ppaca & small businesses presentation 11/13/2013

8/14/2019 PPACA & Small Businesses Presentation 11/13/2013

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Health CareReform and

Your SmallBusinessDR. ALICE LOUISE KASSENSJOHN S. SHANNON CHAIR OF ECONOMICSROANOKE COLLEGE


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Employer MandateDIFFERENCES BETWEEN SMALL AND LARGE EMPLOYERS


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Employer mandate overview

Beginning January 1, 2015 employers with 50 or more FTEemployees MUST offer health insurance that is: Affordable Offers minimum essential coverage

OR

Pay a penalty

If less than 50 FTE, are not penalized if do not offer

Pay or play mandate


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Employer mandate (50 or more FTE)

Retrieved from http://www.segalco.com/publications-and-resources/multiemployer-publications/capital-checkup/archives/?id=2321#section 11/11/2013

Affordability self-only coverage must notexceed 9.5% of employee householdincome (employer safe harbor: W2 form)

Minimum value a plan must cover 60%of plan costs (rest covered by individualvia cost-sharing techniques)
http://www.segalco.com/publications-and-resources/multiemployer-publications/capital-checkup/archives/?id=2321http://www.segalco.com/publications-and-resources/multiemployer-publications/capital-checkup/archives/?id=2321http://www.segalco.com/publications-and-resources/multiemployer-publications/capital-checkup/archives/?id=2321http://www.segalco.com/publications-and-resources/multiemployer-publications/capital-checkup/archives/?id=2321http://www.segalco.com/publications-and-resources/multiemployer-publications/capital-checkup/archives/?id=2321http://www.segalco.com/publications-and-resources/multiemployer-publications/capital-checkup/archives/?id=2321http://www.segalco.com/publications-and-resources/multiemployer-publications/capital-checkup/archives/?id=2321http://www.segalco.com/publications-and-resources/multiemployer-publications/capital-checkup/archives/?id=2321http://www.segalco.com/publications-and-resources/multiemployer-publications/capital-checkup/archives/?id=2321http://www.segalco.com/publications-and-resources/multiemployer-publications/capital-checkup/archives/?id=2321http://www.segalco.com/publications-and-resources/multiemployer-publications/capital-checkup/archives/?id=2321http://www.segalco.com/publications-and-resources/multiemployer-publications/capital-checkup/archives/?id=2321


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Employer mandate - penalties

2015Although firmsize determinedby FTE, penaltyis only assessedon full-timeworkers (30+hours per week)


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Employer mandate - penalties

Determination and application of employer penalty by type of employee

Retrieved from http://www.fas.org/sgp/crs/misc/R41159.pdf 11/13/2013
http://www.fas.org/sgp/crs/misc/R41159.pdfhttp://www.fas.org/sgp/crs/misc/R41159.pdfhttp://www.fas.org/sgp/crs/misc/R41159.pdf


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Employer mandate (less than 50 FTE)

Choices for small employers: 1. Are not penalized if do not offer point employees to individu

exchanges ( www.healthcare.gov )

2. Employers can buy health insurance from Small Business HealthOptions Program ( SHOP ) (functional at the end of November)

An online exchange (much like the exchange for individuals) Could quality for tax credits to offset costs; not permanent Way of attracting new employees increased total compensation?

3. Work with insurance company/broker to buy group coverage inprivate market (nothing new)
http://www.healthcare.gov/https://www.healthcare.gov/marketplace/shop/https://www.healthcare.gov/marketplace/shop/http://www.healthcare.gov/


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Employer mandate more on SHOP

Open to employers with 50 or fewer FTE employees In 2016 this will increase to those with 100 or fewer FTE employees

Self-employed can use individual exchange, but not SHOP If offer through SHOP, must offer to all FT employees (~30 or more

hours per week)

At least 70% of your eligible employees must enroll in your SHOPplan Employees sign up using the SHOP webpage after you have

selected a plan Coverage will not take affect until approved by employer after

enrollment period is over


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Employer mandate - SHOP rates in area

