With new mandates hitting most small groups this year, here’s what you need to know if you own a small business and want to offer health insurance to your employees:
- Groups under 50 are not required to offer group health insurance.
- All 10 of the ACA’s “essential benefits” must be included in “qualified” health plans. These include outpatient care, emergency service, hospitalization, maternity and newborn care, mental health services and addiction treatment, prescription drugs, rehabilitative services and devices, lab services, preventative/wellness/chronic disease services & treatments, and pediatric services including vision and dental. For groups not currently offering vision and dental, they must purchase coverage for dependents under 19.
- Coverage must be offered to dependent children, but there is no obligation for the employer to pay premiums for dependents.
- Premiums must be “affordable;” that is, the employee’s portion cannot exceed 9.5% of his or her household income.
- Rates are calculated per person on the plan, using a rate table that gives a different rate for the age of each individual. Families are capped at a maximum of 3 minor children. Adult children are charged individually, regardless of how many are in the family.
- If a small group employer wishes to include abortion coverage, it must purchase a separate rider. Abortions are not automatically covered by any ACA Qualified plan.
- There are taxes which took effect January 1st, 2014 which apply to all small group plans, regardless of if they are qualified plans and regardless if the business is a non-profit or not. The tax is higher for PPO’s, roughly 5-7%, and lower for HMO’s, roughly 3-4%.
- If you choose not to carry group insurance, your employees will need to purchase their own qualified plans. They may do so on the Marketplace or directly from an insurance agent or company. We advise that those who do not qualify for subsidies bypass the Marketplace in favor of doing business with an agent or company directly.
- If you choose not to carry group insurance, your employees will be paying premiums with after-tax dollars.
- If you receive a rebate due to the medical loss-ratio rebate provision of the ACA, you must return the same percentage of the premium that was paid by employees back to the employees. For example, if the employee paid 50% of the premium, then they are due 50% of their portion of the rebate. We recommend applying both the employer and the employee portions of the rebate to next year’s premiums, to avoid any tax situations. For more information, speak to your accountant.
*We are not lawyers or accountants, and this information is not to be construed as legal advice.
