1 Your Bottom Line: What the Affordable Care Act Means For Your Colorado Small Business Small Business Majority Tim Gaudette Colorado Outreach Manager Boulder, CO May 3, 2014
2 About Small Business Majority Small business advocacy organization founded and run by small business owners National offices in Washington, D.C., Ohio, Colorado, Missouri, Virginia, Oregon, Washington State, New York and California Research and advocacy on issues of top importance to small businesses (<100 employees) and the self-employed, including healthcare, access to credit and clean energy Very focused on outreach to and education of small business owners across the country
3 Agenda Healthcare Reform for the Small Business Point of View The new marketplace (Connect for Health Colorado) Small business tax credit-agriculture Workers Health insurance definitions Enrollment preparation Applying on ConnectforHealthCO.com
4 Key provisions small businesses should know about Establishes competitive marketplaces for small businesses and the self-employed Individual opportunities for self-employed and nonoffered small business employees Improves quality of insurance products on the marketplace Provides immediate tax credits for most small businesses
5 Small businesses struggling with costs Our most recent opinion survey: Small employers who don t offer coverage say lack of affordability is the biggest reason (70%) Which one or two of the following best describes the reasons you do not provide health benefits? My business cannot afford it 70% My employees get coverage elsewhere 32% I do not believe it is the responsibility of my business to provide health insurance Waiting to see what happens with the federal health care reform law Too much paperwork and administration Choosing the right insurance plan is too complicated 2% 5% 9% 16% 0% 20% 40% 60% 80%
6 Shared responsibility Businesses with fewer than 50 full-time workers 96% of all businesses are exempt from any requirement to offer insurance.
7 Colorado small businesses and health insurance According to Kaiser Family Foundation in 2011: 32.6% of businesses with fewer than 50 employees offer health insurance 97.7% of businesses with more than 50 employees offer health insurance In Colorado, 98,000+ businesses with <50 employees, and 27,400 with >50 employees.
8 What is Connect for Health Colorado? Exclusive, convenient and competitive site to compare and purchase commercial insurance A broad array of choices in one place Creates transparency about your options Reduces costs by applying immediate tax credits Broad statewide Customer Support Network One application, one premium payment, and one source for enrollment changes Open for individuals, families and businesses with less than 50 employees
9 Employer/Employee Health Plan Options One Carrier / One Plan One Carrier / All Plans One Metal Level / All Carriers Two Adjacent Metal Levels / All Carriers Example: Bronze and Silver
10 92 Health Plans small employers Competing for Your Business: Anthem Blue Cross and Blue Shield / HMO Colorado Colorado Choice Health Plans Colorado HealthOP Kaiser Permanente Rocky Mountain Health Plans SeeChange Health
11 Small Business Marketplace Open Enrollment Open Enrollment Begins Deadline for enrollment to have coverage Jan. 1, 2014 Coverage begins Individual Open Enrollment Ends Oct. 1 Dec. 23 Jan. 1, 2014 March 31, 2014 Shopping starts October 1, 2013 Coverage Begins January 1, 2014 Open Enrollment ends March 31, 2014 Rolling open enrollment for small business
12 Small Business Marketplace Despite not being subject to employer shared responsibility provisions, the Marketplace may help make healthcare more affordable for small employers o How will it be different? o Small business tax credit o Greater employer choice- shop by price, plan, service, level of coverage o Pooling together of small businesses o How will it be similar? o Private insurance competing for business o Option for small employers, insurance still sold outside
13 Improving Quality Essential Health Benefits Source: Hoopayz.com
14 Immediate consumer protections Children are now able to stay on their parents plan until 26 Insurers will no longer be able to deny coverage for patients with pre-existing conditions Ban on lifetime caps that set lifetime limits on coverage
15 Immediate consumer protections Health plans can t drop coverage when someone gets sick, if mistake on paperwork First-dollar coverage for preventive care for all new plans Increased access to care: community health centers
16 Medical Loss Ratio: 80/20 rule Insurers must spend 80% of premium on medical claims and quality improvement. Limits administrative costs and profit to 20%. If carriers exceed maximum, must give rebates. An estimated $1.1B will be given back in 2012 (Department of Health and Human Services) Nationally: Average rebate per enrollee in a small group plan: $76 Total rebates: $377M or 28% of all small employer plans
17 Rate review Since 2011, Insurance companies are required to publicly disclose and justify rate increases of 10% or more. Insurers explanations will be posted on HealthCare.gov and each state s rate review program will give customers a chance to comment on the explanations. The state can approve or reject an unreasonable or excessive rate increase.
