With the roll-out of the Affordable Care Act coming in January 2014, Maine individuals, and large and small business owners are scrambling to understand just what the law does, or does not, require them do to.
The law’s key provisions – the employer mandate for companies with 50 or more full-time (now designated at 30 hours per week) workers and the launch of health insurance exchanges to help small businesses and uninsured individuals gain affordable coverage, takes effect Jan. 1, 2014.
Small employers are those with fewer than 50 full-time employees (determined by counting the number of employees in a prior year).
Large employers are those with greater than 50 full-time employees (again, determined by counting the number of employees in a prior year).
Full-time, under ACA, is defined as working an average of 30 hours per week. If a company has 40 employees working the traditional 40-hours per week and has another 10 employees working at least 30 hours per week each, under the ACA definition of full-time, that company has 50 “full time equivalent” or FTE employees, and qualifies as a large employer.
Though explained reasonably simply above, there is actually a calculation to fully determine the aggregate number of hours of service monthly for part-time employees (part time means working no more than 120 hours per month).
The calculation is designed to determine, based on a 30-hour full-time work week, whether a company is designated as small (fewer than 50 FTEs) or large (greater than 50 FTEs).
Calculating whether a business is small or large when considering seasonal employees is also a challenge.
Maine has a large workforce of seasonal employees, working in agriculture and tourism, and other businesses that are impacted by those industries.
To fully understand if a seasonal business is defined as small or large under ACA, Joel Allumbaugh, Chief Executive Officer of National Worksite Benefit Group, recommends businesses seek out the most knowledgeable healthcare insurance “broker” possible.
According to Allumbaugh, with time running short, small business owners might do well to consider re-upping their existing health insurance plans in December 2013, to lock in their current plan. “That’ll give them one more year to really find out what the ACA impact will be for them.”
Beginning in 2014, if a small employer purchases coverage through the Health Insurance Marketplace, the company is eligible for a tax credit of up to 50 percent on the company contribution. The tax credits are available on a sliding scale, with firms with fewer than 10 employees getting the maximum credit; and the tax credit will be available for two years.
The non-partisan Congressional Budget Office estimates that approximately 2.6 million small business employees will get coverage through the exchanges in 2014, increasing to approximately 3.7 million employees in 2017 (in part because SHOP eligibility will expand nationwide to all businesses with 100 or fewer FTEs instead of the current provision allowing states to limit participation to businesses with up to 50 employees).
If, however, a small business does not plan to offer health insurance or plans to utilize Maine’s Health Insurance Exchange opening Jan. 1, 2014, the ACA requires those employers notify employees now, since open enrollment begins Oct. 1 – they must send notices to employees by that date, to make them aware that they have an individual responsibility to get coverage and information about the marketplace.
Under the ACA individual mandate, which survived a constitutional challenge, nearly all Americans must have health insurance by 2014.
The marketplace will allow the uninsured to make side-by-side comparisons of different health plans. Maine’s Health Insurance Exchange will offer a Small business Health Options Program or SHOP, focusing on increasing the options for small businesses that want to provide health coverage for their employees.
Allumbaugh however, is wary of this promise. He said ACA is reliant on the healthiest employees opting to have health insurance, and there will be a penalty if they choose not to.
“There’ll be a requirement for individuals to buy, but the consequences to not buy, in my opinion, are not significant enough,” he said.
According to Allumbaugh, the penalty, “starts off at $95 [per year] or 1 percent of income, and I believe that’s adjusted to gross income. It does increase over time, but it never gets close to the payment of a premium,” he said.
That will leave those individuals who are older, and sicker in the pool of the insured.
According to a statement made by Maine Bureau of Insurance Superintendent Eric Cioppa (during a MaineBiz Health Care Reform Forum, Aug. 12), “health care is expensive and will continue to be expensive,” and he does not believe ACA will do enough to contain health care costs.
One reason for Cioppa’s pessimism might be by virtue of ACA/Maine health insurance. Allumbaugh explained, back in 2010 when ACA was proposed, it was thought there could possibly be one health care plan for the entire country.
However, when looking at individual state’s insurance mandates, lawmakers decided it was impossible for a “universal” type plan. They instead opted for the states to figure that out, also requiring that whatever mandates were in existence state-by-state, there would be no rolling back of said mandates.
