PILOT POINT - Emma Evans, a benefits consultant with Aflac Inc., went to the Pilot Point Chamber of Commerce monthly meeting on Thursday and immediately began addressing a key question in the upcoming health care changes provided by the Affordable Care Act.
“How much am I going to pay?” Evans said was the number one question business owners wanted to know when she addressed chamber members.
Her presentation — “Health Reform in Nutshell: What Small Businesses Need to Know Now!” — covered many basic topics dealing with the upcoming 2014 health care changes, including what penalties will apply if employers do not offer a health care plan and if individuals choose not to participate.
Employers with 1-24 employees
“You won’t face a penalty if you don’t provide coverage,” Evans said. “The main thing that is required by law is that you educate your employees, primarily if they don’t get on the exchange.”
Starting next year, employers will need to keep track of who has health insurance in their companies. Evans suggested employers among the 1-24 group review their coverage and make changes accordingly.
Businesses with fewer than 25 employees that pay annual wages below $50,000 and provide health insurance may qualify for a small business tax credit of up to 35 percent (up to 25 percent for nonprofits) to offset the cost of getting insurance, according to healthcare.gov, the government website that highlights important provisions in the health care law. That tax credit is set to increase by 50 percent in 2014.
Employers with 25-49 employees
In this group, small business owners will not be penalized for not providing coverage but also will not receive a tax credit if they do provide coverage.
“But you still have to educate your employee,” Evans said.
The employers in this group are not required to offer insurance, but they will have the option to participate in the Small Business Health Options program if they choose to offer insurance, according to healthcare.gov.
Employers with 50 or more employees
Among this group, employers face penalties if they do not offer a health plan to their full-time employees or offer coverage that is considered unaffordable.
Starting Jan. 1, 2014, business owners will face a penalty of $2,000 per year per full-time employee if they do not offer a health care plan. Or if the employer offers a coverage that could be considered unaffordable by the employee or is not considered a qualified health plan, employers will pay a penalty of $3,000 for each 30-hour full-time employee who purchases coverage through an exchange and receives a federal tax credit, up to $2,000 per full-time employee, excluding the first 30 employees.
“Just because you have 50 to 60 people, it doesn’t mean you are considered a large employer,” Evans said.
Evans used calculations to determined if a business could fall in the 50 or more employee bracket. For a company with 55 total employees with 40 working full-time or 30 hours and 15 working part-time or 20 hours:
■ Multiply the number of part-time employees by the number of weekly hours worked (15 x 20 = 300)
■ Multiply the weekly number of hours worked by four (300 x 4 = 1200)
■ Divide the monthly hours worked by 120 (1200 / 120 = 10)
■ Add the number of hours from the answer above, with the number of full-time employees (10 + 40 = 50)
“This particular company will be considered a large company because it has 50 FTE [full-time employees],” Evans said.
There is also an 9.5 percent affordability test that allows business owners to determine how much their employees can pay monthly for their health insurance based on their W-2 income.
“You have to offer it to everybody,” Evans told an attendee who asked what would happen if he decided to offer insurance only to his full-time employees. “They don’t have to all take it; they do have options.”
Employers will not be responsible to offer coverage for seasonal employees, those working less than 120 days in a year, Evans clarified.
During the presentation, Evans also spent time talking about the how, under the ACA, insurers will be required to offer four levels of plans: bronze, silver, gold and platinum. Insurers are not required to offer plans in all four levels, but within the health insurance exchanges, all insurers must offer at least one silver and one gold plan, according to healthcare.gov.
In addition to employer penalties, Evans also pointed out that in 2014, there will be a penalty of $95 or 1 percent of the individual’s income, whichever is greater, if they choose not to participate. In 2016, the price is expected to increase to $695 or 2.5 percent.
Sheryl Elrod with Northstar Bank said the presentation gave her a lot to think about.
“It was very educational,” she said. “All you hear is the negative; there are plus and minuses and many things we still don’t know.”
One of those unknowns is how medical exchanges will work in the state of Texas. Last fall, Gov. Rick Perry informed the federal government that the state will not set up an exchange to help people buy health insurance. With Texas refusing to participate, there is uncertainty in exactly how many people will be able to get medical coverage.
As of 2011, 5.7 million Texans — 23 percent of the population — were uninsured. In Denton County, 105,969 people — 15 percent of the population — were uninsured, according the U.S. Census Bureau’s American Community Survey one-year estimates.
“We are not going to be able to control the cost of the care,” Evans said about the many uncertainties still surrounding the health care law. “We are also not able to control how the bill is going to work.”
KARINA RAMÍREZ can be reached at 940-566-6878 and via Twitter at @KarinaFRamirez.