Tag Archives: HCR Dashboard

Healthcare reform and the small employer tax credit

Houchens-PaulThe Internal Revenue Service (IRS) has recently published guidance as a proposed rule on the tax credit that is available for small employers (fewer than 25 full-time employees) that will offer or are offering health insurance coverage under the Patient Protection and Affordable Care Act (ACA). This tax credit, under new tax code section 45R, is a sliding scale for purchasing health insurance for employees.

Beginning in 2014, the tax credit will only be available on the Small Business Health Options Program (SHOP) exchange and is equal to 50% of the employer contributions (35% for small employers eligible to be tax-exempt). It should be noted that on September 26th, the Department of Health and Human Services (HHS) announced that the enrollment functions of the federal SHOP exchange will be delayed until November 1.

To qualify for this tax credit, small employers must meet the following criteria:

• Employees’ average annual wages must be less than $50,000. Employers with 10 or fewer employees and average annual wages of less than $25,000 (adjusted for inflation for taxable years beginning after December 31, 2013) will qualify for the full tax credit.
• Employers must contribute at least 50% of the total premium cost or 50% of a benchmark premium.

The final IRS rule is expected to be published after December 31, 2013, but the IRS provides a transition period, allowing employers to rely on the “proposed” rule for taxable years beginning after December 31, 2013, and before December 31, 2014.

The number of small businesses applying for the small group tax credit to date has been less than expected, causing some to speculate that determining qualification for the small group tax credit has been overly complicated. The Milliman HCR Dashboard, a new tool specifically for brokers, insurers, and advisors serving the small and mid-size group market, can determine if a small group may qualify for the tax credit based on census, premium, and employee contribution data. The HCR Dashboard also estimates the amount of the credit, making adjustments for group’s average salary, location, number of employees, premium amounts, and tax status. While small businesses still need to seek assistance from a qualified tax advisor when applying for the small group tax credit, results from the HCR Dashboard can provide an indication of whether such assistance should be sought as part of a complete healthcare reform analysis for a small employer.

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Google+ Hangout: Milliman HCR Dashboard

The Milliman HCR Dashboard allows carriers, brokers, and advisors to provide their small and mid-size clients with key healthcare reform analytics that will help employers understand the financial implications of the Patient Protection and Affordable Care Act (ACA). The HCR Dashboard can help these small and mid-sized employers develop strategic solutions to optimize benefit spending.

Milliman’s Ryan Hart, Scott Weltz, Robert Schmidt, and Paul Houchens offer their perspectives in this Google+ Hangout.

To learn more about the HCR Dashboard, click here.

Are businesses prepared for the impacts of the ACA?

Houchens-PaulThe U.S. Chamber of Commerce recently released a survey of approximately 1,300 executives from companies with 500 or fewer employees on small business outlook. A number of questions concerned whether the executives and their companies were prepared for the impacts of the Patient Protection and Affordable Care Act (ACA). The survey’s ACA-related findings include:

• 49% of executives listed the ACA as their biggest current challenge
• 79% believe the ACA will make health coverage more expensive
• Nearly 25% indicated the ACA is their biggest obstacle to hiring
• Most importantly, only 30% of executives indicated they are prepared for the ACA and have an understanding of the participation requirements for the health insurance exchanges

The ACA is a challenging law for employers of all shapes and sizes to understand. Unfortunately, its complexity, combined with the uncertainty caused by the legal challenges and implementation delays, has caused many employers to be less proactive or to struggle with their strategic planning. In addition, many of the tools that are available to assist employers with the ACA do not provide the right level of information and analysis to fully understand the impacts of the changes.

I believe employers of all sizes need in-depth, customized financial analysis to understand the true impacts of the ACA to their organizations. Analysis that simply scratches the surface of the ACA requirements may not provide an executive with the knowledge to make decisions that may have significant financial ramifications, along with impacting employee attraction and retention.

In recognition of the need to provide small businesses with in-depth financial analysis related to the ACA, I have collaborated with a team of Milliman employer healthcare reform experts to create the Milliman HCR Dashboard. Whether your organization is an employee benefits agency, insurer, benefits law firm, or CPA firm, licensing the HCR Dashboard can give your organization the power to provide your small and mid-size employer clients with the knowledge that will allow them to make informed decisions about the ACA.

Key HCR Dashboard modeling results include:

• Assessment of employee household income distribution by key ACA federal poverty level (FPL) tiers
• Estimated employee premium and cost sharing under the employer’s plan relative to silver or bronze plans in the exchange (including applicable cost-sharing subsidies)
• Estimated impact of adjusted community rating reflective of the employer’s state and insurance carrier (small employers only)
• Assessment of whether a plan design is compliant with ACA requirements for actuarial value, deductible level, and out-of-pocket maximum
• Evaluation of the number of employees with unaffordable coverage based on employee income or estimated household income
• Estimated salary increases by employee household income level to make employees “whole” for losing coverage
• Financial impact of terminating plan, on a pretax and post-tax basis, with and without salary adjustment
• Assessment of potential eligibility for small group tax credit (small employers only)
• Preliminary self-funding analysis

Contact us to learn more about the Milliman HCR Dashboard and how you can provide your clients with the ACA guidance they need.