Affordable Care Act
Obamacare: The Five Questions Most Small Employers Ask
Published on April 03, 2013
We get so many questions from our small business customers about health care reform, that we decided to publish a list of the five questions, and then answer each one.
Most of these answers come from our experienced Small Business team, but you should know that the information changes and is updated all the time, which is why its so important that employers stay up-to-date on the current provisions in the law.
Question #1: Do I have to offer insurance to my employees?
Under the Affordable Care Act, businesses with fewer than 50 full-time equivalent employees are not required to provide health insurance to their employees. Note: On July 2, 2013, the mandate requiring employers with more than 50 employers to provide health insurance was postponed until 2015 (read more).
Employers with fewer than 50 full-time equivalent employees will not face penalties, but that doesn’t mean they should not, or will not, provide health insurance for employees. In fact, there are a number of good reasons why employers choose to provide health insurance today and that will not change in the future.
First and foremost, many wise employers offer health insurance because its better for their workforce. It allows them to recruit and retain talented employees who expect to get health insurance with a job. And, when employees have access to health care, they’re more likely to take care of preventative care, which reduces illnesses, reduces absenteeism, and increases productivity.
Question #2: Will I have to pay a penalty if I do not offer insurance to my employees?
Employers with fewer that 50 full-time (or full-time equivalent) employees will not have to pay any additional taxes, and may actually receive tax breaks when they provide coverage.
As of 2014, large businesses (those with 50 or more full-time workers) whose employees use premium tax credits to buy their own health insurance will be required to pay an assessment.
The assessment for a large employer whose employees opt to buy individual insurance with a premium tax credit (or subsidy) will be $2,000 per full-time employee, beyond the company’s first 30 workers.
Question #3: How will premiums be impacted by the health care law?
The Affordable Care Act includes features that promote transparency and hold insurers accountable for how they spend premium dollars and increase rates. The “Medical Loss Ratio” and “Rate Review” are two features of the health care law that are in place now and making a difference for consumers.
- Medical Loss Ratio: Insurers must, in general, spend 80% or 85% of the premium dollars they take in on health care costs and health care improvement activities. If they do not, they must provide refunds to policy holders.
- Rate Review: Health insurance companies must tell consumers when they want to increase insurance rates for individual or small group policies by an average of 10% or more.
Even with these features in place, many insurers expect health insurance premiums to increase going in the future.
Question #4: Can I continue to use eHealthInsurance as my agent?
Yes! Health insurance agents play a vital role in helping small businesses identify the appropriate health insurance plan for both the employer and employees. Licensed agents from eHealthInsurance, and elsewhere, will still be available to shop for plans from multiple insurers in order to find the right plan and best value for small businesses.
Question #5: What plan options will be available to my business and when can I enroll?
Health insurance companies are in the process of developing products that will meet the new guidelines established by the Affordable Care Act and be available for an effective date of January 1, 2014.
Once those products are available, licensed agents will be aware of it, and be ready to start shopping around for plans and prices, beginning in September of 2013. Agents will be available to assist small employers through the enrollment process and help answer questions related to health care reform.
At eHealthInsurance, our agents shop and compare products from multiple insurers to find a solution that’s optimal for each company’s specific needs. And, we expect new plans that meet health reform standards to be available as early as October, 2013.