The opponents of the Affordable Care Act, a/k/a “ObamaCare” have filed lawsuit after lawsuit trying to gut the law. The Republican led House of Representatives routinely votes to repeal it. It was originally enacted without a single Republican vote in either chamber of Congress. There has seemingly been no chance of harmony when it comes to ObamaCare.
And, yet, the parties and President have actually agreed to 14 changes to the law since its enactment. One of the most important occurred a couple of weeks ago, when the parties and the President came together to make a sensible revision in the ACA that may matter a great deal to small businesses. Essentially, it probably heads off a significant increase in insurance premiums for businesses having between 50 and 100 full time employees (“FTEs”).
Under the ACA, “small businesses” having fewer than 50 FTEs are not required to purchase health insurance for their employees. But if they do, the health insurers providing the coverage must provide ten essential health benefits (a requirement that also applies to individual health plan coverage). The insurers may also vary premiums only based on age, geographic location, family composition and tobacco use. Larger group health insurance plans and self-insured plans do not have to offer the same essential health benefits, so the premiums would typically be lower. But those with 50 or more FTEs are required to provide health insurance coverage or pay a penalty of $2000 for each FTE who receives a federal subsidy after enrolling on a health insurance exchange, excluding the first 30 employees, with the amount increasing over time.
Starting January 1, 2016, businesses having 50-100 FTEs would have also been required to buy insurance that include the essential health benefits. For those employers, insurance rates would almost surely have increased, perhaps by 10 to 20 percent. In short, they, unlike smaller businesses, would HAVE to get insurance; and unlike larger businesses, have to pay higher premiums for policies with essential health benefits.
The tweak to the law allows states to classify businesses of 51 to 100 employees in a manner that avoids the “essential health benefits” requirement, avoiding the premium increase for some 150,000 businesses and their employees. The mandated coverage requirement remains intact.
Also, note, by the way, that businesses with up to 25 full time employees (or equivalent), that pay average annual wages below $50,000, and elect to provide health insurance may qualify for a small business tax credit of up to 50% (up to 35% for non-profits) to offset the cost of health insurance.
Note: in addition to my own review of the ACA, I am indebted to the NFIB’s “The Healthcare Playbook: A Small Business Guide to the Patient Protection and Affordable Care Act (PPACA)” for certain information included in this post.