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The Affordable Care Act and Small Business


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The Affordable Care Act and Small Business

  1. 1. The ACA and Small Business Understanding the Impact of the ACA on Small Businesses in NC
  2. 2. Background on the ACA• The Patient Protection and Affordable Care Act (ACA) was passed March, 23 2010 – The ACA addresses issues related to health care access, cost, and quality• Implementation of the ACA will be phased in over several years – Several provisions directly impact small businesses in NC, including employers who do not currently offer health insurance coverage to employees
  3. 3. Impact on Small Business Small Business Health • Beginning in 2014, each state will have a SHOP Exchange, a health insurance marketplace for small employers to shop for and purchaseOptions Program (SHOP) insurance Small Business Tax • Starting in 2010, some small businesses were eligible for tax credits to Credits help offset the cost of employee health insurance coverage • In 2014, employers with more than 50 employees will be required to Employer Penalties provide health insurance to their employees, or pay a penalty • Starting in 2011, insurers must spend at least 80% of premiums on Medical Loss Ratio health benefits/QI, or pay a rebate to covered small businesses with 50 or fewer employees (85% of premiums for large businesses). Insurance Market • Broader insurance market reforms such as expansion of child coverage to age 26 and elimination of lifetime maximums have applies or will Reforms apply to many small business health insurance plans. • In 2014, all new health insurance plans will be required to coverEssential Health Benefits certain services as defined by the federal government (with state input)
  4. 4. Small Business Health Options (SHOP) Exchange• Beginning in 2014, the ACA requires each state to establish an online marketplace for small businesses, called the SHOP – In NC, employers with 50 or fewer employers will be eligible to participate initially, employers with 100 or fewer employees will be eligible starting in 2016 – The SHOP will allow employers and employees to evaluate insurance options with side-by-side comparisons of plans and premiums – The SHOP will also offer simplified administration for eligibility and billing to employers• The SHOP will facilitate employee choice models• If NC does not establish a SHOP Exchange, the federal government will step in to establish one on NC’s behalf – Regardless of who is running the SHOP, agents and brokers are still expected to play a major role in helping employers and employees purchase insurance through the SHOP
  5. 5. Small Business Tax Credits• Beginning in 2010, the ACA provided tax credits to small businesses that offered health insurance coverage to their employees Small • Employers with under 25 FTEs and average salary under $50,000 are eligible Business Tax for tax credits Credits pre- • Employers must contribute at least 50% of health insurance premium costs 2014 • Maximum credit is 35% of total employer premium (25% for non-profit employers) Small • The maximum credit increases to 50% of total employer premium (35% for Business Tax non-profit employers) Credits Post- • This credit is only available for two consecutive years 2014 • Employers will only be eligible for the tax credit if they purchase coverage through the SHOP exchange• The tax credit levels vary by firm size and average wages• Based on estimates from the North Carolina Institute of Medicine, small businesses in NC may be eligible for over $200 million in tax credits
  6. 6. Employer Responsibility• Large employers will be required to provide health insurance coverage to employees beginning in 2014 or pay a penalty 50 or more FTEs with 50 or more FTEs without Less than 50 FTEs Employer-Sponsored Employer-Sponsored Insurance Insurance May be required to pay May be required to pay $2,000 penalty perEmployer penalty does not $3,000 penalty per employee, if any employees apply employee if coverage is are eligible for federal deemed unaffordable subsidies to purchase health insuranceEmployer Responsibility under the Affordable Care Act. Kaiser Family Foundation: Health Reform Source.
  7. 7. Premium Rebates and Insurance Market Reform Medical Loss Ratio Requirements and Market Reforms for Insurance Offered to Rebates Small Businesses• Medical Loss Ratio standards were • Prohibition on lifetime/annual dollar established requiring insurers to limits for key benefits spend at least 80%/85% of premiums • Dependent coverage to age 26 on medical services and quality • Recommended preventive services improvement activities or pay refunds covered with no cost sharing* to small/large businesses and their • The group’s claims history no longer employees. used for setting premiums*• In 2012 in North Carolina, insurers • In 2014, premiums based only on age, paid $900K in rebates to small geography, tobacco use, benefits, and employers and $14.7 million to large family coverage level* employers. • In 2014, elimination of pre-existing condition exclusions on all individuals * Provisions do not apply to “grandfathered” plans
  8. 8. Essential Health Benefits• Beginning in 2014, non- • Ambulatory services grandfathered health • Emergency services insurance plans will be • Hospitalization required to provide at least • Maternity and newborn care • Mental Health/Substance Abuse the services listed services (including behavioral• A benchmark plan will be health) selected to serve as the • Prescription drugs baseline for covered services • Rehabilitative/Habilitative care • Lab services• All insurers must offer the • Preventive and Wellness same (or equivalent) services services and chronic disease as covered under the management benchmark plan • Pediatric services (including oral and vision care)
  9. 9. Questions