Q 31: Are health insurers required to sell their small group plans through the Marketplace?
For 2014, two insurers currently offering small group health insurance plans – Anthem and Maine Community Health Options -- have chosen to sell their plans through Maine’s Health Insurance Marketplace. Both are offering plans in the bronze, silver, and gold tiers. Off the Marketplace, they and several other health insurers may offer plans; as plans are approved, information will be added to the Bureau’s website. It’s important for small employers to understand all of their options. Small employers may ask a navigator, or licensed agent or broker for information about what’s available.
Q 32: How are small employers defined?
In Maine law, a small group or employer is defined as “any person, firm, corporation, partnership, association or subgroup engaged actively in a business that employed an average of 50 or fewer eligible employees during the preceding calendar year” (for more details, see Title 24-A, M.R.S.A., §2808-B(1)(D) http://www.mainelegislature.org/legis/statutes/24-A/title24-Asec2808-B.html).
Beginning in 2016, employers with up to 100 employees will be eligible to buy small-group health insurance coverage through the Maine’s Health Insurance Marketplace.
Q 33: Can sole proprietors buy small group coverage either through the Maine’s Health Insurance Marketplace or in the outside market?
Federal law does not let health insurers sell small group plans to self-employed individuals with no common law employees, whether they are doing business as sole proprietors or as corporations. For a sole proprietor to qualify for small group coverage, the business must have at least one employee who is not the owner or the owner’s spouse.
Q 34: Do small employers have to offer health care insurance to their employees?
The ACA doesn’t require most small employers to offer health insurance coverage to their employees. (See Question 35, below) Small employers who want to provide coverage may be eligible for a tax credit.
If the employer does offer coverage, however, the coverage must meet the ACA’s minimum standards for all insurance plans, as well as specific requirements that apply to the small group market, such as coverage of the essential health benefits.
Q 35: Is employer-based coverage required to cover dependents (spouses and children)?
It depends on the size of the employer. Beginning in 2015, if an employer with 50 or more full-time equivalent (FTE) employees doesn’t offer coverage that meets minimum standards to employees and their dependents, and employees access premium tax credits through the Marketplace, the employer may have to pay a tax penalty. However, the proposed rules about employer shared responsibility have interpreted the phrase “and their dependents” to mean children under age 26, but not spouses. For more information, see www.irs.gov/pub/newsroom/reg-138006-12.pdf.
Employers with fewer than 50 employees aren’t required to offer coverage to employees or their dependents. However, it is important to understand that “large employer” is defined differently for purposes of the employer mandate than it is for purposes of access to coverage. For purposes of the employer mandate, employees are counted on an FTE basis. This means, for example, that an employer with 47 full-time employees and 4 half-time employees has 51 total employees but only 49 FTE employees. This means the employer would buy its insurance coverage in the large group market (not the small group market) but it would still be exempt from the employer mandate as a small employer. On the other hand, an employer with 50 employees, all of them full-time, would buy its insurance coverage in the small group market but would be subject to the employer mandate as a large employer – beginning in 2016, many more employers will fall into that intermediate category, because employers with 51 to 100 employees will become eligible for small group coverage, but they will remain subject to the employer mandate as long as they have at least 50 FTE employees.
Also, if employer-based coverage includes children, the ACA requires the employer to let children up to age 26 stay on their parent’s policy. Adult children can stay on their parent’s policy whether or not they live in the parent’s home, are married, or the parent no longer claims them as a dependent on their tax return. The employer can require the employee to pay for this coverage, however.
Q 36: How do employers with full-time and part-time employees know whether they’re required to offer health insurance?
All employers will want to assess whether they’ll be considered to have at least 50 full-time equivalent employees once the federal calculation to determine this is finalized. Penalties will be assessed starting Jan. 1, 2016, against employers with 50 full-time equivalent employees not offering health coverage in 2015 if an employee gets the premium tax credit through the Marketplace.
Below are links to the IRS proposed regulation and notice of delayed implementation:
Q 37: How do employers find out if they’re eligible for the small employer tax credit?
For an employer to qualify for federal small business tax credits, the employer must: (1) have fewer than 25 full-time equivalent employees; (2) pay employees an average annual wage that’s less than $50,000; and (3) pay at least half of the insurance premiums.
