This webinar focused on what the new healthcare law, the Affordable Care Act, means for small businesses and practices like yours. It focused on both federal and state provisions to help local small business owners understand how the law will affect them.

1. How the new law impacts your bottom line
Marcia Dávalos
June 18, 2013
What Healthcare Reform Means
For Your Practice

2. Coverage is Good Medicine
2013-2014"

3. About Small Business Majority
• Small business advocacy organization – founded
and run by small business owners
• National – offices in Washington, DC, Virginia,
Ohio, Colorado, Missouri, New York and
California
• Research and advocacy on issues of top
importance to small businesses (<100
employees) and the self-employed, including
healthcare, access to credit and clean energy
• Very focused on outreach to and education of
small business owners across the country

4. Small businesses
struggling with costs
" Soaring cost of insurance – especially for small
businesses – 25% of small business owners are
uninsured (2012 Kaiser study)
" 28% self-employed: not covered
" Small firms pay 18% more than large businesses
Our national study: Small business health costs
would more than double by 2018 to $2.4 trillion
without reform

5. Small businesses
struggling with costs
Our most recent opinion survey: Small employers who don’t offer
coverage say lack of affordability is the biggest reason (70%)
70%
32%
16%
9%
5%
2%
0% 20% 40% 60% 80%
My business cannot afford it
My employees get coverage elsewhere
I do not believe it is the responsibility of my
business to provide health insurance
Waiting to see what happens with the federal
health care reform law
Too much paperwork and administration
Choosing the right insurance plan is too
complicated
Which one or two of the following best describes the reasons you do not provide health
benefits?

6. Small businesses
struggling with costs
Small Business Majority opinion poll: 72% of
those who do offer say they are struggling to do so
72%
28%
0% 20% 40% 60% 80%
My business is really struggling to
afford the cost of health coverage.
(Asked of those who do provide
coverage)

7. Topics for discussion today
• Consumer Protections
• Tax credits
• Cost Containment Provisions
• Health Benefit Exchanges / Marketplace
• Covered California
• Employer Responsibilities
• Individual Responsibility Requirement
• Your questions and comments

8. The Affordable Care Act
• Builds on existing healthcare system
• Aims to rein in healthcare costs
• Upheld by U.S. Supreme Court
• Implementation primarily the responsibility of the
states (small business input essential)
• Some important benefits
went into effect immediately
• Others implemented
from 2010-2014

9. Immediate consumer protections
• Insurers will no longer be able
to deny coverage for patients
with pre-existing conditions
• Ban on lifetime caps that set
lifetime limits on coverage
• Children are now able to stay
on their parents’ plan until 26

10. Immediate consumer protections
• Health plans can’t drop coverage when someone gets
sick, if mistake on paperwork
• First-dollar coverage for preventive care for all new plans
• Increased access to care: community health centers

11. Key provisions small
businesses should know about
• Immediate tax credits for most small businesses
• 2010-2013- Preexisting Condition Insurance Plan for
self-employed; pre-existing conditions no longer a
barrier for coverage beginning Jan. 1, 2014
• Establishes competitive
marketplace for small
businesses (SHOP) and
self-employed (individual)

12. Small business tax credits
• Available to businesses with employees
• Available now (took effect tax year 2010)
• Which businesses are eligible?
 Fewer than 25 full-time employees
 Average annual wages <$50,000
 Employer pays at least 50% of the premium
cost

13. Small business tax credits
Our report: 4M small businesses eligible (83.7%
of all businesses); 1.2M businesses eligible for
max credit

14. Small business tax credits
• 2 in 5 business owners who qualify eligible for max
• 19.3M employees work for eligible businesses
• Total value of the credit for tax year 2011:$15.4B
 An average of $800 in savings per employee

15. Small business tax credits
• Tax credits on a sliding scale:
o Up to 35% 2010–13
o Up to 50% any two years (2014)
• Premium expenses: comprehensive
medical coverage, incl. dental,
vision, long-term care
• Do not cover premium expenses of
owners or their families
• Tax credits can not be claimed by the
self-employed
• Can amend your taxes

