Small Group (Under 50 Employees)
Resource Guide
Changes and Considerations
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An independent licensee of the Blue Cross and Blue Shield Association. U7430b, 2/11
Health Care Reform and Employers
+ Many major provisions take effect in 2014:
▪ Individual mandate
▪ Exchanges
▪ Subsidies
+ Employers will have many new considerations:
▪
▪
▪
▪
Employer mandate: large employers may pay penalties
Calculations for determining full-time equivalent employees
Some tax credits may be available
New reporting requirements
2
Calculating FTEs to Determine Employer Size
Number of
Full-Time*
Employees
Total
Part-time**
Hours /
120
Total Full-Time Equivalent Employees (FTEs)
* Full-time employees are defined as those who work at least 30 hours per week
** Part-time exempts seasonal employees (employed fewer than 120 days)
Example
Meets
Requirements
of a Small
Employer
A firm has:
• 25 full-time employees that work 30+ hours
• 10 part-time employees who all work 24 hours per week
(96 hours per month, per employee)
These part-time employees’ hours would be
treated as equivalent to 8 full-time employees:
10 employees x 96 hours/120 = 1,920/120 = 8 FTEs
25 Full-time + 8 Full-time equivalents = 33 FTEs
Small Group Exemption
+ Small businesses with fewer than 50 full-time employees (or
equivalent full and part-time employees) are EXEMPT from:
▪ Penalties related to the employer mandate provision of the Affordable
Care Act (ACA)
▪ ACA requirement to offer affordable coverage
Small Business Tax Credits – 25 or Fewer FTEs
≤ 10 Full-Time
Employees
≤ 25 Full-Time
Employees
Maximum Average
Annual Wages
Up to $25,000
Up to $50,000
Percentage of Premium
Paid by Employer
At least 50%
At least 50%
Maximum Potential
Credit 2010-2013
Up to 35% of employer
premium payment (25%
for tax exempt firms)
Scaled, dependent on
average wages & FTEs
Maximum Potential
Credit 2014 – on
Up to 50% of employer
premium payment (35%
for tax exempt firms) up
to 2 years
Scaled, dependent on
average wages & FTEs
Calculating Employees and Average Wages
for the Small Business Tax Credit
Total
Number of
Hours Paid
in Given
Year
Total Wages
Paid in
Given Year
2080
FTEs
FTEs
Average
Annual
Wages
BCBSNC Tax Credit Calculator
http://www.bcbsnc.com/content/campaigns/taxsavings/index.htm
Reporting Requirements
Source: Ernst & Young LLP 2012
Employer
requirement to inform
employees of
coverage options
Reporting of enrollment
in health insurance
coverage
Employers subject to
Fair Labor
Standards Act
Self-insured
employers, insurers
Distributed to
Employees
IRS
TBD – Delayed until
future guidance issued
Effective 1/31/2015
Fees & Assessments
+ Health Insurer Tax Fee
▪
▪
▪
▪
New sales tax on health insurers
2014 tax amount = $8 billion
2018 tax amount increases to $14.3 billion
Tax increased based on premium trend thereafter
+ Reinsurance Fee
▪ Applies to all issuers and self-insured group health plans
▪ Fees will fund reinsurance program 2014 – 2016 to stabilize premiums
in individual insurance market
▪ Proposed annual fee is $63 per enrollee in plan
Fees & Assessments, continued
+ Comparative Effectiveness Research Fee (PCORI)
▪ Applies to insurers and self-insured for policies or plan years ending
after 9/30/12 thru 10/1/19
▪ Funds research on effectiveness of medical treatments and
prescription drugs
– FY2013 $1 per covered life
– FY2014 $2 per covered life
– FY2015 on – indexed
+ Tax on “High Value Plans” (“Cadillac” Plans)
▪ Beginning in 2018
▪ 40% excise tax imposed on insurer & self-insured on total annual
value of employer-sponsored coverage that exceeds
$10,200/single, $27,500/family (value includes employer/employee
contributions)
Employer Considerations
Coverage Options
ACA
Compliant Plan
Defined
Contribution Plan
Employer
continues
offering coverage
that is compliant
with ACA
Employer
provides funding
that employee
uses to purchase
their choice of
health insurance
Exchange
Employer uses
Exchange to provide
health insurance
coverage
• Small Employers
2014-2016 (50 and
below)
• Small Employer 2016
