Health Care Reform – Additional Provisions Affecting Small Employers
In addition to the health care reform provisions affecting all employers, there are some additional provisions that specifically affect small employers. The definition of "small employer" differs for each of these provisions. Please see below for the respective provisions and whether or not they affect you based on your company size.
Health Care Reform Legislation Provisions Affecting Small Employers
1) Small Business Health Care Affordability Tax Credits in 2010
- Effective in 2010 for both grandfathered and non‐grandfathered plans
- Available to employers with less than 25 full‐time (including equivalent) employees with an average annual wage of less than $50,000 per full‐time (including equivalent) employees. In addition, the employer must subsidize at least 50% of the employee‐only coverage
- Dental and vision care qualify as well
- Initial tax credit is up to 35% of employer premium costs, subject to certain caps (up to 25% for non‐ profits). Potential credit up to 50% of employer premium costs in 2014, subject to certain caps (up to 35% for non‐profits) 2) Small Business Wellness Grants in 2011
2) Small Business Wellness Grants in 2011
- Available to employers with less than 100 employees who work a minimum of 25 hours per week who have not previously provided a wellness program
- Grants available until 2015
- To qualify for a grant, employers must design a program that includes the following elements:
- Health awareness initiatives (such as health education, preventive screenings, and health risk assessments)
- Efforts to maximize employee involvement and participation
- Initiatives to change unhealthy behaviors and lifestyle choices (such as counseling seminars and self‐help materials) iv. Workplace policies to encourage healthy lifestyles, healthy eating, increased physical activity, and improved mental health
3) New Form of Cafeteria Plan Available to Small Employers in 2011
- Provides protections for eligible small employers including relief from certain nondiscrimination testing
- Eligibility requirements include employing 100 or fewer employees (on average) during either of the prior two years, 1,000 hours of service during the previous plan year, and minimum employer contributions 4) Access to Small Business Health Options Program (SHOP) Exchanges in 2014
4) Access to Small Business Health Options Program (SHOP) Exchanges in 2014
- Opportunity for small employers to expand purchasing power (i.e., reduce administrative costs, increase competitive pressure on insurers)
- Available for employers with up to 100 employees
- Large employers will gain access in 2017 5) "Play or Pay" Requirement for Large Employers in 2014
5) "Play or Pay" Requirement for Large Employers in 2014
- Employers with less than 50 full‐time employees (including equivalents) are exempt from this provision (i.e., not subject to penalty if do not provide adequate health insurance to employees)
6) Provisions Affecting Affordability of Health Insurance for Employers in the Small Group Market
- Beginning in 2014, there will be a number of limits to what insurers can charge. They may only vary premiums based on scope of coverage (individual vs. family), geography, tobacco use, wellness program participation and age. Age rating is limited to a 3‐to‐1 ratio. Rating can no longer take into account gender, health status, occupation, genetic information or claims history. Deductibles can't exceed $2,000 annually for individuals and $4,000 for families and cost‐sharing can't exceed limits for HSAs.
- Also, beginning with plan year 2010, Health and Human Services and the states will establish a process for the annual review of premium increases. Insurers will be required to justify "unreasonable" premium increases to Health and Human Services and the state, and post the information online.
For More Information
For more information about this ACA Pathways or about any other health care reform-related provisions, please contact your Burnham Benefits consultant or Burnham Benefits at:
This ACA Pathways is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice.
The information contained in this ACA Pathways includes emerging health care news from a limited perspective and does not encompass all views. The information was selected from a wide range of sources selected on the basis of their potential impact on employers and/or their employee benefit plans. For more information, please contact Burnham Benefits.
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