1 Affordable Care Act 101: What The Health Care Law Means for Small Non-Profit Employers in New Mexico Charlotte Roybal, Policy Connections West Liz Stefanics, Resources for Change Policy Works
2 Lets Talk Overview of the ACA What do small employers/nonprofits need to know What is a small employer according to ACA When am I expected to do what? How can I get ready? How can I enroll my organization in the health insurance exchange?
3 Why Is Increasing Access to Health Insurance in NM Important? Percentage of adults in New Mexico without health care coverage is higher than the percentage for the U.S. Lack of health insurance coverage: delayed access to health care and increased risk of chronic disease and mortality. more likely to succumb to preventable illnesses, more likely to suffer complications from those illnesses, and more likely to die prematurely. Businesses need healthy, safe workers The Health Care Law P.L
4 New Mexico Small Businesses and Health Care Small employers/nonprofits have reported that their #1 concern has been access to affordable health care for employees. Small employers/nonprofits pay on average 18% more than big businesses for health insurance. The ACA will help by lowering premium cost growth and increasing access to quality, affordable health insurance.
5 ACA Reduces Premium Cost Growth and Increases Access to Affordable Care Before ACA, Small Employers Faced Many Obstacles to Covering Workers Too few choices Higher premiums and unpredictable rate increases Higher rates for groups with women, older workers & those with chronic health concerns or high-cost illnesses Waiting periods or no coverage for individuals with pre-existing conditions Under ACA, insurance companies: Face limits on administrative spending - spend at least 80 percent on actual medical care Must disclose and justify proposed rate hikes of 10% or more Starting in 2014, insurance companies: Can t charge higher rates or deny coverage because of chronic or preexisting condition Can t charge higher rates for women, and face limits on charging premiums for older employees Must not have annual dollar limits on coverage Must offer plans that provide a core package of Essential Health Benefits equal to typical employer plans in the state
6 ACA Reduces Premium Cost Growth and Increases Access to Affordable Care The Health Care Law/ACA increases access to affordable, quality health care for the selfemployed and small employers/nonprofits Since 2010, eligible small employers can get tax credits worth up to 35 percent of their premium contribution to help them pay for health insurance. Better options through new Health Insurance Marketplaces: starting in January 1, 2014, the selfemployed and small employers will have access to a range of affordable health care options no matter where they are located.
7 What benefits will be included by insurers in Essential Health Benefits? Ambulatory patient services, such as doctor's visits and outpatient services Emergency services Hospitalization Maternity and newborn care, including breastfeeding support Mental health and substance use disorder services, including behavioral health treatment Prescription drugs Rehabilitative and habilitative services and devices Laboratory services Preventive and wellness services and chronic disease management includes contraception, preconception STD/HIV tests & treatment Pediatric services, including oral and vision care
8 What do small employers/nonprofits need to know? No employers are required to offer health coverage. You have health coverage rights You may qualify for tax credits if you offer coverage through Small Business Health Options Program (SHOP) Marketplace Employers with more than 50 employees could face payments in 2015 The Employer Shared Responsibility payment is a new requirement under the health care law for some employers. It will take effect in It will apply only to employers with more than 50 full-time equivalent (FTE) employees that don t offer coverage or whose coverage doesn t meet certain minimum standards.
9 Affordable Care Act Small Business Health Care Tax Credit
10 How Will ACA Impact Small Employers? It often depends on the size of the business. 24 or Fewer How many employees does the business have? 50 and above Number of Full-Time Equivalent (FTE) Employees Up to 50
11 Definitions of small employer Self-Employed- One employee- eligible for the federal individual Marketplace FTE employees- eligible for New Mexico HIX. You may qualify for small employer tax credit. Nonprofits get a smaller credit FTE employees- eligible for New Mexico HIX. 50 and over FTE employees- not eligible for the New Mexico HIX until January 2016 when 100 and under employees will be eligible..
