As a business owner, you may have heard a lot of buzz about Obamacare’s “employer mandate.” Maybe you’re still wondering what it is and whether it applies to you. The short answer is that if you have fewer than 50 full-time-equivalent (FTE) employees, you don’t have to worry about the employer mandate. (For a definition of FTE, see the end of this article.) The mandate requires only larger companies to offer health coverage to employees.
That said, there are plenty of important things for owners of smaller businesses to know about Obamacare. Here’s a summary of key points for Connecticut business owners who have between one and 49 employees:
You aren’t legally required to offer health insurance to your employees. If you have fewer than 50 FTEs, whether or not to provide coverage is entirely up to you.
You may be legally required to notify your employees about Obamacare. Whether or not you choose to provide insurance, if your business is covered by the Fair Labor Standards Act, you must notify all your employees about Obamacare’s basic provisions before October 1, 2013 — and you must notify all new hires after that. The U.S. Department of Labor has published sample notices you can use. There’s no penalty under the law for failing to provide notice.
You can purchase health insurance for your employees using Connecticut’s small business marketplace. The small business marketplace is often called the SHOP, shorthand for the Small Business Health Options Program. You can find Connecticut’s SHOP at Access Health CT.
Beginning October 1, 2013, you can use the marketplace to compare health plan prices and features, find out whether your business qualifies for a cost-saving tax credit, and purchase a new plan. For now, the small business marketplace is available only to businesses with 50 or fewer employees. For coverage year 2016, however, the marketplace will be open to employers with up to 100 FTEs.
Your business may qualify for a tax credit. If you have fewer than 25 FTEs and purchase employee insurance through the marketplace, you may qualify for the “small business health care tax credit.” The credit is available to businesses with employees whose average annual wages are less than about $50,000. You must also pay at least 50% of your employee’s health insurance premiums. If your business qualifies, the credit could cover up to 50% of your contribution toward your employee’s insurance — 35% for nonprofits.
You have new rights under the law. No matter where you purchase your employee health plan, insurance providers can’t turn down your company based on your employees’ health status, including pre-existing conditions. Nor can they charge higher premiums for women or employees with high medical costs. (These protections don’t apply to grandfathered plans — those created before March 23, 2010 that meet certain additional requirements.)
For more information about your rights, contact the Connecticut Insurance Department.
If you use the small business marketplace, you must offer coverage to all of your full-time employees. That means people who work for you an average of 30 or more hours per week or 130 hours per month. This calculation does not include employees covered by another plan, such as Medicare, Medicaid, or the military — but it does include full-time workers with private plans.
To use a marketplace plan, at least 75% of the employees to whom you offer coverage must sign up for it. If your business doesn’t meet the minimum participation requirement, you may still be able to sign up for a plan during a special enrollment period at the end of this year. Ask a marketplace representative or your broker for more information.
What Does “Full-Time Equivalent” Mean?
Under Obamacare, a full-time employee is defined as one who works an average of 30 hours per week, or at least 130 hours per month. To figure out your business’s number of FTE’s, you need to add together the hours of full- and part-time employees. For instance, if you have two employees who work 15 hours per week, that equals one full-time worker.
That Was Then…
Businesses may be able to buy health insurance through what are called association health plans under a planned federal rule change. President Donald Trump signed an order directing his administration to write rules that would allow groups and associations of employers to sponsor coverage that can be marketed in multiple states.
Under current rules, insurance must be purchased in a state where a consumer lives or a company is located. Rules formulated under Trump’s order would be expected to protect association health plans from some state and federal requirements. However, they’re not likely to affect insurance policies until 2019 at the earliest because of the process for writing federal regulations.
Under the version that passed the House, states would be able to create their own list of “essential health benefits.” Those benefits — currently set by the Obama-era health care law — determine services on which large employer plans cannot impose annual or lifetime coverage caps. There also must be an annual out-of-pocket spending maximum for those covered.
Under the Republican bill, large employers would be able to use the essential health benefits definition from any state, that’s where the impact could come. For example if Alabama opts to cut a cluster of health care protections, employers could potentially use Alabama as a benchmark,”
Where to Get Help
Visit Connecticut’s small business marketplace. As the Obamacare rollout continues, more information will be available from the SHOP at Access Health CT or 855-SMBIZCT (855-762-4928).