How can I determine if my business qualifies to use Vermont Health Connect?
For the purposes of qualifying to use Vermont Health Connect in 2014, a business is a small business if it employs 50 or fewer full-time employees. An employee is a full-time employee if she works 30 or more hours per week. Anyone who works less than 30 hours per week is not counted.
Who counts as a seasonal employee?
Seasonal employees are defined as employees who work fewer than 120 days during the year.
My business qualifies as a small business. Should I offer coverage to my employees, or not?
For the 47% of Vermont small businesses that offer insurance, the keep-drop question is a critical one. Unfortunately, there is not a one-size-fits-all answer. The State cannot determine what is best for your business and your employees. Vermont Health Connect offers tools such as the Small Employer Estimator to help you decide whether to renew group coverage. If you decide to renew, these tools – along with certified Navigators and registered brokers – can help you determine which plans to renew and how to do it. Visit Vermont Health Connect’s website for more information.
If you are among the 53% of Vermont small businesses that don’t offer insurance, you are able to use these same tools to decide whether to start offering employer sponsored insurance through the Exchange.
What other questions should I ask as I decide whether to keep or drop coverage?
Here are some major questions for an employer to consider:
- Do you offer insurance today?
- How much do you spend today on insurance?
- How much do your employees spend on insurance today?
- Would your employees be better off purchasing insurance through VHC than under your current plan?
- Would you be subject to the federal penalty? Cost?
- Would you be subject to a state assessment? Cost?
What types of businesses do you expect to keep offering coverage? What types will drop?
A village market staffed by lower and middle-income employees (up to 400% of federal poverty level, or household income of $94,200 for a family if four) might consider dropping coverage in order to allow the employees to take advantage of federal tax credits. A law firm with high-income partners, on the other hand, might decide to continue their employer-sponsored insurance. Businesses with a mix of employee incomes will have a tougher decision. These businesses will likely want to consult Vermont Health Connect’s decision tools, such as the Small Employer Estimator, or have a certified Navigator or registered brokers walk through the process of deciding what is best for each of their particular situations.
How will the health coverage work if I decide to keep coverage for my employees?
Small business employers who participate in Vermont Health Connect will have the option of choosing between different plan menus. In the Blue Cross Blue Shield or MVP menu, the employer selects a single insurer and decides how much to contribute, then each employee can select any tier of qualified health plan from that provider. In the other option, the “full menu," employees can select any plan from any insurer.
Regardless of which menu you choose, you will only have to pay one bill each month. Vermont Health Connect will aggregate all of your employees’ premiums, calculate your contribution, then divide and disburse your contribution to each of the insurance companies.
If I decide to offer health coverage, is there a minimum contribution that I am required to make?
In Vermont in 2014, there is no minimum employer contribution requirement. However, in order to receive the federal small business tax credit, the employer must offer at least a 50% contribution to employee premiums. In addition, business owners will want to consider the impact on their employees. Because an offer of health coverage could prevent an employee from receiving tax credits that she could otherwise qualify for, an employee might be better off with no offer of coverage at all than she'd be with a small contribution from her employer.
What happens to my employees if I decide not to offer health coverage?
If you decide not to offer health coverage, your employees and their families will be able to purchase coverage through Vermont Health Connect. If they need help doing so, they can use the Vermont-based call center or certified Navigators. Employees in most Vermont households that use Vermont Health Connect (those with incomes up to 400 percent of the federal poverty level or $94,200 for a family of four) will be eligible for premium tax credits and/or cost-sharing subsidies to help pay for out-of-pocket costs. These two forms of financial assistance are not available to Vermonters in employer-sponsored plans.
What happens to me if my business decides not to offer health coverage to my employees?
Depending on the size of your business, you might be subject to a state assessment, a federal assessment (starting in 2015) or both. If your business has fewer than 50 full-time equivalent employees (“FTEs”), then you will not be obligated to pay a federal assessment if you choose not to offer health coverage. Like larger businesses, however, you will still be required to pay a Vermont assessment of approximately $40 per month for each uncovered FTE, just as you did in past years – although there is no penalty for the first four uncovered FTEs.
Because many small businesses are accustomed to contributing hundreds of dollars per employee per month toward the cost of health care, the decision to drop coverage might leave you with considerably more money on your balance sheet. That, in turn, will lead to more choices. Do you increase employee compensation? If so, do you do so in the form of bonuses or other perks? These decisions will vary from employer to employer based on their particular circumstances.
Businesses with 50 or more FTEs will be subject to a federal assessment for not offering adequate coverage beginning in 2015. It is important to note that whether an employer is subject to this assessment depends on the number of its FTEs, as defined by the IRS. This is not the same as determining if your business qualifies as a small business in Vermont. In other words, a business that employs 40 full-time workers and 40 half-time workers would be considered a small business for the purpose of qualifying to use Vermont Health Connect, but might not be considered a small business for the purposes of avoiding the federal assessment for not offering coverage. If you are unsure how to count your employees, consult the IRS or an attorney.
If a business does not offer health insurance and its employees buy health plans through Vermont Health Connect on their own, can the business still contribute to an HSA?
Yes. Both Blue Cross Blue Shield of VT and MVP Health Care offer high deductible health plans through Vermont Health Connect that may be paired with HSAs. For more details on HSAs, FSAs, and HRAs, please visit Vermont Health Connect's Tax-Favored Accounts Fact Sheet.
What happens if I start offering coverage with 49 full-time employees and later hire more?
If a small employer (50 or fewer employees) offers coverage to employees through Vermont Health Connect and then hires over 50 full-time employees, the business will still be treated as a small employer, and therefore continue to offer coverage through Vermont Health Connect, until the employer no longer chooses to offer an employer plan.
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