Your Bottom Line: What the Affordable Care Act Means For Your Nebraska Small Business


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Hosted by the United States Department of Health and Human Services and Small Business Majority. This webinar focused on what the new healthcare law, the Affordable Care Act, means for Nebraska small businesses. It focused on both federal and state provisions to help local small business owners understand how the law will affect them.

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  • We know here at Small Business Majority how small of margins small businesses operate under every month.18% more? Much of this simple economies of scale - right now the small group marketplace is not big enough to compete with large businesses and the sheer number of their employees.**Kaiser study defined small business as <25 employees, Sept.2012**
  • Define terms- Affordable Care Act, ACA, new healthcare lawCongressional Budget Office (CBO), an independent office in Congress, estimates that the ACA will reduce the deficit by by $100B+ by 2020; by $1.3T by 2030Upheld by U.S. Supreme Court-June 28, 2012
  • Pre-existing conditions (2010 for kids, 2014 for adults)More than 100,000 Americans with pre-existing conditions were able to take advantage of PCIPBeginning in 2014, adults will no longer see a pre-existing condition as a barrier to getting insuredLifetime caps phased out by 2014Limit of $750K for 2011$1.25M for 2012, $2M 2013no limit January 1, 2014Adult children-December 2011, 3.1M nationwideEven if married, not living with you, attending school, not financially dependent on you, or eligible to enroll in their employer’s plan
  • Dropping coverageIf either employee or employer makes an unintentional mistake on their paperwork (2010)Preventive care for all new plans (2010) – source healthcare.govCurrently, 54M Americans nationwide with private insurance now have preventative service with no cost-sharing (co-pay)For you: blood/diabetes/cholesterol tests, many cancer screenings, counseling/screenings/vaccines to ensure healthy pregnancyFor your family: well-baby/child visits, routine vaccinations against diseases such as measles, polio, or meningitisCommunity Health CentersFrom HC.GOV – “The National Health Service Corps repays educational loans and provides scholarships to primary care physicians, dentists, nurse practitioners, physician assistants, behavioral health providers, and other primary care providers who practice in areas of the country that have too few health care professionals to serve the people who live there. As of September 30, 2012, there were 228 Corps clinicians providing primary care services in Georgia compared to 53 in 2008.”EDIT- for state-specific data.
  • Tax credit- eligibility and details on how to claimPre-existing condition- eliminating the idea of job lock
  • You can retroactively apply for the credit back to tax year 2010 if you were an eligible small business.
  • Report: Small Business Majority partnered with FamiliesUSA to look at tax credit eligibility and impact.EDIT- Can switch out % for actual numbers from our 2010 tax credit report
  • *Once the business begins offering inside the exchange in 2014*If you’ve never heard of the credit and qualified, it’s still available as an amendment to your 2010/2011 taxes
  • Tax credits on a sliding scale: Up to 25% of premium expenses for 2010–13Up to 35% of premium expenses for any two years beginning 2014Sequestration impactedONLY tax-exempt employers with regards to Small Business Premium Tax Credit and ONLY in 2013From IRS.GOV/ACA – “…cuts include a reduction to the refundable portion of the Small Business Health Care Tax Credit for certain small tax-exempt employers under Internal Revenue Code section 45R. As a result, the refundable portion of your claim will be reduced by 8.7 percent. The sequestration reduction rate will be applied until the end of the fiscal year (Sept. 30, 2013) or intervening Congressional action, at which time the sequestration rate is subject to change.”
  • Credit in 2010 enabled Mark to hire a new employee—someone who had been previously unemployed. Knowing that money was coming back gave Hodesh, who had been on the fence about hiring this person, the confidence he needed to make his move.
  • In 2012, HHS issued proposed rules on wellness programs which would affect plans starting on or after January 1, 2014.Examples of participatory wellness programs: --Programs that reimburse for the full or partial cost of membership in a fitness center--Programs that provide a reward for participating in diagnostic testing programs where reward will not be tied to the outcomeHealth-contingent wellness program- Must meet requirements: Opportunities to qualify for program at least once a yearMaximum reward cannot exceed 30% of employee-only coverage. Maximum for tobacco cessation programs cannot exceed 50% If individual cannot meet standard, alternative means of qualifying for reward must be offered“Reasonable” chance of improving an individual’s health or preventing disease without being overly burdensomeInsurers must disclose that alternative means or possibility of a waiver will be available for qualifying for reward
  • Requires insurers to spend at least 80% of small groups’ premium expenses on medical claims and quality improvement. Limits administrative and profit costs to 20% of premiums collected. If carriers exceed this, they must make up for it by giving back rebates for the difference.An estimated $1.1B given back in 2012 (Department of Health and Human Services)Nationally:Average rebate per enrollee in a small group plans: $174Total rebates: $321M in the small group marketEDIT- for state-specfic data
  • Large marketplace:Purchasing pool to increase buying power and reduce administrative costsTypically small businesses with fewer than 50 workers eligiblePrivate insurance plans compete:Improved competition will increase employer choiceExchange can negotiate with insurers on behalf of small businesses to ensure higher quality and lower costs
  • Similar to Expedia/OrbitzCategory% of health costs covered by the plan: 60%, 70%, 80%, 90%Billing process – once invoice for all plans in the SHOP marketplace, regardless if there are multiple carriers.Employee Choice – Delayed until 2015. This is where streamlined billing will be most helpful, 1 set of paperwork, multiple insurance providers through SHOP.
