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Confusion About the Affordable Health Care Act

According to critics Obamacare (a/k/a the Affordable Care Act) - and yes they are one and the same - will cause the end of the world as we know it, but no one can tell us why. Well, since it is the law - even getting approval from the Supreme Court - we should get to know it before we bury it.

There are lots of good things about the Affordable Care Act ("AC A") that will have already helped millions of people: no denial of coverage for pre-existing conditions and coverage for adult children who still live at home or attend college until age 26 are two glaring examples. When Congress wrote the law, the idea was to maintain people's current health insurance coverage, to protect consumers, and to cover the uninsured. These goals have been accomplished.

But, due to the bombardment of negativity, most small business owners expect the ACA to adversely affect their businesses. The reality is that most small business owners don't know what to expect. But, there are benefits to small business owners and their employees. All of the negativity surrounding the 2,000 page act has clouded any understanding of the ACA. There will be changes, but no one is sure how it will all shake out. The fact remains that small business owners must offer benefits like health insurance to attract and keep good employees.

So let's cover some simple facts to help understand the ACA.

Employers with less than 50 full-time employees are not required to offer health insurance coverage under ACA. However, all businesses, regardless of size, are required to notify their employees about the ACA marketplaces on October 1.

October 1 Deadline: On October 1, 2013 all employers must notify employees if they have coverage or not -- and what their rights and benefits are. This will be a challenge to all businesses, particularly small businesses which deal primarily in temporary or part-time employees.

October 1 is also the date the Health Insurance Marketplace enrollment begins. These are the health insurance marketplaces created by the ACA. This is where uninsured people can enroll to get insurance. However, coverage will not begin until January 1.

What are the Duties of an Employer?

If your company has employees, you should provide a written notice to its employees about the Health Insurance Marketplace by October 1, 2013, but there is no fine or penalty under the law for failing to provide the notice. The notice should inform employees:

  • About the Health Insurance Marketplace;
  • That, depending on their income and what coverage may be offered by the employer, they may be able to get lower cost private insurance in the Marketplace; and
  • That if they buy insurance through the Marketplace, they may lose the employer contribution (if any) to their health benefits

The U.S. Department of Labor has two model notices to help employers comply. There is one model for employers who do not offer a health plan and another model for employers who offer a health plan or some or all employees:

  • A sample Model Notice for employers who offer a health plan to some or all employees is available on line here.
  • Get a Model Notice for employers who do not offer a health plan here.
  • The model notices are also available in Spanish and MS Word format here.

Employers may use one of these models, as applicable, or a modified version. More compliance assistance information is available in a Technical Release issued by the US Department of Labor.

Tax Breaks for Small Business Owners: While health insurance costs are high for small businesses, the ACA promises lower rates bringing relief in 2015 when competitive, state-based, small-business insurance exchanges, or online marketplaces, formed under the ACA are scheduled to be up and running nationwide.

Businesses with less than 25 employees and which offer health insurance to their employees qualify for a credit of up to 50% of the premiums. You can calculate the credit yourself. The offer will continue in 2014, but beginning on January 1, 2015 the credit will apply only to companies that sign up for plans through a new Small Business Health Options Program (SHOP) located on the online Health Insurance Marketplace.

Health Insurance is not Required to be Carried by Small Businesses

Small Business Owners fear the cost of insurance for their employees. In fact, a large number of small businesses do not carry insurance for their employees and will still not be required to carry it. However, how a small business tackles the changes to health insurance will affect the business bottom line - and every employee's personal budget.

The Illinois Department of Insurance still has not completed the setting up of the Illinois SHOP and is still studying what can be done to help employers with less than 25 employees. The Health Insurance Exchange is being developed by the State of Illinois to promote and facilitate the provision of health coverage by small businesses. The SHOP should be established in 2014 under the Affordable Care Act (ACA).

Restaurant Owners: Restaurants, landscapers, construction and retail businesses have the lowest rate of insured hourly workers. There will be changes to businesses that rely primarily on part-time workers. Some businesses are converting some employees to full-time and begin offering health insurance to full-time workers to take advantage of the benefits offered by SHOP. This will prevent good employees from looking for work elsewhere to obtain health insurance.

Workers who work less than 30 hours a week are not required to be covered, which is why many restaurants are cutting employees' time to less than 30 hours per week. However, this may not be a good business decision since good employees will leave to find jobs that offer more time and coverage.

In addition to a list of various business-related taxes, small employers who choose to offer health care plans must meet a specific list of health services and treatments. But, the plans cannot cost more than 9.5 percent of an employee's salary.

Current Benefits of the ACA Everyone has Enjoyed
  • Premium subsidies to people with limited incomes who purchase health insurance through a Marketplace.
  • More people who have a limited income are able to apply for Medicaid.
  • Insurance companies can't put annual dollar limits on health coverage.
  • Insurance companies can no longer deny anyone health coverage because of
  • a pre-existing condition.
  • People on Medicare get discounts of 52.5% on brand-name prescription
  • drugs and 28% on generic prescription drugs while in the doughnut hole.