Final Rule Released on Health Insurance Exchanges

By: Robert Pusateri, Capstone Brokerage Benefits Consultant, August 21, 2014

Recent provisions were passed that make small businesses exempt from the employer’s responsibility of the Affordable Care Act for 2015. According to the U.S. Treasury Department this will help 96% of employers. Implementation of the Employer Shared Responsibility portion of the ACA now has a provision that will assist a small business owner who offers most of its employee’s health coverage. A business that is considered small is one that has fewer then 50 employees. This is a huge benefit to most small businesses as they are now being awarded more time to become ACA compliant.

If you are a large business owner the provision has also modified when the Affordable Care Act will affect your business. In 2015 employers with more then 100 employees will have to become complaint with the ACA or face penalties. In 2016 a business with 50 or more full-time employees will have to become ACA complaint and offer coverage to most employees to avoid penalties.

For larger businesses (those with more then 100 fulltime employee) the recent provision will help to allow a gradual phase-in of the Affordable Care Act. Large business owners only have to provide health insurance for 70% of the full time employees in 2015 with an increase to 95% in 2016. This is something that will help a business that only offers coverage to an individual who works over 35 hours a week. Thus, allowing time to offer coverage to those who work less then 35 but more then 30.

The final regulation also helps to provide an explanation of unique types of employees. Educational employees who are not working year round due to long breaks from school sessions will not be treated as part-time and will be considered part of a full time count. Volunteers will not be tallied in the employee count and will be exempt from health coverage requirements. Seasonal employees who work only certain times of the year will not be required to be offered health coverage if they work less then 6 months out of the year. Student work study or internships will not be counted as full time employees.

Many small businesses can also qualify for a tax credit that is worth up to 50% of the contribution toward employees’ premium. To determine eligibility of the tax credit there must be less then 25 full time employees. The wages of those employees on average should be less then $50,000 a year. Lastly insurance must be purchased though the states Small Business Health Option Program unless they are not available.

Currently in the United States fewer then 50 percent of small businesses offer their employees health insurance. The Affordable Care Act was enacted in a way to help bridge this gap, however this law has proven to be difficult for the average small business to navigate and for the government to roll out effectively. These latest provisions should help make the transition easier. Having an educated broker is the best bet for a business owner. Maintaining a relationship with your broker can help your business understand the complexity of the law and determine the most cost effective solution to obtain coverage for your employees. After all the biggest problem for small businesses that offer health insurance is the large increase in cost that is hitting the group health insurance market. Now and in the future employers need to be in constant contact with their broker to help to avoid penalties and fees associated with the ACA.