In 2014 the maximum tax credit will increase from 35% to 50% and will only be available to small employers buying health insurance through a Marketplace.
Contact the Maine’s Health Insurance Marketplace at www.healthcare.gov or 1-800-706-7893 for more information. A competent tax advisor also should be able to advise a small employer. FMI: http://www.irs.gov/uac/Small-Business-Health-Care-Tax-Credit-Questions-and-Answers:-Calculating-the-Credit.
Q 38: Are small employers required to buy a health plan for their employees through Maine’s Health Insurance Marketplace?
No, small employers may buy health insurance for employees through the Maine’s Health Insurance Marketplace or in the market outside the Marketplace. It will be important for small employers to understand and compare all available options. State-licensed health insurance agents and brokers are available to help small employers determine which plan best meets their needs.
Q 39: Is there a cost for small businesses to participate in Maine’s Health Insurance Marketplace?
There’s no fee for small employers to use Maine’s Health Insurance Marketplace.
Q 40: Can insurers charge more (or less) for policies sold through Maine’s Health Insurance Marketplace?
No. Although the Marketplace may charge insurers a fee to sell their products through it, insurers must charge the same for similar plans whether they’re sold through the Maine’s Health Insurance Marketplace or in the market outside of the Marketplace.
Q 41: Are there participation rates that insurers can require employers to meet to be eligible to buy small group coverage through the Maine’s Health Insurance Marketplace or in the market outside the Marketplace?
Health insurers offering plans in the small group market outside Maine’s Health Insurance Marketplace may impose participation requirements consistent with Maine law. However, a small employer that can’t meet minimum participation rates must be allowed to buy coverage during an annual enrollment period that begins Nov. 15 and extends through Dec. 15 of each year. Maine law doesn’t allow a health insurer to impose more stringent requirements on small employers seeking coverage than 75% of all eligible employees and dependents who do not have other coverage.
For coverage offered through Maine’s Health Insurance Marketplace, employers must meet a 70% participation requirement, except during the open enrollment period. However, the participation ratio is calculated differently. Outside the Marketplace, eligible dependents are included in the calculation if the employer offers dependent coverage, but within the Marketplace, only employees are counted. Also, employees with individual coverage are considered “nonparticipating” on the Marketplace, but are excluded from the calculation outside the Marketplace.
Q 42: What happens if an employer’s staff increases to more than 50 employees after the employer bought coverage through Maine’s Health Insurance Marketplace?
The employer still will be eligible to buy health insurance through Maine’s Health Insurance Marketplace as long as the employer had 50 or fewer employees at the time they first bought coverage and maintains continuous coverage through the Marketplace.
Q 43: If a worker has access to employer-based coverage, can an employer make the worker wait before becoming eligible for benefits?
Yes, employers may require a waiting period before individuals become eligible for benefits. Under the ACA, this waiting period can’t be longer than 90 days. For more information, contact your employer’s human resources department.
Q 44: Can a consumer with access to employer-based coverage get a tax credit to buy a plan through Maine’s Health Insurance Marketplace?
Only in certain circumstances. A consumer who has access to employer-based coverage is free to buy a plan through Maine’s Health Insurance Marketplace, but tax credits are available only if the employer’s plan isn’t affordable or doesn’t provide minimum value. Coverage isn’t affordable if the cost of employee-only coverage under the employer plan costs the employee more than 9.5% of the employee’s annual household income. The plan doesn’t provide minimum value if it pays for less than 60% of medical costs that the plan covers. HHS and the IRS have developed a minimum value calculator at www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/mv-calculator-final-4-11-2013.xlsm.
An employer can provide its employees with a minimum value written statement stating whether the plan is above or below the 60% threshold. Consumers will receive this information when they shop through Maine’s Health Insurance Marketplace. A navigator, consumer assistor, or insurance broker or agent also should be able to help.
FMI: http://www.irs.gov/uac/Newsroom/Questions-and-Answers-on-Employer-Shared-Responsibility-Provisions-Under-the- Affordable-Care-Act.
Q 45: If a consumer has employer-based coverage, can that consumer’s spouse or dependent child get a tax credit to buy coverage through the Marketplace?
