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Health reform offers benefits and protections for businesses large and small. It aims to make providing health coverage to employees more affordable and accessible through the small business tax credit, the Early Retiree Reinsurance Program and more.

What Businesses Should Know About Health Reform

• Small businesses with fewer than 50 employees are eligible for a tax credit to help offset the cost of purchasing health insurance. Read more about small business tax credits.

• Starting in 2014, small businesses will be able to shop for and compare health insurance plans through a Minnesota Health Insurance Exchange. Read more about an Exchange.

• Through the Early Retiree Program, large and small employers can receive financial assistance in providing health coverage for early retirees. Read more about the Early Retiree Program.

• Employer plans that were in effect on March 23, 2010 are grandfathered plans under the Affordable Care Act and do not need to comply with all of the insurance reforms under the law.  Read more from the Minnesota Department of Commerce about grandfathering of health coverage.

I am a small employer with less than 50 full-time employees. Does health reform contain a mandate requiring me to provide health insurance to my employees?

No.  Health reform does not require small employers to provide health insurance for employees.  Small employers will also not be required to pay an assessment if they do not provide affordable health coverage to employees.  However, health reform does provide for a small business health care tax credit for small employers that choose to provide insurance to their employees.  The IRS has published details on the new small business tax credit on its website (IRS.gov).

I have heard that employers are going to have to pay a penalty if they do not provide coverage for their employees. Is that true if I am a small employer?

No.  While there are penalties in certain situations for larger employers, small employers with fewer than 50 employees are not subject to the penalties.

I have 75 employees. Will I be required to provide insurance for my employees?

Employers don’t have to offer their employees health insurance coverage, but most of them with more than 50 employees will pay an assessment if they don’t, or if they offer coverage that isn’t affordable.

Employers with 50 or more employees that do not offer minimum essential coverage would pay $2,000 for each employee over the first 30 employees if one of their employees gets a tax subsidy to buy insurance under an Exchange.

Employers with 50 or more employees that do offer minimum essential coverage but have at least one full-time employee receiving subsidized coverage under an Exchange would pay whichever is less: $3,000 for each employee receiving a premium credit, or $2,000 for each full-time employee.

I am a small employer with less than 50 full-time employees. Does health reform contain a mandate requiring me to provide health insurance to my employees?

No.  Health reform does not require small employers to provide health insurance for employees.  Small employers will also not be required to pay an assessment if they do not provide affordable health coverage to employees.  However, health reform does provide for a small business health care tax credit for small employers that choose to provide insurance to their employees.  The IRS has published details on the new small business tax credit on its website (IRS.gov).

I have heard that employers are going to have to pay a penalty if they do not provide coverage for their employees. Is that true if I am a small employer?

No.  While there are penalties in certain situations for larger employers, small employers with fewer than 50 employees are not subject to the penalties.

I have 75 employees. Will I be required to provide insurance for my employees?

Employers don’t have to offer their employees health insurance coverage, but most of them with more than 50 employees will pay an assessment if they don’t, or if they offer coverage that isn’t affordable.

Employers with 50 or more employees that do not offer minimum essential coverage would pay $2,000 for each employee over the first 30 employees if one of their employees gets a tax subsidy to buy insurance under an Exchange.

Employers with 50 or more employees that do offer minimum essential coverage but have at least one full-time employee receiving subsidized coverage under an Exchange would pay whichever is less: $3,000 for each employee receiving a premium credit, or $2,000 for each full-time employee.

I am a large employer with more than 50 full-time employees. I do offer my employees health coverage. I have always made sure that the coverage is comprehensive so I am not worried about having the minimum essential coverage. However, I understand that large employers may still be assessed if the coverage I offer is unaffordable and my employees seek subsidized coverage in an Exchange. How do I know if the coverage I offer is affordable?

Coverage under an employer-sponsored plan is affordable to a particular employee if the employee’s required contribution does not exceed 9.5 percent of the employee’s household income for the taxable year. 

As an employer, I don’t know the household income of my employees. I only know the wages I pay each employee. How will I know if I need to pay an assessment because my large employer health plan is unaffordable for my employees?

The U.S. Department of Treasury and the Internal Revenue Service (IRS) expect to propose a safe harbor permitting large employers that offer coverage to their employees to measure the affordability of that coverage by using wages that the employer paid to an employee, instead of the employee’s household income.    This safe harbor would only apply for purposes of calculating the employer assessment.  It would not affect employees’ eligibility for health insurance premium tax credits.
The IRS has posted a request for comments in order to get public input and comments on the proposal.  Comments are due by Dec. 13, 2011. 

Will I be required to drop my current coverage?

No.  Employer-based health plans in effect as of March 23, 2010, are grandfathered under the law.  Grandfathered plans will fulfill the individual requirement to have health insurance that begins January 2014.  Employees and dependents can be added to the policy without losing grandfathered status.

I have provided my employees with health coverage by setting up a self-funded plan. Will I still be able to offer a self-funded plan for my employees under federal health reform?

Yes.  Employers still can offer self-funded plans under federal health reform.

Do federal health reform provisions apply to self-funded plans?

Yes.  Many provisions of federal health reform that apply to insurance companies also apply to self-funded plans.

