Relationship Between International Law and Municipal Law MIR.pdf
Taxes, Subpoenas, and Other Dirty Words: The Top Legal Issues Entrepreneurs Should Know About
1. Taxes, Subpoenas and Other
Dirty Words:
The Top Legal Issues That
Entrepreneurs Should Know
New Orleans Entrepreneur Week | March 24, 2014
Alex Glaser Bryan Bowdler
alex.glaser@phelps.com bryan.bowdler@phelps.com
Mark Jeanfreau
mark.jeanfreau@phelps.com
3. Crowdfunding
Raising money in small increments from a large number of
people, usually through social media or online platforms.
4. Crowdfunding
• Title III of the JOBS Act added a new transactional
exemption to the Securities Act of 1933 for ―equity
crowdfunding‖ (or ―securities-based crowdfunding‖) and
directed the SEC to make rules implementing Title III.
• Release No. 33-9470 (October 23, 2013) – the ―Crowdfunding
Release‖
• Crowdfunding is NOT legal until these rules are adopted
5. Crowdfunding Under Title III / Crowdfunding Release
• Limitations on Offering Size
• Limitations on Investment
• Disclosure Requirements
• Financial Information
• Ongoing Reporting
• Bad Actor Disqualification
and Other Exclusions
• No Advertising
• Internet Only
• Transfer Restrictions
12. Do I Actually Have an Employee?
Employees v. Independent Contractors
• IRS 20-part test
• Behavioral Control
• Whether a business has a right to direct or control how work is done
through instructions, training or other means
• Financial Control
• Whether a business has the right to direct or control the financial and
business aspects of a worker’s job
• The Relationship of the Parties
• Evaluates evidence of the relationship, including how workers and
the business owner perceive their relationship
13. How Do I Support Contractor Status?
• Independent Contractor Agreement
• Nature of Business Relationship
• (i.e., Contractors seek business on their own, make their
own hours, keep their own supplies/offices)
• Other Employment
• Contractors free to seek and accept other employment
15. Do I Need To Have Key Employees Sign an
Employment Agreement?
Under Louisiana law, employment deemed to be ―at will‖
in absence of agreement to the contrary.
Common Features of Employment Agreements:
• Employment for term
• Compensation Structure (form, timing, performance
goals/objectives)
• Cause vs. good reason termination
• Job Duties/Responsibilities
• Business Covenants
16. How Can I Protect My Business?
• Confidentiality
• Trade Secrets
• Non-competition
• Two years maximum
• Non-solicitation
• Two years maximum
• Customers and employees
• Non-disparagement
• Firewalls/Restricted Access
• Employee Handbooks
17. Business Protection
Suggestions When Hiring New Employees:
• Inform new and potential employees that they may be exposed to
confidential information
• Have employees sign confidentiality and nondisclosure agreements
– Must decide which employees should sign
• Limit access to trade secrets only to the extent employees need
such access to do their jobs
• Determine if the employee you’re hiring is subject to someone
else’s non-compete
18. Non-Compete
Purpose: To prevent your former employees from
using information to compete with you.
• In Louisiana, governed by statute
• 2 year temporal limitation
• Reasonable geographic limitation
• Requirement to list specific parishes you’re doing business in
• Defines employer’s business
• Enforceable against employees and independent contractors
19. Non-Solicitation
Purpose: To prevent the solicitation of
your employees and/or customers by
former employees.
• Both employees and customers
• Usually same time period as
non-compete
20. Non-Disclosure
Purpose: To prevent disclosure of trade secrets and other
confidential information.
• Usually written into the non-competition and non-solicitation
agreement
21. I Just Realized that None of My Current Employees Have Signed
Non-Competition Covenants—Can I Have Them Sign Now?
Perhaps. Non-competition covenants must be supported
by consideration - something over and above what an
employee is already receiving.
• Possible forms of consideration
– Pay raise
– Bonus
– Bona fide long term employment
– Severance pay
23. What Kinds of Equity Awards Can I Give Employees
(Traditional Corporations)?