(100 and below)
• Large Employers in
2017 (State option)
Source: Deloitte Consulting LLP: HR Executive Series 7/11/12
Existing Provisions (Already in Effect)
Individual
Market
Small
Group
Market
Large
Group
Market
SelfInsured
Children’s Preexisting Conditions
(2010)
Yes
Yes
Yes
Yes
Rescissions (2010)
Yes
Yes
Yes
Yes
Yes
Lifetime Limits (2010)
Yes
Yes
Yes
Yes
Yes
Annual Limits
Restrictions (2010)
Yes
Yes
Yes
Yes
Preventive Care
(2010)
Yes
Yes
Yes
Yes
No
Age 26 Adult Children
(2010)
Yes
Yes
Yes
Yes
Yes
Medical Loss Ratio
(2011)
Yes
Yes
Yes
No
Yes
Unreasonable Rate
Review (2011)
Yes
Yes
Yes
No
No
Provision
Grandfathered
Does not apply to individual
coverage, but applies to all
other grandfathered
coverage
Does not apply to individual
coverage, but applies to all
other grandfathered
coverage
Future Provisions
Individual
Market
Small
Group
Market
Large Group
Market
SelfInsured
Grandfathered
Modified
Community Rating
(2014)
Yes
Yes
No
No
No
Essential Health
Benefits (2014)
Yes
Yes
No
No
No
Actuarial Value
(2014)
Yes
Yes
Same as Essential
Health Benefits
No
No
Out of Pocket
Maximum (2014)
Yes
Yes
Yes
Yes
No
Annual Limits –
eliminated (2014)
Yes
Yes
Yes
Yes
Does not apply to individual
coverage, but applies to all
other grandfathered coverage
Clinical Trials
Coverage (2014)
Yes
Yes
Yes
Yes
No
Employer Mandate
(Pay or Play)
(2014)
No
No
Yes
Yes, if
applicable
large employer
Yes
Provision
Future Provisions
Provision
Individual
Market
Small
Group
Market
Large
Group
Market
Self-Insured
Grandfathered
High-cost Plan
Excise Tax
(Cadillac Tax)
(2018)
No
Yes, remitted
by issuer
Yes,
remitted by
issuer
Yes, remitted
by plan
administrator
Yes
Nondiscrimination
rules for insured
plans (TBD)
No
Yes
Yes
Similar prior
requirement
No, though selfinsured plans
must observe
prior
requirement
regardless of
grandfather
status
Essential Health Benefits
+ ONLY non-grandfathered small group and individual plans
must cover
+ 10 categories
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Ambulatory patient services
Emergency services
Hospitalization
Maternity and newborn care
Mental health and substance use disorder services, including
behavioral health treatment
Prescription drugs
Rehabilitative and habilitative services and devices
Laboratory services
Preventive and wellness and chronic disease management; and
Pediatric services, including oral and vision care
Other Considerations
+ Exchanges and premium tax credits may make individual
coverage more affordable for a firm’s employees
+ Recruitment and retention may be more difficult if employers
don’t offer coverage
+ ACA includes several provisions to help employers establish
or continue wellness programs:
▪ In 2014, employers are allowed to apply up to a 30 percent premium
contribution differential (HHS may raise this to 50%).
▪ In 2014, $200 million over a 5 year period will be available for wellness
grants for employers with fewer than 100 employees that work 25 hours
or more per week.
Key Considerations & Next Steps for Employers
+ Assess impact of health care reform provisions on workforce
▪ Do your employees value your company differently, if it doesn’t provide
health insurance as a benefit?
+ Determine applicability of employer penalties
▪ Small Employer Groups (fewer than 50 full time employees) are EXEMPT
+ Consider other financial and tax implications
+ Assess your current benefit designs
+ Prepare for complying with tax and other reporting requirements
Thank You!
This document is for educational and discussion purposes only
and is NOT intended to provide legal advice.
This document reflects information gathered to date.
Please note that due to the changing nature of health care
reform, BCBSNC recommends continued monitoring of
legislation and regulations related to the topics contained herein.
An independent licensee of the Blue Cross and Blue Shield Association.
®, SM Marks of the Blue Cross and Blue Shield Association.
SM1 Mark of Blue Cross and Blue Shield of North Carolina.
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2013 BCBSNC. All rights reserved.