By Amira Wazeer
Does your business employ at least 1 employee? Then the answer is yes, a full-time employee (FTE) is generally defined as an employee who works an average of at least 30 work hours a week or 130 work hours in a calendar month.
A full-time-equivalent employee (FTE) is calculated based on the hours worked of full-time and part-time employees making an average of less than $50,000 per year.
Businesses that provide health care coverage through the SHOP may be eligible for federal tax credits if, for the tax year, they have 24 or fewer full-time-equivalent employees who are paid an average annual salary of less than $50,000.
The credit can be as much as 50 percent of the employer’s contribution toward health insurance premiums (35 percent for non-profit employers).
The amount a small business can earn in tax credits varies by number of employees and average wages — a smaller business can get a higher tax credit. Businesses with less than 10 employees and annual wages of less than $25,000 will receive the highest credits.
Let me define employee: An employee performs services for a firm under an employer-employee relationship. An employee receives a W-2 and is listed on your wage and hour reporting. Contractors and independent consultants are not considered employees.
Sole proprietors, partners, and owners of a corporation are not eligible to purchase small group coverage as a group of one unless they have at least one employee who is not their spouse or domestic partner.
To sum it up If you have 1- 24 FTE you are eligible to purchase small group health coverage in your state and may qualify for federal small business tax credits if you purchase coverage through the government-sponsored small business health insurance marketplace, the SHOP.
However, this is not your only option; your small business coverage options now vary greatly and understanding them all can save time, money and jobs.
Employers with fewer than 50 full-time equivalent staffers are not required to provide health coverage and will not be penalized if they do not do so. If your business is exempt and still chooses to purchase small group coverage from the federal health insurance marketplace (the SHOP) here is how it works.
I am going to use my state of Georgia for an example however; each state may vary. Coverage began in January 2014. (Although the federal mandate does not take effect until 2015 for business with 50 or more employees.)
In Georgia, the new federally-sponsored health insurance marketplace (also called an exchange) will include a specific program for small businesses called the Small Business Health Options Program, or the SHOP Marketplace.
This year, 35 states will offer a SHOP program. Other states may have state run exchanges but all states are required to have an exchange.
The SHOP offers coverage for employers with 50 or fewer full time employees.
By selecting a SHOP Marketplace Plan, employers with 24 or fewer full-time-equivalent employees (“Full-time-equivalent employees” is calculated based on the hours worked of full-time and part-time employees making an average of less than $50,000 per year) may qualify for a federal small business tax credit.
Open enrollment is continuous so you can sign up and begin offering coverage at any time during the calendar year.
Several companies are offering plans through the SHOP For 2014, health plan issuers participating through the SHOP in Georgia include:
Blue Cross Blue Shield
Depending on your zip code, you’ll have a choice of multiple health plans in your area.
Plans will offer similar benefits and standards to make it easy to compare coverage
All plans in the marketplace must be Qualified Health Plans Under ACA regulations, this is a plan certified by the health insurance marketplace.
It provides coverage of the essential health benefit package, follows established limits on cost sharing (like deductibles, copayments, and out-of-pocket maximum amounts), and meets other requirements.
( See healthcare.gov for what services might be essential health benefits under the ACA) including quality standards, service area requirements, network adequacy standards.
Starting with plan years beginning on or after January 1, 2014, the ACA requires all non-grandfathered small group commercial plans (with some exceptions, such as retiree and dental-only plans) to cover 10 categories of essential health benefits, as defined by ACA regulations.
Like individual health care plans offered on the exchange there will be four main levels of coverage — bronze, silver, gold, and platinum — also known as metal levels.
Each level has a different actuarial value, which is the percent that the health plan issuer will pay for covered essential health benefits
Platinum — 90 percent actuarial value
Gold — 80 percent actuarial value
Silver — 70 percent actuarial value
Bronze — 60 percent actuarial value
The plans within each metal level will offer similar benefits, which will make it easier for you and your employees to compare coverage options.
Rates are identical for metal level plans.
Employers select a plan and decide how much to contribute
Employers choose the specific plan design and contribution level. The minimum employer contribution level is 50 percent of the selected plan.
Employers may be eligible for federal tax credits
You can visit healthcare.gov, at the small businesses tab, to compare SHOP Marketplace Plans from multiple health plan issuers and see pricing information. You do not need to register.
