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or gender, and rate fluctuations are limited to a few general factors: family size or tier, geography,
age (ratio of highest rate based on age to lowest rate based on age cannot exceed 3:1), and
tobacco use (ratio of highest rate for someone who smokes to lowest rate for someone who does
not cannot exceed 1.5:1). For group plans, new rules allow for some rate differentiation (up to 30
percent; 50 percent for tobacco use) based on participation in wellness programs.
Did you know?
Prior to health care reform, only six states required insurers to provide
guaranteed coverage to individuals. Also, the 1996 HIPAA law requires insurance companies
to guarantee issue and renew coverage to small groups. As a result, states already have
guaranteed coverage for small groups with two or more members.
2
Medicaid Expansion
In 2014, states have the option to expand Medicaid up to 133 percent Federal Poverty Level
(FPL). Employees are eligible for premium subsidies only if they don’t have access to Medicaid
and their employer does not offer affordable, minimum value coverage. In states that opt out
of the Medicaid expansion, low-income employees (who otherwise might have enrolled in
Medicaid) might be eligible for subsidies through the Health Insurance Marketplace. Since
employers with 50 or more workers are subject to penalties if any full-time employees receive
a premium subsidy through the Health Insurance Marketplace, employers may face increased
risk of penalties in states where Medicaid expansion does not occur.
Small Business Health Option Program (SHOP) Marketplace
Starting in 2014, small employers*were eligible to participate in the SHOP Marketplace.
Eligible employers that choose to offer insurance through the SHOP Marketplace are required
to offer SHOP Marketplace insurance coverage to all full-time employees. Starting in 2015, the
SHOP Marketplace will provide a premium aggregation service and will send a single invoice
to the employer. The SHOP Marketplace offers two models:
1
| Employer-choice (available in 2014): The employer selects the plans, and employees
can then choose from the employer’s selected options.
2
| Employee-choice (delayed until 2015 and 2016 in some states): The employer selects an
actuarial value
(metal) level, and employees can select from any available plans at the employer’s
selected metal level through the SHOP Marketplace.
*In 2016, employers with up to 100 employees will be considered small. However, in the case of plan years beginning
before January 1, 2016, a State may elect to define small employer by substituting “50 employees” for “100
employees”. Most states are using 50 employees to define a small employer.
Small Employer Tax Credits
While tax credits became available to small businesses starting in 2010, beginning in 2014
small employer tax credit rates increase from 35 percent to 50 percent of the employers’ cost
of health insurance premiums for two consecutive years. The maximum credit will be available
to employers with 10 or fewer full-time equivalent employees with average annual wages of
less than $25,000.
