There is a new definition for a small employer for 2014. This “small” change will affect a lot of people.
Let’s review for a minute, before 2014, the “size of a group” was determined by eligible employees. This number came from how many people were full-time (and had satisfied their waiting period), or were COBRA eligible. Out of those that were eligible you could deduct the people that had a legitimate waiver. This could be a person who was covered by their spouse’s insurance, or some companies allowed individual coverage to constitute a legitimate waiver.
In 2014, a “small” employer is one who employed an average of at least one but not more than 50 employees during the prior calendar year, and who employs at least one employee on the first day of the plan year. Employees are defined as individuals employed by an employer and include full-time, part-time, temporary and/or seasonal employees.
As a small employer you must also meet a minimum participation to qualify for group major medical insurance. You have to have at least 50% participation in the insurance.
For example:
In 2014 – if you have 20 employees – 10 must participate.
Before 2014 – if you had 20 employees and 10 were part-time or seasonal, you only needed 50% participation of the remaining 10 which would be 5.
Doesn’t sound too bad huh? Well here is where things it makes the difference.
The small employer has to pay at least 50% of the employee only premium. So instead of paying 50% of 5 people (in 2013) … he now has to pay 50% of 10 people (in 2014).
Not to mention, as long as the group is under 50 total employees in 2014 the rates are community rated (rates not based on health). However, once it goes over 50, it goes thru medical underwriting (rates are based on health).
This is what you will see happen:
More employers laying off people to either stay under that 50 employee mark
Employers will lay off part-time workers because maybe they can’t afford to pay insurance for a part-time employee Employers may not hire a “visibly” sick or older person because unfortunately they will be more costly on their insurance.
I don’t agree or disagree with what is going to happen, I am merely trying to outline the new guidelines and make people aware of what is coming in our near futures because of the “change” in healthcare due to the Affordable Care Act.