After multiple delays, the Obamacare employer mandate will finally take effect on January 1, 2015. Is your business affected? Where can you get coverage? Here's a quick recap of what's new and what questions you should be asking now.
Is my business affected?
Starting January 1, 2015, businesses with 100 or more full-time equivalent employees must provide health benefits to at least 70 percent of their full-time employees (and 95 percent by 2016) or else pay a $2,000 annual penalty for each employee, excluding the first 30. Businesses with 50 to 99 employees, however, have until January 1, 2016, to comply with the requirement. And firms with fewer than 50 full-time equivalent workers are not required to offer coverage at all.
How do I count full-time equivalents?
In general, the definition of a full-time equivalent is someone who works an average of 30-plus hours per week. But you also have to count part-timers in your calculation--two people working halftime equal one full-timer under the law. If you have lots of variable-hour workers, the calculations can get complicated, and you need to be careful that you don't run afoul of the law. See the IRS website for the excruciating details.
Are there subsidies available?
Yes. Businesses that have 25 or fewer full-time equivalent employees, pay average annual wages below $50,000, and cover at least half of the premium cost for employee's health insurance can qualify for a tax credit of up to 50 percent of employer-paid premiums. Starting with the 2015 enrollment, these small companies must purchase plans through a state or federal SHOP exchange in order to qualify for the credit. The credit is available for two consecutive tax years. (See the IRS website for more information.)
Additionally, larger companies can reduce the number of people they need to cover by making sure that lower-wage workers who may qualify for Medicaid coverage apply for it. This is especially important in states that have approved Medicaid expansion. If workers do qualify for and accept Medicaid, the employer does not need to provide them with health coverage, and can avoid any penalties associated with non-coverage. Benjamin Geyerhahn, the CEO of BeneStream, a subscription service that analyzes business payrolls to identify workers who are Medicaid-eligible, says that 20 percent to 40 percent of employees in industries such as hospitality and home health care could qualify.
Where can I shop for insurance plans?
In almost every state, small groups (with 50 or fewer employees) can can purchase health plans either directly through an insurance provider or broker, or through a state run or federally run SHOP (small business health option program) exchange. (The one exception is Vermont, which requires all small businesses and individuals to buy health insurance through the state exchange.) At Healthcare.gov, you can find out whether your state uses its own exchange or the federal one. Some good news: Starting November 15, small businesses in states that use the federally run exchange will finally be able to compare plans, apply, and enroll in SHOP plans online. Previously, companies had to complete the signup process by mail or in person.
However, if you are considering using the SHOP, keep in mind that coverage options may be limited. Only 14 states allow companies to offer employees a selection of health insurance plans via the SHOP exchange; in the rest, you may select only one plan for all employees. And in many states, the health plans offered through exchanges include smaller networks of doctors and hospitals than health plans purchased on the private market do.
When do I need to act?
In general, you need to enroll employees by December 15 to make sure they are covered by January 1. If you own a company that is not affected by the employer mandate (yet), or want to add new employees to your plan during the year, you can do so at any time. Unlike the individual health exchanges, which have a March 31 cutoff for 2015 plans, the SHOP exchanges offer rolling enrollment.