If the spouse or dependent child can enroll in the consumer’s employer-based plan, and the plan provides minimum value as described above, the spouse or child isn’t eligible for the tax credit unless the coverage is unaffordable for the employee. The cost of coverage for the spouse or child is not taken into account in the affordability calculation.
Q 46: Will consumers be better off with individual coverage through Maine’s Health Insurance Marketplace rather than employer-sponsored coverage?
It depends on many variables. Whenever a consumer compares plans, the consumer needs to consider both the up-front premium costs and the plans’ benefits and cost sharing requirements, and how well they fit the consumer’s personal circumstances. In addition, when comparing individual and employer plans, the consumer must also compare how much premium and cost-sharing assistance (if any) the Marketplace would provide for individual coverage, with how much premium assistance (if any) the employer would provide for group coverage. Employer-sponsored coverage might cost less than coverage through the federal Marketplace, even if the consumer is eligible for premium tax credits.
Rates are available for plans offered through Maine’s Health Insurance Marketplace and for plans in the Marketplace on the Bureau’s website.
Q 47: Do large employers have to offer health care insurance to their employees? What about seasonal employees?
Under the ACA, if a large employer doesn’t offer affordable coverage that provides minimum value to full-time employees (and their dependents1), and an employee gets a premium tax credit through the Marketplace, the employer has to pay a penalty. For employer-based insurance to be considered affordable, the premiums for the plan’s employee-only option must be less than 9.5% of his or her annual household income. To offer minimum value, the plan must pay at least 60% of the medical costs for services the plan covers. The Federal government has developed a calculator at www.cms.gov/CCIIO/Resources/Regulations-and- Guidance/Downloads/mv-calculator-final-4-11-2013.xlsm, under the “Plan Management” section, where consumers can enter information and get an estimate of whether a plan provides minimum value.
Large employers are defined for this purpose as having 50 or more full-time equivalent (FTE) employees. Full-time employees are defined as working 30 hours or more per week. The number of additional full-time equivalent (FTE) employees is determined by adding the number of hours of service in a month for all part-time workers and dividing by 120 hours per month.
Employers with a large seasonal workforce (such as agricultural workers hired for the harvest season or retail clerks hired for the holiday season) are given leeway under the ACA to not count seasonal employees to decide if they meet the definition of a large employer. If the employer has more than 50 FTE employees for 120 or fewer days per year, the employer doesn’t have to count those employees for those months.
There’s detailed information in the IRS proposed regulation: at www.irs.gov/pub/newsroom/reg-138006-12.pdf.
Q 48: What are the penalties if large employers don’t provide coverage?
Large employers may have to pay a tax penalty if they don’t offer affordable coverage that provides minimum value for at least 95% of their full-time employees and their dependents, or all but five full-time employees (whichever is greater), and at least one of their employees gets premium tax credits through Maine’s Health Insurance Marketplace.
The penalty for not offering coverage will be $2,000 multiplied by the number of full-time employees. The first 30 employees are exempted in the count. The penalty will be imposed starting Jan. 1, 2016, for coverage not offered in 2015.
The payment for offering coverage that isn’t affordable or doesn’t give minimum value is $3,000 multiplied by the number of full-time employees who receive premium tax credits. (The maximum payment may not be greater than the penalty that would have applied if the employer did not offer coverage.)
Medicaid-eligible employees can’t get premium tax credits, so employers will not face penalties for employees who receive Medicaid coverage, or for employees’ children who receive coverage through the Children’s Health Insurance Program (CHIP).
Q 49: What other ACA requirements apply to large employers?
A number of ACA requirements apply to non-grandfathered health plans that large employers offer on either an insured or self-insured basis. The requirements include: limits on out-of-pocket expenditures and waiting periods, no annual or lifetime dollar limits on coverage or cost-sharing for preventive services, the requirement that coverage be offered to adult children up to age 26, and the requirement of access to internal and external appeals. Also, large employers will be eligible for guaranteed issue of health insurance beginning in 2014, but not through the Marketplace, and the coverage will not be subject to the same rating requirements as small group coverage.
1 The proposed rules implementing employer-shared responsibility provisions have interpreted the phrase “and their dependents” to mean children under age 26, but not spouses. Final regulations have not yet been issued. www.irs.gov/pub/newsroom/reg-138006-12.pdf