12 Small Employer Health Care Tax Credit Eligibility is determined by the number of fulltime equivalent employees instead of the number of individual employees To determine the number of full-time equivalent employees, divide the total hours of paid work-time by your organization by 1560 (which equals 30 hours multiplied by 52 weeks) The hours of leased employees are included, but not seasonal workers working less than 120 hours Average wages are determined by dividing the amount of total wages paid by the number of full-time equivalent employees
13 Businesses with 24 or Fewer FTE Employees 50 and above 24 or Fewer Number of Full- Time Equivalent (FTE) Employees Up to 50 If these smaller businesses provide coverage, they may qualify for the Small Business Health Care Tax Credit to help offset costs: Must have average annual wages below $50,000; and Contribute 50% or more toward employees self-only premium costs Note: The maximum tax credit is available to employers with 10 or fewer FTEs and average annual wages of less than $25,000
14 Small Business Health Care Tax Credit In , up to 35% of an employer s premium contribution Employers can still deduct remainder of contribution Credit can be claimed through 2013 For nonprofits the refund is 25 %. In 2014 To take advantage of the credit, business must buy coverage through one of the new small business health insurance Marketplaces known as SHOP Credit can be claimed for any 2 consecutive taxable years beginning in 2014 (or begin in a later year) through the SHOP For nonprofits the refund goes up to 35%. Note that this is a Federal credit, and New Mexico may have additional tax credits available
15 Small Business Health Care Tax Credit Business employs fewer than 25 FTE Employees average annual wages are less than $50,000 Business pays for at least 50% of employees self-only premium costs Up to 35% Federal Tax Credit in 2013 and 50% in 2014 if forprofit entity * SHOP participants only
16 NONPROFIT Health Care Tax Credit Tax-exempt organizations can claim the Small Business Health Care Tax Credit (refund) on a revised Form 990-T. This form is currently used to report and pay tax on unrelated business income. The IRS states that nonprofits are taking the credit against their payroll taxes. A nonprofit cannot take a credit greater than their payroll taxes. Line 25 of this form informs tax-exempt organizations on how to determine the impact of this requirement.
17 Businesses with Up to 50 FTE Employees 50 and above 24 or fewer Number of FTE Employees Up to 50 If an employer chooses to provide insurance to its employees, explore eligibility for Small Business Health Care Tax Credits if size, wage, and coverage requirements met Starting January 2014, if a small business of this size chooses to offer coverage, there is a new streamlined way to do so: Small Business Health Options Program (SHOP) Enhanced SB Health Care Tax Credits available for eligible employers participating in SHOP
18 Affordable Care Act JANUARY 1, 2014: HEALTH INSURANCE MARKETPLACES
19 Health Insurance Marketplace in New Mexico NM Governor agreed to accept Medicaid Expansion provision The New Mexico Health Insurance Exchange (NMHIX) was created by legislation in March and signed by the Governor. Board members appointed in April The NMHIX has been approved by federal government as a Hybrid Exchange (Partnership) for year 1. October 1, Enrollment begins January Individual plans accessed through the Federal Exchange (marketplace)
20 NMHIX SHOP In Small Employers/Nonprofits (50 or fewer FTEs) in NM will have coverage in plans through the NMHIX marketplace called the SHOP (Small Business Option Program) Open ongoing enrollment for small employers/nonprofits You can enroll through a registered broker with the NMHIX or directly through the NMHIX.com web site To take advantage must enroll through the NMHIX SHOP Need to have 50% of your employees participate January Employers with up to 100 FTEs can use SHOP.
21 Health Insurance Marketplaces: Choice and Transparency The NMHIX SHOP will offer employers: A choice of qualified health plans from different private health insurers Meaningful comparison between plans Choice to work with a broker or independently Option to offer employees a choice among qualified health plans across multiple health insurance companies Take advantage of enhanced level of Small Business Health Care Tax Credits
22 New Mexico Health Insurance Exchange: Your number of FTES can grow and still remain in SHOP One of the advantages will be choice. Nonprofits can offer their employees the choice from one to all the plans. The employer receives a single bill from NMHIX. Golden Enrollment- The NMHIX will offer in November 2013, an enrollment period where small employers/nonprofits do not need to have the 50% participation to sign up.
