Reform Timeline for more specifics. 

I heard the law was delayed? What does that mean for me?

The law itself was not delayed. There were only a few parts of the law that were delayed including the employer mandate to offer affordable coverage and the out-of-pocket limits on plans, both delayed until 2015. 

 

Our Health Reform Timeline can give you more specifics about when certain provisions of the law are scheduled to begin. 

Am I personally required to have health insurance?

There are a few exceptions to the rule, but starting January 1, 2014, most of us are required to have qualified health insurance or pay a penalty. See our Individual Requirement page for informations about rules, exceptions and penalties. 

 

There are several different options to have qualified health coverage. These include things like coverage through your job or your spouse/partner's job, Medicare or Medicaid, other government programs or coverages, or private individual or family coverage that you purchased on your own.

 

 

Where can I get information on the entire law, not just the parts that apply to businesses?

You might want to check out our ACA Summary for a detailed summary of the law from how it was passed originally in 2010.

 

Or, for a more bullet point review, please visit our ACA Timeline.

 

Or, you can browse through the other sections of American Health Insurance Exchange for information on individuals and families, the self-employed, small businesses (less than 50 full-time equivilent employees), or large businesses (50 or more FTEs) and we'll show exactly how the law affects those people or groups.

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