A lot has been said about Obamacare, also known as the Affordable Care Act, but what does it mean for your small businesses and franchises? How will you be affected?

Small Business Health Options Program (“SHOP”) Exchanges:

• Beginning in 2014, businesses with up to 100 employees can use state-based SHOP exchanges to purchase coverage.
• SHOP exchanges utilize a premium rate review process. They also set standards for how much insurance companies can spend on administrative costs (i.e. the medical loss ratio).

Requirement for All Small Employers Providing Coverage:

• Small employers must limit waiting periods to no more than 90 days.
• They must eliminate lifetime and annual benefit limits.
• Small employers offering dependent coverage must offer that coverage to workers’ adult children up to age 26 (no obligation that they contribute to that coverage).
• Beginning 6 months after enactment, pre-existing condition exclusion periods for children were banned.

Requirements for Plans Sold in Small Group Market: (except grandfathered plans)

• These plans must meet the essential benefit requirements (“EHBs”).*
• These plans must be rated consistent with rating limits (i.e. 3:1 for family structure, geography and age bands and 1.5:1 for tobacco use).
• They must limit deductibles to $2,000 for single coverage and $4,000 for family coverage.
• Annual cost sharing must be limited to current Health Savings Account limits; in 2010, this was $5,959 for single coverage and $11,900 for family coverage.

Grandfathered Plans:

• Small employers already offering health coverage can continue to provide such coverage to their workers, with current policies being “grandfathered,” or exempt from most of the law’s regulatory reforms and the essential benefits requirements.
• However, if an employer ends a grandfathered policy, new coverage bought on small group markets is subject to the regulatory reforms and benefit minimums.

No Financial Requirements for Small Businesses: the ACA imposes no financial requirements for small businesses to contribute to their employees’ health insurance.

• However, beginning in 2014, larger employers with more than 50 full-time employees (“FTEs”) who do not offer coverage face a penalty of $2,000 per FTE (excluding the first 30 FTEs) if at least one FTE receives a government subsidy to buy coverage on the exchange.

Small Business Health Care Tax Credit:

• This new tax credit helps small businesses and small tax-exempt organizations afford the cost of covering their employees. It encourages small businesses to offer health coverage for the first time or maintain their current coverage.
• To qualify, an employer must: (1) cover at least 50% of the cost of health insurance for employees; (2) not have more than 25 full-time equivalent employees; and (3) have annual wages of less than $50,000.
• Credits became available in 2010, covering up to 35% of the employer’s contribution to health insurance coverage; on January 1, 2014, this will increase to 50%.

For more information, visit: www.healthcare.gov.

*The ACA defines essential health benefits to “include at least the following general categories and the items and services covered within the categories: ambulatory patient services; emergency services; hospitalization; maternity and newborn care; mental health and substance use disorder services, including behavioral health treatment; prescription drugs; rehabilitative and habilitative services and devices; laboratory services; preventive and wellness services and chronic disease management; and pediatric services, including oral and vision care.” {D0365900.DOC / 1}

**References: www.apsa.org