23 Enrolling in NMHIX SHOP: Who, When & How Who is eligible? Employers with generally 50 or fewer FTE employees Starting in 2016, employers with up to 100 FTEs will be eligible to participate Once an employer enrolls, it can grow and still remain in SHOP When can employers enroll? Starting October 1, 2013 for coverage beginning January 1, 2014 Thereafter, throughout the year How can employers enroll? Through a broker registered with the NMHIX SHOP Directly through the NMHIX SHOP
24 Small Employers/NonProfits: If you already provide health coverage to your employees and wish to keep the coverage you have, you can keep it. If you are self-employed with no employees, then you can get coverage through the Individuals portion of the federal Health Insurance Exchange through 2014.
27 How can I get ready for NMHIX SHOP? Learn about and get ready for SHOP. Open enrollment for SHOP starts October 1, Ask your agent or broker about SHOP If you offer coverage, check in with your insurance company. Starting in 2014, small business health insurance tax credits are available only through the SHOP. If you currently get the credit, this is very important to take into account when you make an insurance choice. Have questions about the SHOP Marketplace for businesses with 50 or fewer employees? Call (TTY users: ). Hours: Monday through Friday, 9 a.m. to 5 p.m. EST. Agents and brokers may also use this number
28 You can apply for 2014 coverage as soon as October 1, 2013: https://nmhix.com
29 How SHOP Works: Employer Control and Simplicity Single Plan Option Employer: Chooses which qualified health plan to offer Decides percentage of premiums to contribute toward employee premium Single Metal Level Employee Choice Option Employer: Chooses a metal level Sets a single premium contribution amount for all employees Gets a single bill makes single payment to NMHIX SHOP Employee: Chooses any plan in the designated metal level Pays the difference between employer contribution and plan premium
30 SHOP: Basic Guarantees All qualified health plans offered through the NMHIX SHOP: Will provide essential health benefits o Ambulatory patient services o Maternity (reproductive care) and newborn care o Rehabilitative services o Emergency services o Hospitalization o Mental Health o Laboratory services o Prescription drugs o Pediatric services o Preventive/Wellness/ Chronic disease management Must be licensed and in good standing Offer adequate selection of doctors and hospitals Protect employees against catastrophic costs
31 SHOP: A Market-based Approach Relies on private health insurers Spurs competition for customers based on price and quality, rather than by avoiding risk Uses models pioneered by states
32 The Bottom Line The NMHIX SHOP helps small employers by: Giving employers a choice of health insurance plans Providing apples-to-apples comparisons between health plans Providing exclusive access to tax credits for many small employers Providing the option to offer employees a choice of health plans
33 Affordable Care Act 2015: EMPLOYER SHARED RESPONSIBILITY FOR EMPLOYEE HEALTH INSURANCE COVERAGE
34 Nearly All Small Firms Are Exempt from Employer Shared Responsibility ACA exempts all firms that have fewer than 50 employees--nearly 96 percent of all firms in the U.S. or 5.8 million out of 6 million total firms from any employer shared responsibility requirements. Many firms that do not currently offer coverage will be better able to do so because of lower costs and wider choices in the SHOP Marketplace.
35 Businesses with 50 or More FTE Employees 24 or fewer Employer Shared Responsibility Provisions 50 and above Number of FTE Employees Up to 50
36 Employer Shared Responsibility Provisions: Key Definitions Full-Time Employee: an employee who is employed on average 30 hours or more per week (or at least 130 hours of service in a given month) Full-Time Equivalent (FTE) Employee: a combination of employees, each of whom individually is not a full-time employee because they are not employed at least 30 hours/week, but who, in combination, are counted as the equivalent of a full-time employee --For example, two employees each of whom works 15 hours/week are added together to equal one FTE. Controlled Group Employers: employers with common owners or who are otherwise related are aggregated together to determine whether they meet the threshold number of 50 or more FTE employees
37 Employer Shared Responsibility Provisions If employer meets 50 FTE employee threshold, it is responsible for: EITHER (1) An employer does not offer coverage to at least 95% of its full-time employees (and their dependents), OR (2) (2) The coverage offered to employer s full-time employees is not affordable or does not provide minimum value AND At least one full-time employee receives a premium tax credit in the individual Marketplace Note: An applicable large employer might also be subject to this payment if it offers coverage to at least 95%, but less than 100%, of its full-time employees, and one or more of the full-time employees who are not offered coverage receives a premium tax credit.