Essentially Maine’s current mandates were frozen. According to Allumbaugh, “states can now add more mandates, but they can’t roll them back and Maine is a state with some of the most mandates, and that’s going to impact our options,” and affordability, he said.
According to Allumbaugh, all states were told to set health insurance minimum essential benefits based on state mandates, and now “[Maine] we are not only rather unattractive [to any incoming business] we are now uniquely unattractive and nobody is moving toward us now,” he said.
According to Allumbaugh, there’s another snag for businesses, “The insurance industry can no longer sell products with higher than a $2000 deductible,” which might make Maine small business struggle to find an affordable plan.
There does sound like a measurable benefit for those small businesses that offer a SHOP program: those plans are required to provide detailed information about prices, benefits and the level of coverage provided, making apples-to-apples comparisons easier.
According to http://www.health.gov, Maine’s Health Insurance Exchange will start with one plan Jan. 1, and develop more options in 2015. Through the end of this year, the federal government is offering a small business premium tax credit of up to 35 percent of the company’s share of the employees’ premium costs.
To reiterate: to be eligible, a company must have fewer than 25 full-time employees; have an annual average employee wage below $50,000 and cover at least 50 percent of the cost of health insurance.
Starting in 2014, the maximum tax credit increases to 50 percent of the employer’s share of health insurance coverage, but will be available only to small businesses purchasing coverage through SHOP.
That tax credit will be available for two years.
The non-partisan Congressional Budget Office estimates that approximately 2.6 million small business employees will get coverage through the exchanges in 2014, increasing to approximately 3.7 million employees in 2017 (in part because SHOP eligibility will expand nationwide to all businesses with 100 or fewer full-time employees instead of the current provision allowing states to limit participation to businesses with up to 50 employees).
As part of full disclosure for this article as well, Joel Allumbaugh was selected in June 2011, by The Maine Heritage Policy Center, as the new director of MHPC’s Center for Health Reform Initiatives.
The Maine Heritage Police Center is a research and educational organization, which formulates and promotes conservative public policies in Maine.
In 2009, Allumbaugh served as a member of the Maine Coalition to Protect Patient Rights, an organization that united legislators, health providers, health policy experts, business owners and others in opposition to ObamaCare’s government takeover of health care. That year, MAHU, under his leadership, also partnered with MHPC to propose free-market alternatives to ObamaCare.
Allumbaugh, a well-known expert in health insurance regulations and reform, has served on MHPC’s Board of Advisors since 2009.
Ellen McPherson, of the Employee Benefits Solutions, part of the Holden Agency in Portland, is Project and Compliance Manager of Health & Life, with 20 years in the industry. McPherson works with clients to assist in strategy development and has worked in the areas specifically of marketing, product development and legislative affairs.
There are multiple articles by McPherson on the website addressing issues with ACA, at http://www.holdenagency.com.
The Federal Government, at http://www.healthcare.gov, with information there about the Health Insurance Marketplace, and options for signing up for health care beginning Oct. 1. At that site, individuals choose their home state, and information is presented that encompasses all the individual state requirements.
At that site, there’s a step-by-step process to get information, and see what options are available for small business.
Also at healthcare.gov, a Maine small business may choose one of four categories of plans, that offer similar benefits, but differ based on how enrollees and the plan share the costs of care. They are broken down into: Bronze, Silver, Gold and Platinum category plans.
According to the website http://www.healthcare.gov, “the category has nothing to do with the quality of care a plan provides. All plans offered through SHOP must provide a set of essential health benefits.”
The plans outline what employees can expect to pay for deductibles, copayments, and an expected out of pocket for the year, if they need a lot of care.
With SHOP, all employees will pay a monthly premium, and the employer decides up front exactly how much it can afford to contribute to employees’ premiums, giving small business control over the company’s health coverage spending.
The Maine Bureau of Insurance website (http://www.maine.gov/pfr/insurance/ACA_SmallGroup_Index.html) has a complete breakdown of what the individual bronze, silver, gold and platinum plans and comparisons, plus information on Small Group Exchange Plans and Small Group Plan Factors.