Enrollment for SHOP is through an agent, broker, or health plan issuer
To enroll in a SHOP Marketplace Plan, contact your agent, broker, or health plan issuer. Let them know you want a SHOP Marketplace Plan.
You cannot enroll in SHOP coverage at healthcare.gov at this time. The federal government plans to offer online enrollment at healthcare.gov for SHOP Marketplace Plans for plan years beginning Jan. 1, 2015.
To find out how much your business may be eligible for see the Federal tax credit calculator available at healthcare.gov site.
Contact your broker or the health plan directly.
You may also wish to call the federally-operated SHOP directly at 1-800-706-7893, 9:00 a.m. – 7:00 p.m. EST, Monday through Friday. TTY users should call 1-800-706-7915.
Option # 2
Purchase small group health care coverage directly from a health plan through a broker.
The changes in the health care market place opened the door for insurance products and discount cards for those who cannot pay the premiums for exchange plans.
Clients can now “bundle short term medical plans with dental, vision, critical illness, and disability income plans to provide coverage for them and their employees.
These plans do not provide the mandated coverage and will not prevent paying the ACA penalties but with the savings realized they offer great coverage and may be a bargain.
A major drawback is they do not cover any pre existing illnesses. Check with your agent to see what plans they offer.
Continue the plan you have.
According to the Kaiser Family Foundation, the health care law allows businesses already offering insurance to keep their current plans.
These “grandfathered” group plans — plans in place before March 23, 2010 — don’t have to meet the same criteria as new plans offered on the exchange.
Among other provisions, they don’t have to offer the aforementioned essential health benefits or cover free preventative care.
When purchasing your coverage directly from a health plan issuer, you have the advantages of: Maintaining your relationship with your current health plan issuer(s) and saving the time and effort necessary to research and purchase new coverage.
If your plan has covered at least one employee and continued with no major benefit or employee contribution changes since the ACA was signed into law on March 23, 2010, as well as met other requirements, it may be considered a “grandfathered” plan.
Not all health plan issuers offer “grandfathered plans.” If offered by your current health plan issuer and if you qualify; a potentially wider selection of medical, dental, and vision plan designs may be offered than offered in the SHOP.
What’s different in 2014?
Plans will be available in four main coverage levels as outlined above.
Plan rates will be calculated using new rules the rates for 2014 plans are based on a number of factors, such as the type of plans you’re offering to your employees and whether your plans are grandfathered or non-grandfathered.
If you currently offer small group coverage, this could significantly impact your 2014 premiums. Your health plan issuer will provide you with rate information.
Plans cannot have a waiting period of longer than 90 days from the date of eligibility. This refers to the time period an employee must wait prior to his or her group health coverage becoming effective.
By purchasing small group coverage (Health coverage specifically designed for small businesses or non-profit organizations with 50 or fewer employees or as defined by the health marketplace in your state) directly from a health plan issuer, your business won’t be eligible for the federal small business tax credit.
Next step: Contact your agent, broker, or health plan issuer. Let them know your decision.
Advise your employees to purchase their own coverage
Instead of offering coverage to your employees through a small group health plan, you can advise them to obtain or purchase their own health coverage.
If you are considering dropping coverage for your small group employees, please talk to your broker or current insurance provider to discuss your options and the possible individual penalties.
Under the ACA, you are not required to offer coverage to your employees. However, beginning Jan. 1, 2015, this will change for employers with 50 or more full-time-equivalent employees – “full-time-equivalent employees” is calculated based on the hours worked of full-time and part-time employees must.
Employers of 50 or more who don’t offer minimum essential coverage to full-time employees and their child dependents may face potential tax penalties.
If you don’t offer coverage through your business, your employees are responsible for obtaining or purchasing their own coverage.
Your employees may be able to obtain coverage through a spouse, partner, or parent’s employer-sponsored coverage, by purchasing individual or family coverage (directly from a health plan or through the individual exchange In the individual marketplace (or exchange) individuals and families will be able to research, compare, and purchase health coverage from multiple private health plan issuers.
(Amira Wazeer is a state licensed and federally certified insurance agent with over 14 years experience. She specializes in Medicare plans, Affordable healthcare plans, dental and vision plans, Life insurance for diabetics and Janazza (final expense) insurance. Consultations are free. Need a speaker at your upcoming events or have Questions and comments contact firstname.lastname@example.org or call 404-202-1926.)