What does existing Minnesota law do to assist small businesses to provide health insurance for employees?

Minnesota passed the Minnesota Small Employer Health Benefit Act in 1992, which requires health carriers to issue coverage to any eligible small employer, regardless of the health conditions of its employees, as long as the small employer meets certain conditions.  The Minnesota Small Employer Health Benefit Act also restricts the premium rate that can be charged to a small employer.

This law applies to employers with two to 50 employees and requires that the employer contributes at least 50 percent toward the cost of coverage for eligible employees.  It also requires that at least 75 percent of eligible employees participate.

What are some of the features of federal health reform that have already been a part of Minnesota health reform?

Minnesota law already requires small group coverage to be sold and renewed on a guaranteed issue basis, which means that health carriers offering coverage to Minnesota small groups already must issue and renew coverage to any small employer, regardless of past claims or the health conditions of its employees.  When federal health reform makes coverage guaranteed issue and renewable for small groups in 2014, this will not be a change for Minnesota small groups.

Many of the rating restrictions for small groups scheduled to take effect nationally in 2014 under federal health reform are already part of Minnesota law.  For example, for small groups, Minnesota already limits premium differences based on age to a 3 to 1 ratio.  Minnesota already does not allow health carriers to charge more based on gender. 

What businesses are eligible for the Small Business Health Care Tax Credit if they choose to offer health coverage to employees?

The credit is targeted to help employers with low- and moderate-income workers afford to offer employees health insurance coverage. Small businesses may be eligible if they cover at least 50 percent of the cost of health care coverage for their workers, pay average annual wages below $50,000 and have fewer than the equivalent of 25 full-time employees.  The number of employees is determined based on a formula that counts part-time employees on a pro-rated basis so employers that have more than 25 individual workers may qualify if some of their workers are part-time.  See IRS.gov for more details on the small business health care tax credit.

What if my small business doesn’t offer insurance today, but I choose to start offering insurance this year. Will I be eligible for these tax credits?

Yes.  The tax credit is available to small businesses that provide coverage today as well as those that choose to begin offering such coverage.

How much is the tax credit?

For each year from 2010 through 2013, the maximum credit is 35 percent of premiums paid by eligible small businesses and 25 percent of premiums paid by eligible nonprofits (tax-exempt employers).

In 2014, the value of the credit will increase to 50 percent of premiums paid by eligible small businesses and 35 percent of premiums paid by eligible nonprofits (tax-exempt employers).

The size of the credit depends on average wages and the number of employees.  The full credit is available to firms with average wages below $25,000 and fewer than 10 full-time equivalent workers.  It phases out gradually for firms with average wages between $25,000 and $50,000 and for firms with the equivalent of between 10 and 25 full-time workers.  The IRS has published details on the new small business tax credit on its website (IRS.gov).

Can employers still apply for the Early Retiree Reinsurance Program?

No.  Based on the amount of the $5 billion in appropriated program funding that remains available and the rate at which it is being disbursed, the Secretary of Health and Human Services made the decision to stop taking applications for the program after May 5, 2011.

How much of the original $5 billion in funds allocated for the Early Retiree Reinsurance Program currently remains?

According to figures released by the U.S. Department of Health and Human Services, the ERRP had disbursed $2.7 billion from the appropriated $5 billion as of June 10, 2011.  Approximately $2.3 billion remained as of that date.

I am an employer that applied and was accepted into the Early Retiree Reinsurance Program. I am getting ready to submit a claim. Where can I find information on how to submit a claim?

The U.S. Department of Health and Human Services has created a website.  Information and sample submissions can be found on ERRP.gov.

Does Minnesota currently have a law regarding breastfeeding at work?

Minnesota law requires employers to provide break time for a mother to express breast milk for her infant child.  Employers are also encouraged, but not required, to provide a private location for pumping.  By requiring private space for mothers and allowing mothers to pump “as needed,” health reform strengthens requirements to the benefit of mothers and children. 

What must an employer provide to workers who need to express breast milk in the workplace?

Employers are required to provide a reasonable amount of break time and a space to express milk as frequently as needed by the nursing mother, for up to one year following the birth of the employee’s child. The frequency of breaks needed to express breast milk and the length of each break will likely vary. The space provided by the employer cannot be a bathroom, and it must be private and free from intrusion by coworkers or the public.

Does the nursing mothers break time apply to small businesses?

All employers covered by the Fair Labor Standards Act (FLSA), regardless of the size of their business, are required to comply with this provision. However, employers with fewer than 50 employees are not subject to the FLSA break time requirement if the employer can demonstrate that compliance with the provision would impose an undue hardship. Whether compliance would be an undue hardship is determined by looking at the difficulty or expense of compliance for a specific employer in comparison to the size, financial resources, nature, or structure of the employer’s business.

Does the break time have to be paid break time?

Employers are not required under the FLSA to compensate nursing mothers for breaks taken for the purpose of expressing milk. However, where employers already provide compensated breaks, an employee who uses that break time to express milk must be compensated in the same way that other employees are compensated for break time. 

If the only space available at a work site is a bathroom, can employers require employees to express breast milk there?

No.  The statute specifically states that the space provided for employees to express breast milk cannot be a bathroom.