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Employer Responsibility:

Businesses with fewer than 50 full-time employees (measured in FTEs) will be exempt from any
requirements to contribute toward employees' health coverage. An estimated 96 percent of all
firms in America have fewer than 50 employees and would be exempt. Of those businesses with
more than 50 employees, another 96 percent already offer health coverage.

Employers with more than 50 full-time equivalents (FTEs) are expected to offer insurance
coverage to their employees within 90 days of employment and help pay for premiums.
o FTEs are calculated by basically adding up the full time employees (Full time is
considered more than 30 hours/week on a monthly averaged basis) and then adding up
any remaining part-time workforce hours and dividing by 40 (so having 40 full-time
workers and 30 half-time workers would cause an employee to have 55 FTE).
o FTEs are used to determine if an employee is large or small, but are not used to
calculate penalties.
o Employees who are seasonal (less than 120 days of work) do not need to be counted
toward the 50 person threshold.

If an employer is responsible for offering coverage the coverage must meet certain
requirements.
o Coverage must meet a minimum actuarial value, which is the percentage of costs that
the insurance plan pays when co-pays and deductibles are factored in (i.e. it can’t simply
be catastrophic coverage). The minimum actuarial value for coverage is 60% which is
typical for most insurance today.

o Coverage must be “affordable.” The employee’s part of the premium cost can’t be
more than 9.5% of their income. So if the employee has to pay $150/month for the
premium then they should be making at least $1,530/month. If the premium is more
than this it is deemed “unaffordable” and the employee can go into the exchange and
claim a tax credit to help buy coverage.

o Employers must offer coverage to the dependents of employees, but the employer is
not required to pay for that additional coverage. In other words the employer is
responsible for making only the individual employee’s coverage affordable, not the
entire family’s coverage (but the employer must make family coverage available for the
employee to purchase).

Individuals can get credits to allow them to get coverage on the exchange only if their employer
does not make “affordable” and “minimum” coverage available. Additionally, people only
qualify for government credits if they make less than 400% of the federal poverty level (FPL).
FPL for an individual is $10,830 right now, so they’d have to make less than $43,320 to qualify.
In summary the only way that an employer (over 50) is fined would be

A. The employer doesn’t offer coverage at all


 AND
 The employee goes on to the exchange for coverage and gets a tax credit to
help offset the coverage cost. (Note: If affordable, minimum coverage is offered
by the employer and the employee doesn’t take it, the responsibility is on the
employee, not the employer)

B. The coverage does not meet


 “Minimum” essential coverage (60% actuarial value) OR
 “Affordable” criteria--employee premium cost is more than 9.5% of the
employee’s income
 AND
 The employee goes on to the exchange for coverage and gets a tax credit to
help offset the coverage cost. (Note: If affordable, minimum coverage is offered
and the employee doesn’t take it, the responsibility is on the employee, not the
employer)
Fines for A & B above

A. If an employer doesn’t offer coverage at all and has more than 50 employees (Case A) AND an
employee goes to the exchange and gets tax credits then the employer is charged $2000/yr per
full time employee (not just the number of employees getting tax credits). The fine is only on
true full time employee and not on “equivalent” employees.
a. There is also a 30 person “exemption.” This means that if a company has 55 actual full
time employees and doesn’t offer coverage then their penalty is based on 55-30=25
people. So the penalty would be 25 x $2,000=$50,000/yr

B. If an over-50 employer does not offer coverage that is “affordable” and/or ”minimum,” (Case B)
AND an employee goes to the exchange and gets tax credits then the employer pays $3,000 fine
per year per employee receiving exchange credits. If only part of the employees have
“unaffordable” coverage the fine is $3000/employee/year, but the maximum employer fine is
$2,000 multiplied by the total number of employees (not just the number for whom insurance is
unaffordable). As an example, if an employer has 55 employees and 5 of those employees make
a low enough income that insurance is “unaffordable” while the remaining 50 make enough
income that it is “affordable, ” the fine would be 5 x $3,000=$15,000.

All fines are pro-rated by the number of months—i.e. if the employee only is on the exchange for 6
months of the year getting credits then the penalty is 50% of the annual rate.
Tax Credits for Businesses Employing Fewer than 25 People

The tax credits are estimated at $40 billion from 2010 to 2019, an average of $4 billion
per year over that ten-year time span; approximately 3.6 million small businesses will
qualify in 2010 for the tax credit to offset employer health plan costs.

This represents up to 79,900 Missouri small businesses. These small businesses employ
approximately 303,046 Missourians.

Beginning in 2010 and through 2013, businesses with fewer than 25 full-time
employees that contribute at least 50% of the total premium will be eligible for tax
credits of up to 35% of the employer contribution. The full credit will be available for
businesses with fewer than 10 employees averaging less than $25,000 annual wages, and
phase out at $50,000 and/or 25 FTEs. Nonprofit organizations will qualify for tax
credits of up to 25% of the employer contribution during this time period.

For example, if a small business provides insurance for its 10 employees (whose wages
average $25,000) and pays $6,000 of the $10,000 annual premium per employee, the
business will be eligible for a $2,100 tax credit per employee (35% of the $6,000). This
credit will be available in 2010, 2011, 2012 and 2013.

Beginning in 2014 and going forward, eligible small businesses purchasing coverage via
an exchange will receive tax credits of up to 50% of the employer contribution if the
employer provides at least 50% of the premium cost. A business can claim the credit
for any two years in the future. The law explicitly excludes sole proprietorships and
family members from the small business tax credits (but they can apply for individual tax
credits). [Note: The credits INCREASE once the exchanges come online but only last for
two years.]

For up to two years after 2013, if a small business provides insurance for its 10
employees (whose wages average $25,000) and pays $6,000 of the $10,000 annual
premium per employee, the business will be eligible for a $3,000 tax credit per employee
(50% of the $6,000). This credit will be available in 2014 and after for a maximum of
two years.

An employer can still deduct the costs of providing their employees with health
insurance.

A small business who receives a tax credit would be able to deduct the amount of
premiums for which they did not receive a tax credit. For instance, if the business
receives a 35% subsidy, they can deduct the remaining 65% of the premium costs.