Type of Award Description Benefits
Stock Options Grants right to purchase equity at a
predetermined exercise price during
set time period
• Share in company
appreciation
• Participate in liquidity
event
Restricted
Stock
Issuance of equity subject to
forfeiture (i.e. continued employment)
• Retention device
• Shareholder rights
(voting, dividends)
Equity Bonuses Performance bonuses paid in the
form of equity instead of cash.
• Incentivizing employees
through performance
goals
• Minimizes cash outlays
Restricted
Stock Units
―Phantom‖ restricted stock subject to
forfeiture
• Retention device
• No voting rights
• May issue Dividend
Equivalent Units
24. What Kinds of Equity Awards Can I Give Employees
(LLCs)?
• Capital Interest (liquidation + income distributions) vs.
Profits Interest (same but liquidation interest limited to
appreciation after vesting)
• Phantom Units
• Liquidation + income distributions based on any appropriate
formula; often no member rights
• Optional Attributes
• Vesting
• Forfeiture for bad acts
• Full or limited voting rights
25. Why Can’t I Just Grant Warrants Instead of
Equity Compensation?
• You can, but warrants received in exchange for the
performance of services are deemed to be
compensatory.
• Substance over form
• Different tax and accounting treatment
27. Is Health Care Reform Going to Affect My
Business?
• Individual Mandate vs. Employer Mandate
• SHOP (Small Business Health Option)
• Fewer than 100 employees
• Exchanges (Individuals only)
28. Kaiser Family Foundation Charts
Penalties for
Employers Not
Offering Affordable
Coverage Under the
Affordable Care Act
29. Kaiser Family Foundation Charts
The Requirement to
Buy Coverage Under
the Affordable Care
Act Beginning in 2014
30. Is Health Care Reform Going to Affect My
Business?
• Individual Mandate
• Currently in effect
• Employer Mandate
• 100 or more employees = coverage for at least 70% FTEs in
2015, 95% in 2016 and after
• 50-99 employees = coverage for at least 95% in 2016 and
after
31. What is the SHOP Option?
• Small Business Health Options Program (SHOP)
• Marketplace intended to provide coverage for small
employers
• 2015: SHOP available to employers with 50 or fewer
FTEs
• Employer Mandate
• 2016: SHOP available to employers with 100 or fewer
FTEs
32. What is the SHOP Option?
• Employers choose between 4 levels of coverage
(bronze, silver, gold, platinum) to offer employees and
employees able to select between multiple plans
• All plans offered on SHOP exchange meet essential
benefits and minimum value requirements imposed by
Health Care Reform
• (i.e., limits on cost-sharing, out of pocket expenses, and
annual/lifetime deductibles; offer all preventive and other
specific services)
• SHOP requirements
• Offer coverage to all FTEs and at least 70% sign up
33. What are the Advantages of SHOP Coverage?
• Employee and Employer Choice over Levels of
Coverage
• Cost Control
• Competitive Advantage
• Tax Advantages
• Compensation Deduction for Employer-Paid Premiums
• Tax Credit for Employers with 25 or Fewer Employees (up to
50% of premium costs); employees must have annual wages
less than $50,000
34. Can I Just Give My Employees a Flat Amount Per Month
and Tell Them to Sign Up for the Coverage They Want?
• Yes, but may lose tax advantages
• Private Exchanges
35. Legal Issue 7
The Basics of Louisiana’s
Open Account Statute for
Unpaid Receivables
36. La. R.S. 9:2781
―When a person fails to pay an open account within thirty
days after the claimant sends written demand therefor
correctly stating forth the amount owed, that person shall
be liable to the claimant for reasonable attorney fees for
the prosecution and collection of such claim when
judgment on the claim is rendered in favor of claimant.‖
La. R.S. 9:2781(A).
• What does that mean?
37. What is an ―Open Account‖?
• The statue defines an ―open account‖ as ―any account
for which a part or all of the balance is past due,
whether or not the account reflects one or more
transactions and whether or not at the time of
contracting the parties expected future transactions.‖
38. What is an ―Open Account‖?
Example: You provide your services to a client and, after
completing a task, you send your invoice. If your client
does not pay according to the terms of the invoice, there
is an ―open account.‖
39. Open Accounts
So you have an open account, what do you do?
