COVERED CA SHOP Eligibility – Small Business Health Options Program
With almost half of all Americans receiving their health insurance from their employer, small businesses play an important role in fulfilling the goals of the Affordable Care Act. Most business owners recognize the competitive advantages of providing high-quality health insurance to their employees. Offering health coverage helps recruit and retain the best talent and keeps employees healthier, happier and more productive.
Covered California is developing a marketplace specifically designed for small businesses with 1 to 50 eligible employees. Covered California is scheduled to conduct open enrollment later this year for coverage that will begin on January 1, 2014. In 2015, Covered California will begin offering health plans to employers with 100 or fewer eligible employees, for coverage effective January 1, 2016. You can enroll in health plans offered by Covered California throughout the year. Unlike the individual marketplace, there is no designated open-enrollment period, giving you the option to either enroll according to your policy’s renewal date or whenever you choose.
Tax credits for small businesses:
As a small business owner, you may qualify for a tax credit to help offset your contribution to your employees’ premium payment. There is a tax credit for businesses with fewer than 25 full-time equivalent employees who are paid an average annual salary of less than $50,000. Starting in 2014, the maximum tax credit is 50% (35% for nonprofits) and is available for a total of two consecutive years. Generally, businesses with 10 or fewer full-time equivalent employees and wages averaging less than $25,000 a year will qualify for the highest credits. To qualify for any tax credit, employers must pay at least 50 percent of employee premium costs. It is an attractive option to offer because of the favorable treatment to both employer and employee.
Employers with 50 or more full-time equivalent employees that do not offer affordable insurance or offer coverage that does not meet minimum standards will be subject to penalties starting in January 2015. Businesses with fewer than 50 full-time equivalent employees that do not provide health coverage will not face a penalty in 2014 but will have new options that make providing insurance to employees even more attractive.
The Department of Labor recently released their inflation-adjusted penalties for ERISA, the Family Medical Leave Act, and the Genetic Information Nondiscrimination Act.
With healthcare premiums continuously increasing year over year, many employers are searching for options to help reduce their benefit costs.
The Employee Retirement Income Security Act (ERISA) oversees group benefit plans, and with the onset of the Affordable Care Act, the ERISA Summary Plan Description (SPD) requirements are in the spotlight.