18 Small business tax credits Available to businesses with employees Took effect immediately (tax year 2010) Which businesses are eligible? þ Fewer than 25 full-time employees þ Average annual wages <$50,000 þ Employer pays at least 50% of the premium cost
19 Small business tax credits Our report: 70,360 Colorado small businesses are eligible (68.6% of all businesses); 27,800 small businesses eligible for the maximum credit Colorado small businesses that are eligible for premium tax credits in 2011 Non-eligible businesses Eligible businesses 31.4% 68.6% 39.5% 60.5% Maximum premium tax credits Some tax credits All small businesses Eligible small businesses
20 Small business tax credits Tax credits on a sliding scale: o Up to 35% of premium expenses for o Up to 50% of premium expenses for any two years beginning 2014 Tax credits do not cover premium expenses of owners or their families Tax credits can not be claimed by the self-employed Still as an amendment to your 2010 taxes, or can be carried back to tax year 2010.
21 Nonprofits also eligible Tax credits on a sliding scale: o Up to 25% of premium expenses for o Up to 35% of premium expenses for any two years beginning 2014 Tax refund for tax-exempt employers Include amount on line 44f on the Form 990-T and attach Form 8941 Does not have to be publically reported
22 Small business tax credit as % of employer contribution to premiums Average Wage Firm size Up to $25,000 $30,000 $35,000 $40,000 $45,000 $50,000 Up to 10 35% 28% 21% 14% 7% 0% 11 33% 26% 19% 12% 5% 0% 12 30% 23% 16% 9% 2% 0% 13 28% 21% 14% 7% 0% 0% 14 26% 19% 12% 5% 0% 0% 15 23% 16% 9% 2% 0% 0% 16 21% 14% 7% 0% 0% 0% 17 19% 12% 5% 0% 0% 0% 18 16% 9% 2% 0% 0% 0% 19 14% 7% 0% 0% 0% 0% 20 12% 5% 0% 0% 0% 0% 21 9% 2% 0% 0% 0% 0% 22 7% 0% 0% 0% 0% 0% 23 5% 0% 0% 0% 0% 0% 24 2% 0% 0% 0% 0% 0% 25 0% 0% 0% 0% 0% 0% Source: CONGRESSIONAL RESEARCH SERVICE, SUMMARY OF SMALL BUSINESS HEALTH INSURANCE CREDIT UNDER PPACA (P.L ) 3 (Apr. 5, 2010).
23 Small business tax credits More than 2 in 5 small business owners who qualify for the credit are eligible for the maximum 19.3 million employees work for businesses that can benefit from this credit (335,400 in Colorado) Total value of the credit for tax year 2011: $15.4B An average of $800 in savings per employee
24 How do Businesses Qualify? Counting Employees Based on monthly totals from previous calendar year Add monthly full time employees to full time equivalent part-timers Determine part-time hours for each month (but not more than 120 hours per employee, then divide by 120 hours) An employer may select any 6 month period to determine average for previous calendar year Once an employer is Marketplace qualified they may remain regardless of changes in employee count
25 What the Healthcare Law Means for Agricultural Employers & Workers I m an employer with agricultural workers. Am I required to provide health benefits to all my employees? If you have more than 50 full-time equivalent employees, you must provide affordable and minimum essential coverage to all of your full-time employees. A full-time employee is one that averages more than 30 hrs/week of work, although there are special rules for employees with variable hours. In 2014, however, no penalties will be assessed. I run a small farm (less than 50 employees) with a mix of parttime and full-time workers. Am I required to offer coverage? No, there is no requirement for small employers to offer health benefits to their workers.
26 What the Healthcare Law Means for Agricultural Employers & Workers My workers are seasonal employees. Do I count them in determining whether I am a large employer? In general, an employer is considered a large employer under the ACA if the employer has more than 50 full-time-equivalent workers per year. Seasonal workers do count among your fulltime employees unless your business qualifies for the seasonal worker exemption. The seasonal worker exemption applies if: You had more than 50 employees for fewer than 120 days, or During the 120 period you would have had fewer than 50 employees if you excluded your seasonal workers. The 120 days (or 4 months) do not need to be consecutive.
27 Determining FTEs for Seasonal Workers: Examples Farm A has 30 full-time, year-round employees, and hires 25 workers to work 50 hours per week during a 2-month planting season in the winter, and then invites the same crew back for a 3-month harvest season in the fall. Farm A is a large employer because the Farm employs more than 50 full-time workers for more than 120 days. Farm B has 30 full-time, year-round employees, and hires 25 workers to work 50 hours per week during a 3 month harvest only. This employer is a small employer because the number of full-time employees exceeded 50 during a period that is less than 120 days, and during that time the seasonal worker exemption applies, because after excluding the seasonal employees you had fewer than 50 full-time workers.