  • Many small business workers and self-employed entrepreneurs will receive affordability tax credits towards their premiumsUp to 400% of federal poverty level (approx. $90,000 for a family of four)Expanded coverage and individual responsibility requirement – reduce hidden taxWe do presentations with HHS Regional Directors across the country, they site that that hidden tax was about $1000 a year for individuals with insurance. By expanding the individual responsibility requirement, it should help to reduce that for the insured.From Families USA Report - “Private health insurance premiums are higher, at least in part, because uninsured people who receive health care often cannot afford to pay the full amount themselves. The costs of this uncompensated care are shifted to those who have insurance, ultimately resulting in higher insurance premiums for businesses and families.”
  • Important to realize that this is just an OPTION for business owners to purchase insurance, so I would encourage you to begin looking into it in October 2013 to see if this is a better option for you and your employees. Interestingly, your Senators and Reps/staff will be required to use the exchange, so this is just giving them added incentive to create a system that is cost-effective and easy to use…
  • The Employer Shared Responsibility Payment applies to some large employers who don't offer insurance, or offer insurance that meets certain minimum standards – affordable and provides minimum value.If you have 50 or more full-time equivalent (FTE) employees, you may have to make this payment…
  • Source- Family Foundation data in 2011, businesses nationally by size:
  • Source: Congressional Resource Service, June 2010 report:
  • On July 2, the Government announced that the Employer Shared Responsibility requirement is going to be delayed by one year to 2015. As we’ve presented previously, the impact of this delay is minimal do to the small number of affected businesses.The delay means that the Affordable and Minimum Value requirements will also not go into effect until 2015; BUTThe Administration is encouraging companies to voluntarily comply with the requirements in 2014 so they can prepare for the transition in 2015.Is coverage AFFORDABLE?If an employee's share of the premium costs for coverage is more than 9.5% of their yearly household income, the coverage is not considered affordable.You can generally avoid a Shared Responsibility Payment for an employee if the employee's share of the premium for employee-only coverage doesn't exceed 9.5% of their wages for that year as reported on the employee’s W-2 form.Does coverage meet MINIMUM VALUE?A health plan meets minimum value if the plan's share of the total costs of covered services is at least 60%.Rule of Thumb: compare your plan to the “Bronze” level plan in your state’s Insurance Marketplace, all plans in Marketplace meet minimum value.-Seasonal? Yes, if they are full-time that month they will count toward the penalty that month. -Monthly calculation- 1/12 x 3000 for any applicable month or ½ x 2000. Seasonal employees will count only for months where individual is FTE (30 hour/week)
  • - Many Employers = “In general, the FLSA applies to employers that employ one or more employees who are engaged in, or produce goods for, interstate commerce. For most firms, a test of not less than $500,000 in annual dollar volume of business applies.”
  • Your Bottom Line: What the Affordable Care Act Means For Your Nebraska Small Business

    1. 1. Your Bottom Line: What the Affordable Care Act Means For Your Nebraska Small Business Mary Timmel Midwest Outreach Manager Small Business Majority July 2013
    2. 2. Stephene Moore, Regional Director Department of Health and Human Services Region VII
    3. 3. Patricia Brown-Dixon (right) Regional Administrator and Becky Greenwald Regional Advocate of the U.S. Small Business Administration’s Region VII Office
    4. 4. About Small Business Majority • Small business advocacy organization – founded and run by small business owners • National – offices in Washington, DC, Virginia, Ohio, Colorado, Missouri, Ne w York and California • Research and advocacy on issues of top importance to small businesses (<100 employees) and self- employed, including healthcare, taxes, access to capital, clean energy and more • Very focused on outreach to and education of small business owners across the country
    5. 5. Small businesses struggling with costs Soaring cost of insurance – especially for small businesses – 25% of small business owners are uninsured (2012 Kaiser study) 28% self-employed: not covered Small firms pay 18% more than large businesses Our national study: Small business health costs would more than double by 2018 to $2.4 trillion without reform
    6. 6. Small businesses struggling with costs Our most recent opinion survey: Small employers who don’t offer coverage say lack of affordability is the biggest reason (70%) 70% 32% 16% 9% 5% 2% 0% 10% 20% 30% 40% 50% 60% 70% 80% My business cannot afford it My employees get coverage elsewhere I do not believe it is the responsibility of my business to provide health insurance Waiting to see what happens with the federal health care reform law Too much paperwork and administration Choosing the right insurance plan is too complicated Which one or two of the following best describes the reasons you do not provide health benefits?
