Small Group HBA

Small Group (2 to 49 employees)

Employers with less than 50 fte’s are not subject to any Pay or Play penalties if they do not offer qualified and affordable plans. The aspects of the ACA that small employers should be aware of are:

  • Major features were implemented in 2014.  Most on plan anniversary date (We don't know all the details yet as enabling regulations are still being written and some parts have delayed implementation).
  • Health rates are likely to increase again through 2014 due to many things driving health care expenses and the Affordable Care Act.
  • Modified community rating will apply to calculate rates.  No medical underwriting, no industry, sex or case size factor.  What factors will be used are:  Location, age(s) by year, family size and possibly tobacco usage in states outside of California.
  • Groups of less than 50 FTE's are not subject to the "play or pay" penalties. Full time generally = 30 hours a week or more.
  • Complex rules governing definition of full time equivalent, part time, variable hours worked & seasonal employees.
  • A Group of 2 or more must include an employee on verifiable payroll records. A group of two “Partners” of a company are no longer allowed.
  • Determination of group size based on look back for various time periods in 2014.
  • New ACA taxes began 1/1/2014. Group rates will be impacted. When/how vary by carrier. Average 3-5% in addition to health care cost trend increases.
  • Maximum waiting period will become 60 days (1st of month following 30 days).  Effective with the groups renewal in 2014.
  • If group plans are offered, all employers must offer government approved “essential benefits” with no lifetime benefit maximums
  • No enrollment exclusions for pre-existing conditions.
  • Groups of fewer than 25 employees may be eligible for tax credits if plan is purchased through an exchange. Tax exempt organizations may also be able to participate and be eligible for “refunds”
  • The California Exchange (Covered California) is open for business. The next Open Enrollment period will begin in November, 2014.
  • RAF’s (Rate Adjustment Factors) were eliminated 1/1/2014. This will help groups with high (1.1) RAF’s, however it will create a higher rate increase for groups with a 2013 .90 RAF.
  • Employer contribution amounts will be subject to a minimum contribution requirement (by law and/or carrier).
  • Spousal age is now be factored in. Dependent cost for children also affects the final family rates.
  • True 1099 employees will probably not count against you. Possible higher standard of measure.

Short term strategies we should discuss:

  • Managing the FTE Challenge! If you employ close to 50 FTE’s, or have a large number of variable hour workers, set up a system to accurately classify and keep a running total on the number of full time, seasonal and part time employees.  This is easier to set up now rather than having to look back for all of 2013.
  • Price comparison shopping! If you are nearing 50 employees, at least consider a goal of staying under the 50 full time equivalent employee thresholds. This eliminates possible penalties and may reduce reporting requirements.
  • Take a very critical look at any “special arrangements” you have for owners or key employees on health plans.

*Full time equivalent employees – Employers will have to add up all part time employees time to determine the FTE number

You can view a sample "Employer Group Benefits Plan Proposal" by clicking

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Health Benefits Advisors

31194 La Baya Drive, Ste 100
Westlake Village, CA, 91362

Ph: 949-636-3601
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6285 E. Spring Street Box 273
Long Beach, CA 90808

Ph: 562-384-5125
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May 2014