Family 2 adults age 30, 2 children

Single Parent Family 1 adult age 30, 2children

Couple 2 adults age 40, no children

Plans priced by primary business location$0.00

$200.00

$400.00

$600.00

$800.00

$1,000.00

Adult IndividualAge 27

Adult IndividualAge 50

Family Si ngle Pare ntFamily

SHOP Rates in Roanoke Salem area

Average Median Min Max


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Employer mandate (less than 50 FTE) - example

Fleet Transportation, LLC (Alexandria, VA) Luxury transportation service Offers health insurance to each of its 25 full time employees (moral

responsibility)

Owner David Glazier reports that United Healthcare (provider) is toincrease his rate by over 50% for 2014 Used a broker to find a cheaper Blue Cross/Blue Shield plan, but still more

than current plan He has been using a tax break for small businesses the past three years, but

under ACA benefit only available to those buying from exchange Issues getting on SHOPs site, getting information (time away from running his

business) Strongly considering sending his employees to the individual exchange due to

increased costs
http://www.fleettransportation.com/http://www.fleettransportation.com/


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Employer mandate (indirect effects)

Uncertainty When will SHOP be functional?

How much will insurance cost theemployer?

Its all very confusing and it didnt answer mymain question how much is it all going tocost ? ( Washington Post, 11/7/2013 )

How much time/money will be spentlearning the system?

If choose to offer and use tax credit, willthe benefit be affordable after creditexpires?
http://www.washingtonpost.com/business/on-small-business/health-care-laws-exchange-problems-leave-small-business-owners-in-a-difficult-position/2013/11/06/4bae4d38-4722-11e3-bf0c-cebf37c6f484_story.htmlhttp://www.washingtonpost.com/business/on-small-business/health-care-laws-exchange-problems-leave-small-business-owners-in-a-difficult-position/2013/11/06/4bae4d38-4722-11e3-bf0c-cebf37c6f484_story.html


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Individual MandateDIRECT AND INDIRECT EFFECTS ON SMALL BUSINESSES


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Individual mandate

Beginning in 2014, all individuals must by health insurance withessential benefits

Self-employed individuals can get health insurance through thestate exchanges just as any other individual

If do not buy health insurance, face a penalty (unless have anexemption)

Penalty is the greater of: $95 or 1% of household income over the filing threshold in 2014 $325 or 2% of household income over the filing threshold in 2015 $695 or 2.5% of household income over the filing threshold in 2016


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Individual mandate penalty example

Suppose you are single and earn$40,000 per year. The filing threshold for 2014 for single

individual is $10,250 The amount over the threshold is

$40,000 - $10,250 = $29,750 1% of this is ~$300

Exchange for a single person undage of 49 making $40,000 offercoverage ranging from $120.10/mto $1720.90/month (50 options,Roanoke) All include coverage for doctor v

hospital, maternity/newborn carepreventative care

Qualify for some aid (cut off $45

although Kaiser calculator says twill pay more and not qualify forsubsidy

Pay $300 in penalty or at least $1,4 per year in premiums (risk of penallow since cannot be denied coverag

sick)

Whatwould

you do?


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Individual mandate (indirect effects)

Some individuals will have a newor higher expenditure lessdisposable income

Income determines personalconsumption

Income falls consumption falls demand for goods and services falls(a continuous cycle)

Those businesses operating on asmall margin might find can no longercover average costs of production


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Thank you

Feel free to contact me

Dr. Alice Louise Kassens

[email protected]

(540) 375-2428 (office)

@RnningEconomist

The PowerPoint presentation will beavailable on my blog:

www.therunningeconomist.blogspot.com
mailto:[email protected]://www.therunningeconomist.blogspot.com/http://www.therunningeconomist.blogspot.com/mailto:[email protected]

ppaca & small businesses presentation 11/13/2013

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