• You need to make written demand on the party that owes you the
debt.
• The easiest way to do so, is to write a letter demanding payment.
• The demand letter must contain certain information though.
40. Why Send the Demand Letter?
The most important reason why you want to write a
demand letter is because if you have to eventually file a
lawsuit, you can recover your attorneys’ fees if you send a
demand letter with the required content.
41. Content of Letter
First, the demand letter must correctly state the amount
owed.
• If you do not state the correct amount, a court can decide that
you cannot recover attorneys’ fees.
• If your invoices contain an interest provision, make sure you
include and correctly calculate any interest that may be owed.
42. Content of Letter (continued)
Attach the unpaid invoices.
• The current version of the statute
does not require you to attach a
copy of any unpaid invoices.
• A previous version of the statute did require
you to include a copy of unpaid invoices, and, as a
practical matter, a court and/or the recipient might expect to
receive them.
43. Content of Letter (continued)
Reference the statute.
• Although it is not required, it is a good idea to reference the Open
Account statute in your demand letter.
• You don’t want there to be any ambiguity from your letter. You
want the letter to clearly state that it is an attempt to collect a
debt.
• Potential Language: ―This letter constitutes formal written
demand for immediate payment of the [ ] that you owe on
your open account pursuant to La. R.S. 9:2781.‖
44. Sending the Letter
Keep a copy of your letter.
• Make sure you keep a copy of the letter that you send so that it
can be attached to the lawsuit if you have to file one.
• In fact the statute requires that, if you mail the letter, you must
attach a copy to the lawsuit.
• If you don’t have a copy of the letter attached to your lawsuit, the
court can deny your request for attorneys’ fees.
Send it Certified Mail, Return Receipt Requested.
• Under the statute, you do not have to proof that the letter was
actually delivered.
• While proof of receipt is not required, it is always a good thing to
show the Court.
45. Now What?
Wait 30 days.
• The statute requires that you give the person 30 days to pay after
you send the letter.
• If they do pay in that timeframe, you cannot recover attorney fees
assuming you had a lawyer prepare the demand letter.
If they don’t pay within the 30 days, you are free to file a
lawsuit and will be able to collect attorney fees.
46. Other Things to Keep In Mind
The statute of limitations.
• The statute of limitations, or as a Louisiana lawyer will call it
―prescription,‖ is three (3) years for Open Account claims.
You only recover a ―reasonable‖ attorney fee.
• We talked a lot about this before and taking steps to ensure you
can recover the attorney fees.
• But, the court will ultimately decide how much you receive in
attorney fees.
48. The Good News First
You are not alone.
• Bankruptcy is probably one of the few areas of law that makes
lawyers who aren’t familiar with it a little scared.
Bankruptcy filings are on the decline.
• According to the American Bankruptcy Institute, 2013 had the
lowest number of bankruptcy filings since 2007.
• Also, small business bankruptcy filings fell by approximately 24%
in 2013 from 2012 levels.
• In 2013, there were approximately 44,111 small business
bankruptcies as compared to 57,964 in 2012.
• Hopefully, this trend continues and none of you will ever need to
know any of this.
49. Forms of Bankruptcy
For the purposes of today,
there are two forms of
bankruptcy small businesses
should know about:
• Chapter 7
• Chapter 11
50. Chapter 7 - Liquidation
• As far as businesses go, Chapter 7 bankruptcy is
probably the most ―extreme.‖
• What happens in a Chapter 7?
• Not long after the bankruptcy petition is filed, the Court will
appoint a Chapter 7 Trustee.
• It is the Chapter 7 Trustee’s job to gather all of the non-
exempt assets of the business and sell them or abandon
them in order create the maximum return on those assets
that can be distributed to creditors.
• Once that is done, the Chapter 7 Trustee will distribute the
funds to the creditors and close the case.
51. Chapter 11 – Reorganization
• This form of bankruptcy is probably the most well-
known form of bankruptcy.
• What happens in a Chapter 11?