    7. 7. Small businesses struggling with costs Small Business Majority opinion poll: 72% of those who do offer say they are struggling to do so 72% 28% 0% 20% 40% 60% 80% My business is really struggling to afford the cost of health coverage. (Asked of those who do provide coverage)
    8. 8. The Affordable Care Act • Builds on existing healthcare system • Aims to rein in healthcare costs • Upheld by U.S. Supreme Court • Implementation primarily the responsibility of the states (small business input essential) • Some important benefits went into effect immediately • Others implemented from 2010-2014
    9. 9. Immediate consumer protections • Insurers will no longer be able to deny coverage for patients with pre-existing conditions (2010 for kids, 2014 for adults) • Ban on lifetime caps that set lifetime limits on coverage • Already, 701,000 Nebraska residents, including over 257,000 women and over 192,000 children, will not have to worry about hitting those limits. • Adult children under 26 can stay on their parents’ plan (Sept. 23, 2010) • As of December 2011, 3.1M nationwide and 18,00 young adults in Nebraska have been able to keep their insurance.
    10. 10. Immediate consumer protections • Health plans can’t drop coverage when someone gets sick, or if a mistake is made on their paperwork • First-dollar coverage for preventive care for all new plans • In 2011 and 2012 over 477,000 people in Nebraska, and 71 million Americans, with private health insurance gained preventative service coverage with no cost sharing. • Increased access to care: community health centers • In Nebraska- 6 health centers operating 33 sites serving over 62,500 people have received an additional $678,000 in support from the ACA to expand access to basic healthcare.
    11. 11. Key provisions for small businesses • Immediate tax credits for most small businesses • 2010-2013- Preexisting Condition Insurance Plan for self-employed; pre-existing conditions no longer a barrier for coverage beginning Jan. 1, 2014 • Establishes competitive marketplace for small businesses (SHOP) and self-employed (individual)
    12. 12. Small business tax credits • Available to businesses with employees • Available now (took effect tax year 2010) • Which businesses are eligible?  Fewer than 25 full-time employees  Average annual wages <$50,000  Employer pays at least 50% of the premium cost
    13. 13. Small business tax credits Our report: 33,200 Nebraska small businesses are eligible (93.8% of all businesses); 10,300 businesses eligible for the maximum credit 2,700 10,300 33,200 33,200 Small Businesses That Are Eligible for Premium Tax Credits Non-eligible businesses Eligible businesses Maximum Premium Tax Credits Some Tax Credits
    14. 14. Small business tax credits • 2 in 5 business owners who qualify eligible for max • 19.3M employees work for eligible businesses • Total value of the credit for tax year 2011:$15.4B  An average of $800 in savings per employee
    15. 15. Small business tax credits • Tax credits on a sliding scale: o Up to 35% 2010–13 o Up to 50% any two years beginning in 2014 • Premium expenses: comprehensive medical coverage, incl. dental, vision, long-term care • Tax credits do not cover premium expenses of owners or their families • Can amend your taxes for past years
    16. 16. Nonprofits also eligible • Tax credits on a sliding scale: o Up to 25% 2010–13 o Up to 35% any two years (2014) • Include amount on line 44f of Form 990-T • Does not have to be publicly reported • Refund for tax-exempt employers • Sequestration has affected 2013 levels, go to for more info
    17. 17. Auto repair shop with 10 employees Wages: $250K or $25K per worker Healthcare costs: $70K $24,500 (35% credit 2010-2013) $35K (50% credit 2014) Example: Main Street mechanic
    18. 18. Restaurant with 40 part-time employees 20 full-time-equivalent workers Wages: $500K or $25K per FTE Healthcare costs: $240K $28K (11.7% credit phased out 2010-2013) $40K (16.7% credit phased out 2014) Example: Downtown Diner
    19. 19. Healthcare tax credits help small business owners • Mark Hodesh, owner Downtown Home & Garden Ann Arbor, MI • Pays 75% of employees healthcare premiums ($60K/yr) = $15,000 credit in 2010. “This is finally a chance to get some money back and I put it into the business."