16. Nonprofits also eligible
• Tax credits on a sliding scale:
o Up to 25% 2010–13
o Up to 35% any two years (2014)
• Include amount on line 44f of Form 990-T
• Does not have to be
publicly reported
• Refund for tax-exempt
employers

17. Wellness programs
Wellness programs affect plans starting on Jan. 1, 2014
• Two types of wellness programs:
1. Participatory wellness programs- Do not provide reward OR
do not include conditions for obtaining a reward that are based
on an individual satisfying a standard related to a health factor.
2. Health-contingent wellness
program- Require individuals to
meet a specific standard related
to their health obtain a reward
(namely a specified % of the cost
of health coverage)

18. Medical Loss Ratio: “80/20 rule”
• 80% of premium on medical
claims & quality improvement
• 20% on administrative & profits
• Rebates to customer if exceed
• Estimated $1.1B given back in 2012;
321 in the small group market
• Average rebate per enrollee in small group plan: $174

19. Rate review
• Insurance companies required to:
o Publicly disclose and justify rate increases of
10% +
o Explain increase on HealthCare.gov; each
state’s rate review program will give customers
a chance to comment
• State can approve or reject unreasonable or excessive
increase if has its own law
• No state program: federal government will conduct
reviews

20. State health insurance exchanges:
coming in 2014
• Large marketplace to shop for health coverage
• Private insurance plans will compete
• RAND study:
Expand coverage to 85.9%
of small business
employees (60.4% today);
an increase of 10.5 million
workers

21. What is a Health Benefit Exchange?
• One-stop shop web portal
with no wrong door
INSURANCE PLANS
EXCHANGE
Choice
Comparison
Billing
Tax Credits
SMALL BUSINESSES /
INDIVIDUALS
• Large marketplace to
buy commercial
insurance
• Compare plans for
information about price,
quality and service
• Plans organized by
level: bronze, silver,
gold, platinum
• Calculator to compare
costs across plan
options
• Streamlined billing
process

22. State exchange decisions
• States will enter into the federally-facilitated exchange
(FFE), state-federal partnership, or set up a state-based
exchange
Exchange Decision State
State-based exchange
(18)
CA, CO, CT, DC, HI, ID, KY,
MA, MD, MN, NM, NV, NY,
OR, RI, UT, VT, WA
State-federal partnership
(7)
AR, DE, IA, IL, MI, NC, WV
Federally-facilitated
exchange or FFE (26)
AK, AL, AZ, FL, GA, IN,
KS, LA, ME, MO, MS, MT,
ND, NE, NH, NJ, OH, OK,
PA, SC, SD, TN, TX, VA,
WI, WY

23. Health Benefit Exchange
• Two Exchanges: individuals; small businesses
• Opening on January 1, 2014 (pre-enroll begins Oct. 1)
• Voluntary
o Members of Congress and staff required to use
Exchange
• Exchanges designed by states -- or by federal gov’t if
a state so chooses
o State-based exchanges mean increased flexibility and
more input from small businesses and other
stakeholders
• Not a new concept - Business groups, non-profits and
state gov’ts already run similar programs in CA, CT,
MA, NY, UT

24. California Health Benefit Exchange
Our Exchange: “Covered California”
• First in the nation. Enacted in 2010 –
Bipartisan effort
• Governed by independent public board
• Holding dozens of public board meetings
• Executive Director is a former business leader;
hiring more staff now
• Received federal $$ for planning; Exchange self-
funding by 2015; no state dollars spent
• Stakeholder advisory panels providing input
from small business owners and business
organizations

25. California’s Key Decisions
• Active Purchaser: Exchange will negotiate with insurers
o Standard products will provide Apples-to-apples
comparison
• Employee Choice: Employer selects “tier” of coverage;
worker selects insurer; employer receives one bill
• Brokers can sell Exchange products; will be paid market
commission rates by Exchange.
• HR Services: COBRA administration, HSAs, wellness
plans, etc.
• Public-private partnership: Administrative management
of small business Exchange to be done by private-sector
vendor

27. Dental Benefits in California
• AB 82 SB 77 - Passed on Saturday June 15, 2013
• Partially restores funding for Medi-Cal Adult Dental and Nutrition
Benefits
• Starting May 14, 2014 the following Dental benefits for persons 21 and
older will be reinstated :
– Examinations, radiographs/photographic images, prophylaxis,
and fluoride treatments.
– Amalgam and composite restorations.
– Stainless steel, resin, and resin window crowns.
– Anterior root canal therapy.
– Complete dentures, adjustments, repairs, and relines, including
immediate dentures.

