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Small business credits:
Small businesses may be eligible for a tax credit of up to
50% of their premium payments if they have 25 or fewer full-time equivalents whose
average annual wages are no more than $50,000. While it is still too early to tell
exactly how competitive the exchanges will be, tax credits coupled with the options in
the exchanges may help your business to provide cost-effective workplace benefts.
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For more information about small business tax credit eligibility see Appendix Chart 2.
Penalties:
Employers with at least 50 full-time equivalents must offer minimum
essential health coverage to their full-time employees or face a penalty.
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In some
cases, it may be cost-effective for employees to purchase coverage through the
exchange, despite the employer’s responsibility to pay a penalty. Discuss the
strategy that is right for your business with your broker or benefts advisor. For more
information about penalties by business size and coverage, see Appendix Chart 1.
State exchanges will have many unique characteristics, but each will offer four levels of
coverage, which vary depending on the proportion of medical expenses the insurance plan
is expected to cover. Of these plans, a “silver” plan (one that pays 70 percent of medical
expenses or actuarial value) will be the benchmark for calculating subsidies. Individuals can
“buy-up” to other plan levels, as well as dental coverage. Additionally, they can purchase
voluntary insurance outside of the public exchange.
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Plan Tiers:
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•
Bronze:
plan pays 60 percent of medical expenses (actuarial value)
•
Silver:
plan pays 70 percent of medical expenses
•
Gold:
plan pays 80 percent of medical expenses
•
Platinum:
plan pays 90 percent of medical expenses
Health insurance reforms and exchanges will provide employees with the option to purchase
insurance directly from the individual market, so individuals will need to better understand
both their options and health risks. While the ACA requires businesses to communicate to
employees about exchanges and potential eligibility for tax subsidies, employees will be
responsible for deciding how they spend their health care dollars. As some employers move
toward defned contribution plans, employees will be in control of how they use and add to
their employer’s contribution.
Currently, many employees are in the dark when it
comes to their employer’s investment. In fact, 43
percent of employees say they do not truly understand
their employer’s contribution to their insurance benefts.
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As health care costs continue to be a concern for many
Americans, it is increasingly important for employees to
understand their benefts options, make smart benefts
decision, and wisely manage their health care dollars.
Important Fact 5:
“Silver” or 70/30
coverage will
be the public
exchange
benchmark.
Important Fact 6:
Exchanges afrm
the importance
of employee
education.
43
%
of employees say they
do not truly understand
their employer’s
contribution to their
insurance benefts.
2