    20. 20. How to claim the small business tax credit • Small employers (businesses or tax-exempt) use Form 8941, available on • Include amount of credit as part of general business credit on income tax returns • Can be reflected in determining estimated tax payments for a year • Applies toward income tax, not employment tax
    21. 21. Wellness programs Wellness programs affect plans starting on Jan. 1, 2014 • Two types of wellness programs: 1. Participatory wellness programs- Do not provide reward OR do not include conditions for obtaining a reward that are based on an individual satisfying a standard related to a health factor. 2. Health-contingent wellness program- Require individuals to meet a specific standard related to their health obtain a reward (namely a specified % of the cost of health coverage)
    22. 22. Medical Loss Ratio: ―80/20 rule‖ • 80% of premium on medical claims & quality improvement • 20% on administrative & profits • Rebates sent to customers if 20% is exceeded • Estimated $1.1B given back in 2012; $321M in the small group market • Over 14,000 families in Nebraska will receive rebates this year, average of $160 per rebate • National average rebate per enrollee in small group plan: $174
    23. 23. Rate review • Insurance companies required to: o Publicly disclose and justify rate increases of 10% + o Explain increase on; each state’s rate review program will give customers a chance to comment • State can approve or reject unreasonable or excessive increase if has its own law • Nebraska Insurance Department has been approved to review rates, and began doing so in 2012
    24. 24. SHOP insurance marketplace Small Business Health Options Program • Large marketplace to shop for health coverage in each state • Private insurance plans compete for your business • Who? Small Businesses with fewer than 50 full time employees • Enrollment begins Oct 1, 2013 • Coverage begins January 1, 2014 RAND study: Expand coverage to 85.9% of small business employees (60.4% today); an increase of 10.5 million workers
    25. 25. SHOP insurance marketplace • One-stop shop web portal Small Business Insurance Marketplace INSURANCE PLANS MARKETPLACE Choice Comparison Billing Tax Credits SMALL BUSINESSES o Compare plans and get detailed information about price, quality and service o Plans organized by category: bronze, silver, gold, plat inum o Calculator to compare costs across plan options o Streamlined billing process
    26. 26. • Small business workers and self-employed receive affordability tax credits (up to 400% of federal poverty level—appx $90,000 for family of four) • Ensure more $$ to medical care – reduced administrative costs • Incentives for administrative efficiency and modernization • Reduce hidden tax State health insurance marketplaces
    27. 27. • Insurance will still be sold outside the state marketplace • Members of Congress must use their state’s marketplace State health insurance marketplaces
    28. 28. • Businesses with fewer than 50 full-time workers – 96% of all businesses – are exempt from any requirement to offer insurance Employer shared responsibility For larger employers starting 2015
    29. 29. Size of American businesses • Kaiser Family Foundation: o 4.8M businesses with fewer than 50 employees (35.7%) offer health insurance o 1.7M businesses with 50 or more employees (95.7%) offer health insurance. Small Business Majority and Kaiser Permanente poll: After learning about features in the marketplace, percentage of California small business owners who said they’d be likely to offer insurance jumped from 32% offering to 42%
    30. 30. For larger employers • Am I above or below 50 full-time employees? – At least 50 full-time employees or combination of full-time/part- time employees equivalent to 50 full-time employees – Full-time employees: at least 30 hours per week – Part-time employees: at least 15 hours a week – Seasonal employees (≤120 days per year) • Size determined annually • Amount owed determined monthly
    31. 31. For larger employers • Potential requirements for larger employers (those with more than 50 employees): – Failing to offer coverage- $2,000 for each full-time employee per year, excluding the first 30 full-time employees – Failing to offer affordable coverage that provides minimum value- $3,000 per year for each full-time employee receiving federal financial assistance in marketplace • What does it mean to be affordable and meet minimum value? • Affordability penalty cannot exceed that of failing to offer coverage. Business will pay lesser of the two
    32. 32. • Two notices available: one for employers who do offer coverage, one for employers who do not. Employee notifications • Many employers are required by the Fair Labor Standards Act (FLSA) to notify employees of coverage options available through the Insurance Marketplace. • Notifications to existing employees must be out by Oct 1, 2013 and all new employees beginning Oct 1 should receive this notice.
    33. 33. • Objective, straightforward resource to help Small Businesses navigate the new healthcare system both in and out of the SHOP marketplace • Step by step guide if employers decide to offer coverage, alternative healthcare options if you don’t • Tools like the Small Business Tax Credit calculator and an action plan checklist
    34. 34. • Interactive website dedicated to the ACA • State specific information on SHOP marketplaces • Compare your existing coverage • Create a pre-enrollment checklist • Oct. 1, 2013 and beyond: buy health insurance right here
    35. 35. Resources • National HHS website: • SBM Coverage Guide: • Our website: o ―What’s in Healthcare Reform for Small Businesses‖ o Healthcare Policy Page o Detailed FAQ o Tax credit calculator
    36. 36. Join our network • Emma Hollister, Network Coordinator • Email: • Direct: (202) 828-8357 Connect with us! @SmlBizMajority Small Business Majority Ways to get involved: Contact • Receive a monthly newsletter • Share your story for media requests • Letters to the editor/Op-eds • State events/Roundtables • Fly-ins • Webinars for business organizations