28 How to claim the small business tax credit Small employers (businesses or tax-exempt) will use new Form 8941, available on Include the amount of credit as part of the general business credit on income tax returns Credit applies towards income tax, not employment tax The image cannot be displayed. Your computer may not have enough memory to open the image, or the image may have been corrupted. Restart your computer, and then open the file again. If the red x still appears, you may have to delete the image and then insert it again. Credit can be reflected in estimated annual tax payments
29 For larger employers Shared responsibility requirement delayed until 2015 You must have at least 50 full-time employees or a combination of full-time/part-time employees that is equivalent to at least 50 full-time employees Full-time employee: at least 30 hours per week Part-time employee: at least 15 hours a week Seasonal employees ( 120 days per year) Size determined annually Amount owed determined monthly Offer of coverage must be affordable and meet qualified health plan requirements
30 Health Insurance 101 Premium: The monthly amount that you must pay for your health / dental insurance (coverage) Deductible: You need to pay this amount before your plans starts helping you pay for most covered services through coinsurance. Annual Out of Pocket Max: This is the most you ll pay for care during a policy period (usually a year) before your plan starts paying 100 percent for most covered services. Copay: A fixed amount (for example, $15) you pay for a medical visit or for medication that is covered under your health plan, usually when you receive the service. This is considered part of your out-of-pocket costs, separate from premiums and deductibles. Coinsurance: After reaching your deductible, you may start paying a percentage of the total cost for certain services. Coinsurance usually reflects the percentage of medical expenses that you are responsible to cover, for dental expenses the percentage reflects what the dental plan will cover. Source: Cliff Craig, Connect for Health
31 Health Insurance 101 HMO: A type of health insurance plan that usually limits coverage to care from doctors who work for or contract with the HMO. It generally won t cover out-ofnetwork care except in an emergency. An HMO may require you to live or work in its service area to be eligible for coverage. HMOs often provide integrated care and focus on prevention and wellness. (No Out of Network Coverage) PPO: A type of health plan that contracts with medical providers, such as hospitals and doctors, to create a network of participating providers. You pay less if you use providers that belong to the plan s network. You can use doctors, hospitals and providers outside of the network for an additional cost. (Out of Network Coverage but at higher cost-sharing) EPO: A more restrictive type of preferred provider organization plan under which employees must use providers from the specified network of physicians and hospitals to receive coverage; there is no coverage for care received from a non-network provider except in an emergency situation. (No Out of Network Coverage) Source: Cliff Craig, Connect for Health
32 The Enrollment Process Gathering information Employer account creation Creating enrollment Employee responsibilities
33 Info You ll Need to Enroll For all employees: Date of hire address Date of birth Social Security Number Home address Salary Hours worked per week For all dependents: Date of birth Social Security Number
34 Enrollment Process - Employer Create account Create roster (list of all employees) Attest to small business status (2-50 employees) Create census (list of employees offered coverage) Create enrollment Define enrollment period Select census Define plan selection options Define contribution Browse/select plans Complete enrollment
35 Enrollment Process Employer, cont. Send welcome message to employees Check participation rate At least 70% of employees must accept or decline coverage When enrollment period closes, submit application Send payment to Connect for Health Ongoing: Manage enrollment Change roster Manage employee life change events Pay monthly premium
36 Enrollment Process Employees Receive welcome message with participation code Create account on employee portal Enter participation code to associate with employer account Shop and select plan during open enrollment period Submit application
37 Creating an Account Go to
38 Creating an Account, cont.
39 Creating an Account, cont.
40 Adding Employees
41 Adding Employees
42 Adding Employees
43 Adding Dependents Click Save & Continue
44 Create Your Census
45 Create an Enrollment
46 Creating an Enrollment
47 Select Census
48 Define Plan Selection Options
49 Define Contribution
50 Filter Plans Filters: Employer contribution Employee contribution Annual deductible Carrier Metal level
51 Review Enrollment
52 Send Welcome Message
53 Resources Contact Connect for Health Colorado: Call center: 855-PLANS-4-YOU ( ) For More Information: healthcoverageguide.org/states/colorado/ Emily Dewey Health Coverage Guide Small Business Majority Stephanie Salazar-Rodriguez Health Coverage Guide
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