Hosted by the United States Department of Health and Human Services and Small Business Majority. This webinar focused on what the new healthcare law, the Affordable Care Act, means for Kentucky small businesses. It focused on both federal and state provisions to help local small business owners understand how the law will affect them.

1. To access the audio portion of this
presentation please dial
(712) 432-0075
and enter participant code 651757#
Questions may be entered at any time
during the discussion in the chat box on the
lower left hand corner of your screen

2. Your Bottom Line:
What the Affordable Care Act Means
For Your Kentucky Small Business
Grant Lahmann
Outreach Manager, Southern States
Small Business Majority
June 2013

3. Dr. Pamela Roshell, Regional Director
Department of Health and Human Services Region IV

4. 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

5. 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

6. 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?

7. 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)

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 (2010 for kids, 2014 for
adults)
• Ban on lifetime caps that set lifetime
limits on coverage
• Already, 1,414,000 Kentucky residents,
including over 528,000 women and over
362,000 children, will not have to worry about
hitting those limits.
• Adult children under 26 can stay on their
parents plan (Sept. 23, 2010)
• As of December 2011, 3.1M nationwide and
48,000 young adults in Kentucky have been able
to keep their insurance.

10. Immediate
consumer protections
• Health plans can’t drop coverage when someone gets sick, or if a mistake is
made on their paperwork
• First-dollar coverage for preventive care for all new plans
• In 2011 and 2012 over 975,000 people in Kentucky, and 71 million Americans, with private
health insurance gained preventative service coverage with no cost sharing.
• Increased access to care: community health centers
• In Kentucky, 21 health centers operating 132 sites serving over 278,000 people have received
an additional $75 million in support from the ACA to expand access to basic healthcare.

11. Key provisions
for small businesses
• Immediate tax credits for most small businesses
• 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?
þ Fewer than 25 full-time employees
þ Average annual wages <$50,000
þ Employer pays at least 50% of the premium
cost

13. Small business tax credits
Our report: 51,100 Kentucky small businesses
are eligible (89.2% of all businesses); 15,800
businesses eligible for the maximum 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
beginning in 2014
• Premium expenses: comprehensive
medical coverage, incl. dental,
vision, long-term care
• Tax credits do not cover premium
expenses of owners or their families
• Can amend your taxes for past years

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. Auto repair shop with 10 employees
Wages: $250K or $25K per worker
Healthcare costs: $70K
$24,500 (35% credit 2010-2013)
$35K (50% credit 2014)
Example:
Main Street mechanic

18. Restaurant with 40 part-time employees
20 full-time-equivalent workers
Wages: $500K or $25K per FTE
Healthcare costs: $240K
$28K (11.7% credit
phased out 2010-2013)
$40K (16.7% credit
phased out 2014)
Example:
Downtown Diner

19. Healthcare tax credits help
small business owners
• Mark Hodesh, owner Downtown Home & Garden
Ann Arbor, MI
• Pays 75% of employees healthcare premiums ($60K/yr) =
$15,000 credit in 2010.
“This is finally a chance to
get some money back and I
put it into the business."

20. How to claim the small
business tax credit
• Small employers (businesses or tax-exempt)
use Form 8941, available on www.irs.gov
• Include amount of credit as part of general
business credit on income tax returns
• Can be reflected in
determining estimated tax
payments for a year
• Applies toward income tax,
not employment tax

21. 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)

22. Medical Loss Ratio:
80/20 rule
• 80% of premium on medical
claims & quality improvement
• 20% on administrative & profits
• Rebates sent to customers if 20% is
exceeded
• Estimated $1.1B given back in 2012;
$321m in the small group market
• Over 249,000 families in Kentucky will receive
rebates this year, average of $114 per rebate
• National average rebate per enrollee in small
group plan: $174

23. 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
• Kentucky’s Insurance Department has been approved to
review rates, and began doing so in 2012

24. 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

25. State health
insurance exchange
• One-stop shop web portal
Small Business Exchange
INSURANCE PLANS
EXCHANGE
Choice
Comparison
Billing
Tax Credits
SMALL BUSINESSES
o Compare plans and
get detailed
information about
price, quality and
service
o Plans organized by
category: bronze,
silver, gold, platinum
o Calculator to compare
costs across plan
options
o Streamlined billing
process

26. Kentucky’s Health
Insurance Marketplace
• Facilitate the purchase of health insurance coverage for
individuals and small employer groups – one stop shop for
employers.
• In the case of SHOP, provide invoices and aggregate premiums.
• Apply for premium credit assistance and tax credits.
• Certify qualified Health plans, including stand alone dental
plans, in cooperation with DOI.
• Allow for the participation of insurance agents.
www.KYNECT.KY.gov

27. • Small business workers and self-employed receive
affordability tax credits (up to 400% of federal
poverty level—appx $90,000 for family of four)
• Ensure more $$ to medical care – reduced
administrative costs
• Incentives for administrative
efficiency and modernization
• Reduce hidden tax
State health
insurance exchange

28. • Insurance will still be sold outside exchange
• Members of Congress must use the exchange
State health
insurance exchange

29. • Businesses with fewer than 50 full-time workers –
96% of all businesses – are exempt from any
requirement to offer insurance
Shared & individual
responsibility

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. For larger employers
• Potential requirements for larger employers (those with
more than 50 employees):
– Failing to offer coverage- $2,000 for each full-time employee
per year, excluding the first 30 full-time employees
– Failing to offer affordable coverage- $3,000 per year for each
full-time employee receiving federal financial assistance in
exchange
• What does it mean to be affordable?
• Affordability penalty cannot exceed that of failing to offer
coverage. Business will pay lesser of the two

33. The new
HealthCare.gov
• Entire interactive website
dedicated to Small Businesses
• State specific information on
SHOP marketplaces
• Calculators for FTEs, types of
coverage, compare your existing
coverage
• Create a pre- Enrollment
checklist

34. Resources
• National HHS website: www.healthcare.gov
• SBM Coverage Guide:
www.healthcoverageguide.com
• Our website: www.smallbusinessmajority.org
o What s in Healthcare
Reform for Small
Businesses
o Healthcare Policy Page
o Detailed FAQ
o Tax credit calculator

35. Join our network
• Emma Hollister, Network Coordinator
• Email: ehollister@smallbusinessmajority.org
• Direct: (202) 828-8357
Connect with us!
@SmlBizMajority
Small Business Majority
Ways to get involved:
Contact
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