38 Employer Shared Responsibility Provisions No employer payment is owed for non-coverage of parttime employees even if they receive a premium tax credit in the marketplace If an employer offers affordable coverage that provides minimum value to a full-time employee who declines it, no employer payment is owed for that employee No payment is owed if an employee obtains coverage through means other than the individual Marketplace (e.g., spouse s family coverage) To avoid payment, employers that offer coverage to fulltime employees must also offer coverage to the dependent of those full-time employees who are children under age 26 (coverage need not be offered to spouses)
39 ACA Offers Strong Incentives for Employers to Continue to Offer Coverage The cost of providing coverage is tax deductible by the employer. By contrast, employer shared responsibility payments are non-deductible. Employers that offer coverage have greater flexibility to tailor the coverage to provide those benefits most valued by their workforce and will enjoy competitive advantage in recruiting and retaining employees.
40 Self-Employed Business Owners and Health Insurance Coverage Starting in January 2014, the individual shared responsibility provision calls for each individual to have minimum essential health coverage for each month, qualify for an exemption, or make a payment when filing his or her federal income tax return. Minimum essential coverage incudes employer-sponsored coverage (including COBRA; retiree coverage; employer coverage through spouse), coverage purchased in the individual market, Medicare, Medicaid coverage, Children s Health Insurance Coverage (CHIP), Veterans health coverage, TRICARE, and others Solo proprietors (business owners without a common law employee), though not eligible for SHOP coverage, may purchase coverage through the new individual marketplace (NMHIX), enrolling October 1, 2013 for open in January Advantage: individuals may qualify for individual premium tax credits and/or cost sharing reductions on a sliding scaled based on income through the New Mexico Health Insurance Marketplace.
41 Other ACA Provisions Impacting Small Businesses Summary of Benefits and Coverage Disclosure Rules Medical Loss Ratio rebates (commonly referred to as the 80/20 rule) W-2 Reporting of Annual Health care costs (unless required to file fewer than 250 W-2s in year prior) Annual tax deductible cap for employee contributions to Flexible Spending Accounts is $2,500
42 ACA Provisions Looking Forward Starting in 2014, plans can t impose waiting periods of more than 90 days for otherwise eligible new hires to begin coverage. Starting in2014, employers may use additional incentives rewards under workplace wellness programs (e.g., max reward increases to as much as 50% for smoking cessation programs). Starting in 2015, employers with50 or more FTEs will have new information reporting requirements detailing health insurance coverage offered. First reports due Also in 2015, there will be new information reporting requirements for issuers of health insurance coverage applies to employers of any size that have self-insured health plans. First reports due 2016.
43 EMPLOYERS NOTICE OF COVERAGE OPTIONS: FLSA 18B Employers who have more than one employee and do more than $500,000 annual volume of business must provide certain notices to employees regarding health benefits available under the HIX and the availability of tax credits. Both employers with group health plans and employers without group health plans are required to provide this notice. Notice requirement applies to all employers subject to FLSA and must be provided to all employees. 18B Model notices available at By no later than October 1, 2013, employers will be providing these notices to current employees and to new hires within 14 days.
44 ENROLLMENT ASSISTANCE Help will be available Toll free number In New Mexico Help in person Navigators- in New Mexico called Health Care guides Agents and brokers Certified Community Assisters OPEN ENROLLMENT October 1, 2013 on going enrollment for small employers/nonprofits
45 Small EMPLOYERS Resources NM HIX DHHS SBA DOL Health Ins Marketplace CMS
46 MORE RESOURCES Affordable Care Act Spanish Internal Revenue Service Small Business Majority Consumers Union www. ConsumersUnion.org/health Kaiser Family Foundation (KFF) reform/ Council of Nonprofits resources Independent Sector NM Center on Law and Poverty Southwest Women s Law Center