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Top 5 Things Small Employers Need to Know About Health Care Reform

With confusion swirling around health care reform, many small businesses don’t know where to begin navigating these landmark changes.  As a result, they may have delayed taking action. With key provisions and deadlines of the Affordable Care Act (ACA) taking effect, failure to engage will create problems and could negatively impact employees. The key message is: Engage with professionals now. Here are five things small businesses need to know about health care reform:

  1. Large vs. small business.  The rules employers need to follow differ greatly depending on whether the employer is considered a “large” or “small” business.  This is determined by calculating the number of full time equivalents (FTEs).  Small businesses with under 50 FTEs are not subject to penalties for not offering coverage to employees. Large businesses with 50 or more FTEs are subject to penalties beginning in 2015. Many of the provisions that require businesses to offer coverage do not affect small businesses.
  2. Make sure you are in compliance. There are many provisions that small employers need to comply with if they offer coverage to their employees.  Luckily the burden of most of these compliance issues will be transferred to the carrier to implement.  However, every employer subject to the Fair Labor Standards Act (which is most employers), must submit to their employees the Department of Labor Notice of Coverage options by October 1, 2013, regardless of whether the employer offers coverage or not.   Those who have not yet met this requirement are encouraged to use the model notices posted at MI Health Answers.
  3. Changes to the price of insurance. The rules regarding how coverage is rated (i.e., priced) change for small employers beginning January 1, 2014.  There are multiple impacts to rating rules related to the age of the employees and their dependents, restrictions on previously used rating standards, and new taxes and fees.   The overall effect for these rules mean that many small employers may see very large rating changes at their renewal, some getting cheaper and others getting more expensive. Consult with your agent to assess what factors will affect your rates.
  4. Know your purchasing options. The ACA introduces new purchasing options into the market.  One option that is getting most attention is the creation of the new Health Insurance Marketplaces.  There are two types of marketplaces that have been created, one for businesses and the other for individuals.  Employers seeking coverage for their employees can use the Small Business Health Options Program (SHOP) Exchange.  This will be open for business October 1, 2013.  However, you can continue to purchase insurance through your agent and directly from your carrier as you always have.
  5. Have a communication plan for your employees.  Regardless of what the employer decides to do regarding offering coverage, many of the effects of ACA will get passed on to the employees.   Unfortunately, many employees do not understand how health care reform will affect them.  Employers may choose to stop offering coverage or begin offering coverage if they haven’t before, which could increase costs for employees or restrict coverage options. It is imperative that employers keep lines of communication open and clearly explain how employees are affected and why things are changing.  This is the best way of maintaining a satisfied workforce as the impacts of ACA take shape.  Employee engagement and consumerism will be key factors in keeping coverage affordable for individuals.

What is MI Health Answers?

The Detroit Regional Chamber is helping the business community and their employees prepare for the impacts of the Affordable Care Act through our MI Health Answers educational program.  MI Health Answers will provide employers and employees with customized answers to their questions and opportunities to talk with ACA experts.  Our goal is to ensure that consumers are connected to the resources they need to get the most out of their health care dollar.  Employers and employees can get started now by visiting us at mihealthanswers.com.

This post was contributed by Jonathan So (Senior Director, Healthcare Customer Segment, Detroit Regional Chamber)