28. Dental Benefits in California
• Proposed Bill AB 18
– Establish a Dental Loss Ratio (DLR) – this would require a minimum
percentage of a dental plan’s gross premium collections to be spent
on actual treatment and care and limits the amount of premium
collections that can be applied to the plan’s administration of the
benefit.
– If the plan fails to do so, the plan must reimburse each policyholder.
– The proposed DLR percentage is still being determined.

29. Shared responsibility
• No business mandated to offer coverage
o large firms may pay fee for not offering
• Businesses with fewer than 50 FTEs
o 96% of all businesses exempt from any fees

30. Size of American businesses
• Kaiser Family Foundation:
o 4.8M businesses with fewer than 50 employees (35.7%)
offer health insurance
o 1.7M businesses with 50 or more employees (95.7%) offer
health insurance.
Small Business Majority and Kaiser Permanente poll:
After learning about features in the exchange,
percentage of California small business owners who
said they’d be likely to offer insurance jumped from
32% offering to 42%

31. For larger employers
• Am I above or below 50 full-time employees?
– At least 50 full-time employees or combination of full-time/
part-time employees equivalent to 50 full-time employees
– Full-time employees: at least 30 hours per week
– Part-time employees: at least 15 hours a week
– Seasonal employees (≤120 days per year)
• Size determined annually
• Amount owed determined monthly

32. Fees for Larger Employers
( >50 FTEs, 4% )
• Fail to offer coverage- $2,000 per year for each FTE
Excluding the first 30 full-time employees
o Firms only pay fee if at least one worker qualifies for federal
financial assistance in Exchange.
• Failing to offer “affordable” coverage- $3,000 per year for
each FTE receiving federal financial assistance in
exchange
o What is “Affordable”?
o Employee’s required contribution must not exceed 9.5% of
income
o Plan covers less than 60% (average) of healthcare expenses

33. Additional Responsibilities
• Summary of health plan – Insurers provide employers
a summary of benefits; employers must share info with
workers (Sept. 2012)
• W2 reporting –
informational only
o Allows workers to see how
much employer is spending on
health benefits
o Firms with fewer than 200
workers exempt until further
notice

34. • Beginning in 2014, most individuals required
to; obtain insurance or pay penalty
• May qualify for tax credits based on income for
100% - 400% of fed poverty level (family of 4 =
$23,000 to $92,000)
• Not eligible for tax credits in Exchange if
employer offers affordable insurance
• Acceptable coverage: Employer, individual,
Medicare, Medi-Cal, Covered CA, etc.
Individual Responsibility
Requirement (incl. Self-Employed)

35. • Exemptions for certain religions and very
low-income individuals (≤ $9,500 per yr)
• Penalty: $95 or 1% (2014)
$325 or 1.5%
(2015) $695 or
2.5% (2016)
• Aims to reduce “hidden tax” of $1,000 per
year
• About 1-2% of population expected to pay fee
Individual Responsibility
Requirement (incl. Self-Employed)

36. " "CONNECT WITH US ONLINE"
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" "@DRSFORAMERICA"
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Coverage is Good Medicine"

37. For more information
• National HHS website:
www.healthcare.gov
• Our Website:
SmallBusinessMajority.org
• Healthcare Coverage Guide:
HealthCoverageGuide.org
• Health Law Guide for Business:
HealthLawGuideForBusiness.org
• Covered California:
CoveredCA.com
Emma Hollister,
Network Coordinator
ehollister@smallbusinessmajority.org
(202) 828-8357
Connect with us!
@SmlBizMajority
Small Business Majority
Marcia Dávalos,
So Cal Outreach Manager
mdavalos@smallbusinessmajority.org
(818) 804-8229