• Unlike a Chapter 7, there is no automatic trustee appointed
by the Court. Courts usually allow the business to be a
―debtor-in-possession.‖ What this means is that the people
who control the business will be allowed to continue to
operate the business while it reorganizes.
• Eventually, the business will present the Court and the
creditors with a ―plan of reorganization‖ which will lay out
how and in what amounts the debtor will pay its creditors
and how it anticipates to fund those payments.
52. The Automatic Stay
• Perhaps the biggest benefit that a debtor obtains when
it files for bankruptcy is the imposition of the automatic
stay.
• What this does is the instant the debtor files for
bankruptcy, all debt collection efforts against the debtor
must stop.
• This means any pending lawsuit is stopped.
• It also prevents creditors from taking an steps in an attempt
to collect a debt. For example, the letter we talked about in
connection with the Open Account statute cannot be sent if
the business has filed for bankruptcy.
53. The Proof of Claim
The proof of claim is the
document you will need to
submit to the Court if you
want to receive any
payment from the debtor.
54. The Proof of Claim (continued)
• In most cases, there will be a deadline by which you
must submit a proof of claim.
• In some Chapter 7 cases, however, you may not need
to submit a claim. This is because the case has been
categorized as a ―no asset‖ case which means there is
nothing in the estate to liquidate and so there will be no
cash to distribute.
55. The Proof of Claim (continued)
The most important part of the proof of claim is the proof!
• The form that we showed earlier has a box that appears on the
second page and is easy to overlook.
• But, it is the most important. When you file your claim you must
attach to it any documents, such as invoices, purchase orders,
notes, statements of accounts, contracts, etc., that prove you are
owed what you say you are.
• The failure to attach supporting documentation is a basis for a
Court to later reject your claim.
56. Preferences
What is a preference?
• Basically, a preference is a payment you receive from a debtor in
the 90 days before the bankruptcy filing.
• These transactions during the 90 days before the bankruptcy can
be ―avoided.‖ What that means, is you may have to give the
money back.
Based on my practice so far, nothing is more frustrating to
the clients I have dealt with than a preference lawsuit.
57. Preferences (continued)
There are defenses to preference claims, however and we
will talk about the two main preferences:
• The ―Ordinary Course‖ defense
• What this is if you received payments from the debtor in the
ordinary course of the debtor’s and your business on
ordinary business terms, you may not have to pay the
money back.
58. Preferences (continued)
Ordinary Course Defense
Example
Creditor’s arrangement with debtor is that debtor pays on 60-day net terms,
and this is a customary term in the industry. However, over the course of the
prior two years, debtor frequently paid within 65 to 75 days. In the 90 days
prior to filing bankruptcy, debtor makes payments to creditor which are within
55 to 75 days net. Although the agreed upon terms were 60 days net,
because debtor and creditor established a course of payment which was often
65 to 75 days net, if this occurred frequently enough, and if this was ordinary
within the industry, most courts would probably find that none of the payments
received within the 90 days prior to filing were a preference.
59. Preferences (continued)
The ―New Value‖ Defense
• How this defense works is that if you receive a payment from a
debtor before the bankruptcy filing, and that provide additional
goods and/or services for which you were not paid, you can
reduce your preference liability.
60. Preferences (continued)
New Value Defense
Example
Example: Creditor receives a potentially preferential payment in the amount
of $50,000. Creditor subsequently ships to debtor $60,000 worth of goods.
Debtor then files bankruptcy. The result will be that the $50,000 payment was
not a preference.
