If you’re the founder of a startup or small business, figuring out healthcare options for your employees is probably not on the top of your list of passions. But it’s definitely something you need to think about to keep your team happy (which is why we pulled together this resource).
Quick refresh from U.S. Department of Health & Human Services: The Affordable Care Act put in place comprehensive health insurance reforms that have improved access, affordability, and quality in health care for Americans.
Open enrollment season for individual plans opens up in a little over a week. This is the time where individuals can start, stop or change their health insurance plan. While this deadline doesn’t necessarily apply to businesses, it does mean your employees not covered under your corporate plan only have 45 days to figure out healthcare plans that start January 1, 2017, and a little over three months to make any and all changes to their health insurance for 2017. If you’re a new business, or your hiring new employees, you want to be ready to offer your team the right coverage should they need it.
Here are quick answers to your top questions about Open Enrollment
What are my options as a startup/small business?
Businesses with 50 employees or fewer can offer Small Business Health Options Program (SHOP) plans to their employees. Further, the Health Connector makes it easy for small business owners to understand the differences and similarities between plans to choose the best one. You can buy coverage through the Health Connector directly or through a broker, and there are no membership fees if you use it as your source for group coverage.
Do I need to offer my employees health coverage?
If you have under 50 employees, the short answer is no. You can choose to offer insurance through the SHOP Marketplace or any other source. But you don’t have to, and you don’t face a penalty if you don’t.
If you have more than 50 employees and you don’t offer insurance, or if your coverage doesn’t meet certain standards & affordability (as outlined here by the IRS), you should pay attention to the Employer Shared Responsibility Payment. You may owe a payment if at least one of your employees uses the Health Insurance Marketplace and receives a premium tax credit.
When is my enrollment period then?
It varies, but most businesses choose their plan in the fall. Further, if an employee wants to leverage their own health coverage plan, they must decline your plan during the enrollment period (another reason to keep your team very well informed of your healthcare options).
Can I set it and forget it?
Nope, you have to take action every single year to keep your healthcare plan active. Don’t drop the ball.
You should give your employees 60 days notice so they have some time to plan and make a decision. The SHOP Marketplace provides a helpful example timeline for renewal and a page of resources to tap when you’re actually ready to renew:
Example of SHOP renewal timeline
- Coverage ends: December 31
- Start renewal planning: November 1
- Make renewal offer to your employees: November 16
- Employees must respond by (if you provide 2 weeks): December 1
- Submit your completed enrollment: Any time before December 15
- New coverage takes effect: January 1
What are the costs to me and my employees?
Obviously it depends on the plan you choose and what you intend to cover, if anything, for your team. Within the marketplace, you can sort by plans and prices. Ultimately, you decide how much of your employees’ premiums you want to pay – no minimum or maximum to be aware of.
Important to note: you must pay your first month’s premium after you enroll in the SHOP Marketplace no later than the 15th of the month so it can be processed, otherwise they’ll cancel your enrollment. From there, you’ll get an invoice around the 10th of the month and payment is due in full on the first of the following month.
Are there fines if I don’t follow these guidelines?
No, your coverage will be cancelled though. There are tax forms however that need to be filed by a certain date to avoid fines (see below).
I want to leverage a broker – where should I search to find one?
It depends which state you’re in but BetterHealthConnector.com has a useful directory.
What and how should I communicate all of this to my employees?
The SHOP Marketplace application will offer you a bunch of options in order to help you create your coverage plan, such as
- Whether to offer your employees one plan or a choice of plans
- Whether to offer coverage to part-time employees
- Whether to offer medical coverage, dental coverage, or both
- How much of your employees’ premiums you’ll pay
- Whether to offer coverage to dependents
- When coverage starts
- How long new employees must wait before they get a coverage offer
Once you’ve figured out these answers, you’ll have a list of plans to choose from by price, and will receive all the information needed to share with employees.
Are there any tax implications I should know about or breaks I can take advantage of?
As for tax implications, yes. Here is a great resource on the forms that need to be filled out by the employeer and when – Forms 1095-B and 1095-C are due by Jan. 31, 2017, and you will be fined hundreds of dollars per day per full time employee affected. Yikes.
As for tax breaks, that’s also a yes. You may qualify for the Small Business Health Care Tax Credit which provides employer health care tax credits if you have fewer than 25 full-time equivalent employees making an average of about $50,000 a year or less.
If you don’t go with a plan from the Marketplace, talk to a tax advisor as you might incur tax penalties if they don’t meet ACA standards.
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