As a result of the Affordable Care Act, beginning in October 2013 (or November 2013 if the exchange is not fully operational), individuals in every state will have access to an insurance marketplace (i.e., insurance exchange) that will offer health insurance beginning January 1, 2014.
A state can (1) choose to establish and operate its own marketplace, (2) partner with the federal government to operate a marketplace, or (3) allow the federal government to operate a federally facilitated marketplace for its residents. The above mentioned insurance exchanges are not insurers nor are they government-run health plans. Instead, they will operate as supervised marketplaces that provide access to an insurer’s qualified health plans (QHPs), and provide information for consumers to compare the various insurance policies offered by the health insurers licensed in a given state.
How Does This Affect My Business?
Currently, the threshold for being considered a “small business” is a business with 50 or fewer full – time equivalents (FTEs). Businesses with more than 50 FTEs are considered “large businesses”. If you have fewer than 25 employees, you may even qualify for the Small Business Tax Credit (to qualify you must pay at least 50% of all full-time employees’ premium costs). Starting in 2014, the Small Business Tax Credit is worth up to 50% of the contribution toward employees’ premium costs (up to 35% for tax-exempt employers). You do not need to offer coverage to your part time employees or dependents. Unfortunately, there are limitations for the claimed credit based on wages paid to your employees.
As a “small business”, you may obtain employee insurance through the Small Business Health Options Program (SHOP), which can simplify the process of buying health insurance. However, no employer is required to offer health coverage if they have 50 or fewer employees. The SHOP can help employer’s (1) control the coverage offered, (2) control how much is contributed towards employee premiums, (3) compare different health plans online to help determine which health plan may be right for your business, and (4) aid in determining whether or not an employer qualifies for the Small Business Health Care Tax Credit. If an employer plans to use SHOP, they must provide coverage to all full-time employees working 30 or more hours per week on average. In several states at least 70% of full-time employees must enroll in the SHOP plan. The SHOP will provide licensed agents or brokers that can assist with the application process for employees, aid in budgeting when determining which plan may be best, and compare prices relative to the coverage and quality received. You can continue to use your current agent or broker to buy health insurance in the SHOP.
If you are considered a “large business”, you generally will not qualify to use SHOP for providing health insurance to employees, and you may be subject to the Employer Shared Responsibility Payment beginning in 2015. Starting in 2016, all SHOPs will be open to employers with up to 100 FTEs.
What If I’m Self-Employed?
If you are self-employed with no employees, you are not considered an employer and will need to look into the individual marketplace for the health coverage options. You are considered “self- employed” if you run an income generating business with no employees. Further, if you hire independent contractors to complete work, you are still considered self-employed.
For more information on each states insurance marketplace and the marketplace overall, please visit www.healthcare.gov.