62. Taxes, Subpoenas and Other
Dirty Words:
The Top Legal Issues That
Entrepreneurs Should Know
New Orleans Entrepreneur Week | March 24, 2014
Alex Glaser Bryan Bowdler
alex.glaser@phelps.com bryan.bowdler@phelps.com
Mark Jeanfreau
mark.jeanfreau@phelps.com
Notes de l'éditeur
Threshold issue for any company. Is this person an employee or indpendent contractor? As you’d suspect, you can probably tell the difference between the two designations just by considering the facts and circumstances surrounding their employment.IRS has a 20-part test to determine status. Of course, the IRS would come out with a 20-part test for something. Way to make it nice and simple. If you read the relevant authorities, the test kind of breaks down into three overriding factors. Behavioral Control----and this is the big one—do you have the right to direct or control how the work is being done.Financial Control----do you control business aspects of the job i.e. how long the person works, what hours they work, etc.Overall Relationship of the Parties----this is the smell test, right? Does it pass muster? What does this relationship actually look like? What is the intent here?This whole slide begs the question---Why do businesses think its better to have contractors rather than employees? Well, don’t have to remit payroll taxes on their behalf, they cant sue you, you can terminate contractor relationship easily. Not eligible for unemployment.
--contractor agreement, the IRS will give no substance to a contractor relationship unless there is an agreement in place
Term-based---advantage of er b/c you knowtheyre not going to leave, adv to ee b/c secure employment. Common question—well, I wanna fire Goofball but he has an employment agreement with a 4 year term. Help me get rid of him. Well, did he do anything wrong? Yeah, I don’t like the way he looks. More commonly, its hes not a great employee, but he hasn’t done anything wrong. Can you fire him? Sure, but you owe the salary that is remaining for the rest of the term. So if youre only 1 year into a 4 year agreement, that’s 3 years salary. How do we commonly fix that? “Evergreen” agreements, 1 year terms that automatically renew, so that way, if you do get rid of someone, you only owe the remainder on a one year term.Comp sturcutre- i.e. bonsuses, commissions, time of payment, if you have to hit a certain performance level to get a bonusHow can you term the agreement? List reasons for cause term. This is for er. Exectuvies will often have good reason terms, which allow them to recoup some of the money remaining under the agreement. Commonly, its things like diminution in exec’s duties, reduction in salary, re-location of 100 miles or more. You get the drift—if the exec has a good lawyer, they will always demand on good reason term.
A few things to note along these lines. Not everything is a trade secret. Whether it’s a trade secret is a facts and circumstances det. That is specific to your business.Non-comp/non-solicitaiton—these are covenants you have your ees sign that say during my employment and for certain amount of time thereafter, I will not compete with your business and I will not solicit your customers and employees. IMPORTANT,. b/c Ive seen non-competes and non-solicits from small businesses that are NOT compliant with Louisiana law, you must list all the parishes in which you do business, and you must have a description of the business that you conduct, in order to have a valid non-compete. A busienssprtoectionagremeent with these covneants will be UNENFORCEABLE on its face if not. Please go back and check yours today. A lot of lawyers, especially lawyers not from Louisiana, mess this up. Non-disparagemeent---I wont call you a jerk after I leave, I wont post on the Internet that you’re the devil incarnate and that your business is committing tax fraud.Another important point about non-competes----you must have consideration in order to make them valid. Now when you first offer someone a job, that is deemed to be sufficient consideration to support a non-compete. But if you hand someone a non-c 2 years down the road and ask them to sign it, theres no consideration. You’d have to raise their salary or give them somehting else they don’t already have. So think about that.Also cant give all these to every ee. You can only prevent competition and soliciation from people that actually might compete with you. So Darren over in the mailroom, he doesn’t know any trade secrets, hes not a threat to your business. You cant prevent him from going to work in the mailroom of your top competitor. But your head of sales, that’s a different story.
Individual mandate---eveyrone must have minimum essential coverage by jan. 1, 2014 or pay penalty. Emplyoer mandate—50+ employers must provide mimimum value coverage to full tiemees and chidlren up to age 26 or pay penalty. Delayed until 2015. Exchanges—marketplaces where similar indivs. Can group togetehr to buy insurance. Its an economy of scale argument right? One self-employed person himself is unisurable, but group him together with 200 similar individuals and you have what essentially would otherwise be a very lucrative insurance plan. The exchanges people—insurers love them. My prediction is that theyre going to make a fortune. SHOP because it might apply to some of you. Its new program that is supposed to simply process of purchasing insurance for small businesses. Supposed to be open beginning Jan. 1, 2014 for ers with 50 or fewer, supposed to go to 100 or fewer in 20156and beyond. Similar to the individual exchange where youcan compare health plans online. So the exchange kind of acts like a broker for you, but the idea is that the insurers get to introduce plans that are tailored toward small businesses, so they wont be these “cadillac” health plans, as the term is becomign popularized, but instead plans designed for small busiensses. May also qualify for small busienss tax credit worth 50% of your premium costs. Heres the kicker with SHOP though—so you have 48 ees and you go online to the SHOP---you have to implement a plan that covers all your FTEs. So its like volutnarliy subjecting yourself to the employer mandate. Also, at least 70% of your ees have to enroll in SHOP in order to qualify. Its not meant to be a place for you and your CFO to find great coverage and leave everyone else out in the cold.
