Health Care Reform FAQs for Small Businesses

Will I be able to keep the group plan I have now?

You will definitely be able to keep your small group coverage through your renewal date in 2014. After that, all plans will have to conform to all Health Care Reform guidelines, so there may be some changes to your plan options. Some insurers are offering rate guarantees and contract extensions through November 30, 2014.

Will there be penalties if I do not offer coverage?

If you have less than 50 “full-time equivalent” (FTE) employees, there will not be any penalties. To calculate your FTE’s, you take your number of full-time employees (work 30 hours or more/week). Then add up all of the hours of your part-time employees and divide by 120 hours/month and add to your full-time employees to get your total FTE’s. The Employer Mandate which does charge penalties for companies > 50 FTE’s has been delayed until 2015.

Will I have options on the Federal Exchange?

The SHOP program is the small business portion of the Federal Exchange. Like individuals, employers will be able to see and choose from multiple plans like individuals do on the Individual Exchange. In 2014, only employers with <50 FTE’s can use the SHOP exchange. In 2016, employers can have up to 100 FTE’s and use SHOP. In 2014, the employer will have multiple options to choose from, but will only be able to offer one plan. In 2015 and beyond, employers will be able to offer multiple plans. You can use a broker to help you determine which SHOP plan is the best for your organization at no cost to you.

What happens if I drop coverage entirely?

See #2. In 2014, no employer will face any penalties. In 2015 and beyond, large employers may be subject to penalties. Based on the income make-up of your workforce and your potential small group premium, it may even make sense in some cases to drop coverage and offer employees a stipend to get individual insurance on the Exchange and potentially qualify for tax subsidies. This is a very case-by-case decision and you should work with your broker to determine the best choice for your business.

How can I use an HRA or defined contribution program going forward?

You will not be able to use an HRA or defined contribution program if you drop coverage and let employees get coverage on the individual Exchange (you can’t get the tax deduction from the defined contribution and then have employees get another tax subsidy through the Exchange).  There will still be the current HSA/HRA and defined contribution types of plans in the SHOP Exchange or through private insurance companies.

Are there any forms I need to provide to my employees to comply with the new law?

Starting with the 2013 tax year, you will have to report the aggregate cost of any employer-sponsored health coverage (the employer and employee portions) on each employee’s W-2. By October 1st, you must also provide documentation to all employees informing them of the existence of the Exchange/Marketplace, the services offered, and ways to get more information. A Model Statement can be found on the Employee Benefits Security Administration website. Starting in 2012, employers must also make sure that their employees get a copy of the Summary of Benefits Covered (SBC). This should be provided by your small group insurance carrier.