Individual mandate---eveyrone must have minimum essential coverage by jan. 1, 2014 or pay penalty. Emplyoer mandate—50+ employers must provide mimimum value coverage to full tiemees and chidlren up to age 26 or pay penalty. Delayed until 2015. Exchanges—marketplaces where similar indivs. Can group togetehr to buy insurance. Its an economy of scale argument right? One self-employed person himself is unisurable, but group him together with 200 similar individuals and you have what essentially would otherwise be a very lucrative insurance plan. The exchanges people—insurers love them. My prediction is that theyre going to make a fortune. SHOP because it might apply to some of you. Its new program that is supposed to simply process of purchasing insurance for small businesses. Supposed to be open beginning Jan. 1, 2014 for ers with 50 or fewer, supposed to go to 100 or fewer in 20156and beyond. Similar to the individual exchange where youcan compare health plans online. So the exchange kind of acts like a broker for you, but the idea is that the insurers get to introduce plans that are tailored toward small businesses, so they wont be these “cadillac” health plans, as the term is becomign popularized, but instead plans designed for small busiensses. May also qualify for small busienss tax credit worth 50% of your premium costs. Heres the kicker with SHOP though—so you have 48 ees and you go online to the SHOP---you have to implement a plan that covers all your FTEs. So its like volutnarliy subjecting yourself to the employer mandate. Also, at least 70% of your ees have to enroll in SHOP in order to qualify. Its not meant to be a place for you and your CFO to find great coverage and leave everyone else out in the cold.
Individual mandate---eveyrone must have minimum essential coverage by jan. 1, 2014 or pay penalty. Emplyoer mandate—50+ employers must provide mimimum value coverage to full tiemees and chidlren up to age 26 or pay penalty. Delayed until 2015. Exchanges—marketplaces where similar indivs. Can group togetehr to buy insurance. Its an economy of scale argument right? One self-employed person himself is unisurable, but group him together with 200 similar individuals and you have what essentially would otherwise be a very lucrative insurance plan. The exchanges people—insurers love them. My prediction is that theyre going to make a fortune. SHOP because it might apply to some of you. Its new program that is supposed to simply process of purchasing insurance for small businesses. Supposed to be open beginning Jan. 1, 2014 for ers with 50 or fewer, supposed to go to 100 or fewer in 20156and beyond. Similar to the individual exchange where youcan compare health plans online. So the exchange kind of acts like a broker for you, but the idea is that the insurers get to introduce plans that are tailored toward small businesses, so they wont be these “cadillac” health plans, as the term is becomign popularized, but instead plans designed for small busiensses. May also qualify for small busienss tax credit worth 50% of your premium costs. Heres the kicker with SHOP though—so you have 48 ees and you go online to the SHOP---you have to implement a plan that covers all your FTEs. So its like volutnarliy subjecting yourself to the employer mandate. Also, at least 70% of your ees have to enroll in SHOP in order to qualify. Its not meant to be a place for you and your CFO to find great coverage and leave everyone else out in the cold.
Individual mandate---eveyrone must have minimum essential coverage by jan. 1, 2014 or pay penalty. Emplyoer mandate—50+ employers must provide mimimum value coverage to full tiemees and chidlren up to age 26 or pay penalty. Delayed until 2015. Exchanges—marketplaces where similar indivs. Can group togetehr to buy insurance. Its an economy of scale argument right? One self-employed person himself is unisurable, but group him together with 200 similar individuals and you have what essentially would otherwise be a very lucrative insurance plan. The exchanges people—insurers love them. My prediction is that theyre going to make a fortune. SHOP because it might apply to some of you. Its new program that is supposed to simply process of purchasing insurance for small businesses. Supposed to be open beginning Jan. 1, 2014 for ers with 50 or fewer, supposed to go to 100 or fewer in 20156and beyond. Similar to the individual exchange where youcan compare health plans online. So the exchange kind of acts like a broker for you, but the idea is that the insurers get to introduce plans that are tailored toward small businesses, so they wont be these “cadillac” health plans, as the term is becomign popularized, but instead plans designed for small busiensses. May also qualify for small busienss tax credit worth 50% of your premium costs. Heres the kicker with SHOP though—so you have 48 ees and you go online to the SHOP---you have to implement a plan that covers all your FTEs. So its like volutnarliy subjecting yourself to the employer mandate. Also, at least 70% of your ees have to enroll in SHOP in order to qualify. Its not meant to be a place for you and your CFO to find great coverage and leave everyone else out in the cold.
Individual mandate---eveyrone must have minimum essential coverage by jan. 1, 2014 or pay penalty. Emplyoer mandate—50+ employers must provide mimimum value coverage to full tiemees and chidlren up to age 26 or pay penalty. Delayed until 2015. Exchanges—marketplaces where similar indivs. Can group togetehr to buy insurance. Its an economy of scale argument right? One self-employed person himself is unisurable, but group him together with 200 similar individuals and you have what essentially would otherwise be a very lucrative insurance plan. The exchanges people—insurers love them. My prediction is that theyre going to make a fortune. SHOP because it might apply to some of you. Its new program that is supposed to simply process of purchasing insurance for small businesses. Supposed to be open beginning Jan. 1, 2014 for ers with 50 or fewer, supposed to go to 100 or fewer in 20156and beyond. Similar to the individual exchange where youcan compare health plans online. So the exchange kind of acts like a broker for you, but the idea is that the insurers get to introduce plans that are tailored toward small businesses, so they wont be these “cadillac” health plans, as the term is becomign popularized, but instead plans designed for small busiensses. May also qualify for small busienss tax credit worth 50% of your premium costs. Heres the kicker with SHOP though—so you have 48 ees and you go online to the SHOP---you have to implement a plan that covers all your FTEs. So its like volutnarliy subjecting yourself to the employer mandate. Also, at least 70% of your ees have to enroll in SHOP in order to qualify. Its not meant to be a place for you and your CFO to find great coverage and leave everyone else out in the cold.
Individual mandate---eveyrone must have minimum essential coverage by jan. 1, 2014 or pay penalty. Emplyoer mandate—50+ employers must provide mimimum value coverage to full tiemees and chidlren up to age 26 or pay penalty. Delayed until 2015. Exchanges—marketplaces where similar indivs. Can group togetehr to buy insurance. Its an economy of scale argument right? One self-employed person himself is unisurable, but group him together with 200 similar individuals and you have what essentially would otherwise be a very lucrative insurance plan. The exchanges people—insurers love them. My prediction is that theyre going to make a fortune. SHOP because it might apply to some of you. Its new program that is supposed to simply process of purchasing insurance for small businesses. Supposed to be open beginning Jan. 1, 2014 for ers with 50 or fewer, supposed to go to 100 or fewer in 20156and beyond. Similar to the individual exchange where youcan compare health plans online. So the exchange kind of acts like a broker for you, but the idea is that the insurers get to introduce plans that are tailored toward small businesses, so they wont be these “cadillac” health plans, as the term is becomign popularized, but instead plans designed for small busiensses. May also qualify for small busienss tax credit worth 50% of your premium costs. Heres the kicker with SHOP though—so you have 48 ees and you go online to the SHOP---you have to implement a plan that covers all your FTEs. So its like volutnarliy subjecting yourself to the employer mandate. Also, at least 70% of your ees have to enroll in SHOP in order to qualify. Its not meant to be a place for you and your CFO to find great coverage and leave everyone else out in the cold.