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Illinois Dodges Disaster on Supreme Court's Obamacare Ruling

The following originally appeared on Crain's Chicago Business.


Illinois just dodged a bullet with the outcome of King v. Burwell. If the Supreme Court had ruled against subsidies being challenged in the case, working people and families in the state collectively would have lost more than $49 million a month to help purchase health insurance.

In its decision, the court affirmed the legality of the provision of premium tax credits under the Patient Protection and Affordable Care Act in all states, whether they established their own health insurance marketplace or used the federal marketplace. On average, working poor and middle-class Illinoisans are getting $211 monthly to help pay their health insurance premiums. A different decision would have meant a 169 percent increase in out-of-pocket expense on the average premium.

Recent data by the Kaiser Family Foundation show nearly 73 percent of the remaining uninsured in Illinois eligible for Get Covered Illinois, the state's health insurance marketplace—roughly 597,473 people—live and work in metropolitan Chicago. In the Chicago area, more than 100,000 of the remaining uninsured reside in areas where English is not the predominant spoken language. While concise data are not available of how many of the uninsured are working, American Community Survey data indicate that as many as 62 percent of the uninsured in Illinois are working at least part time and more than likely work for small businesses.

The most recent year for which U.S. Census data on businesses are available, 2012, show 314,199 business establishments in Illinois. However, 94 percent of these companies employ fewer than 50 employees and thus are not required to provide health insurance via the ACA. Cook County alone accounts for 41 percent of the state's total small businesses.

NOW WHAT?

Now that the King v. Burwell decision has put the legality of subsidies to rest, Illinois needs to get busy enrolling the remaining 597,473 uninsured individuals eligible for a path to coverage in the Get Covered Illinois marketplace. Of these uninsured, 283,629 are eligible for a tax credit or subsidy.

It's a matter of economic security for our residents and for Illinois' economic environment. The math tells us that the business community—especially small businesses—needs to be at the heart of efforts to enroll the remaining uninsured. Crain's and Health & Disability Advocates surveyed small businesses last fall and learned that Chicago-area companies still face increasing health care costs; are confused by the requirements of the ACA; and are unlikely to enroll themselves and their employees online. In fact, more than 80 percent of those surveyed said they shop for health insurance for themselves and their employees using health insurance brokers and agents.

Now that federal funding for ACA assisters and navigators is ending, a public-private partnership for enrollment in Get Covered Illinois is critical. We need to double down on engaging health insurance brokers and agents. While the state did an amazing job in enrolling 633,757 adults in Medicaid as part of ACA, Illinois ranked well behind others in marketplace enrollment, coming in 20th out of 37 states that operate marketplaces using HealthCare.gov.

Get Covered Illinois is key to helping Illinois businesses thrive, enabling them to better attract and retain talent. The marketplace also encourages entrepreneurship by ending the reliance of individuals on larger employer-sponsored coverage.

A strong ACA marketplace is a win-win for the business community and the state. We urge Springfield, City Hall and county governments to make enrollment of the remaining uninsured a top priority and engage the business community, health insurance brokers and agents in the process.

Barbara Otto                                          
CEO                                                        
Health & Disability Advocates           

Erica Salem
Director of Strategic Health Initiatives
Health & Disability Advocates

Employer-Sponsored Health Insurance Staying Steady

Rates of employer-sponsored healthcare have not declined since the implementation of the ACA, according to Fredric Blavin, a Senior Research Associate at the Urban Institute’s Health Policy Center. These findings, published in the January 2015 issue of Health Affairs, are based on his analysis of the Health Reform Monitoring Survey. Researchers at the Urban Institute administered this survey to workers between June 2013 and September 2014, asking if they are/were employed and if they are/were offered employer-sponsored health coverage. Analysis of these national data, displayed in figure 1, suggests that rates have remained statistically constant. The pre-existing and new ACA economic incentives for workers to obtain coverage from employers remains strong; the feared erosion has not yet materialized.


Massachusetts An Early Example

Earlier studies on Massachusetts’ employer-sponsored insurance market support Blavin’s findings. Between fall 2006 and fall 2009, a period of time which included adoption of the state’s health reforms, the rate of employer-sponsored insurance increased by 3%.

ACA Provisions Prevented Downward Direction

Incentives in the healthcare law have restrained the predicted drop-off in employer coverage. Provisions, such as ongoing preferential tax treatment of premiums through payroll deductions and the mandate to provide coverage for businesses with 50 or more workers, have persuaded employers to continue offering plans.

But Small Firms Are Left Out

One notable result from this survey is the nagging imbalance between large firms and small firms offering coverage.  Although mechanisms like the small employer tax credit and the SHOP Marketplace are meant to close this gap, small businesses have not taken advantage. Outreach and education with small businesses represents a large opportunity for insurance coverage expansion.   Small employers need information to understand provisions of the ACA in order to provide health insurance options to this growing workforce.

Michele Thornton, MBA
Insurance and Benefits Consultant


Illinois Small Businesses Should SHOP for 2015 Health Coverage

Small business owners: are you considering all available options to find a health insurance plan that works best for your business and employees?

One resource for Illinois small business owners is the Small Business Health Insurance Options Program, or SHOP, where employers can compare group health insurance options. The SHOP is open year-round for small employers to browse, compare plans, and fill out applications online.

The Benefits of SHOPping Around


Buying health insurance through the SHOP can help small businesses save money. According to the Robert Wood Johnson Foundation, total spending on healthcare by small businesses will decrease by 8.7% because of provisions in the healthcare law. Small employers that offer coverage through the marketplace may be eligible for a tax credit that can cover up to 50% of their employees’ premiums. The Small Business Majority’s tax credit calculator shows if small businesses are eligible for the credit and how much money they could receive.

There are even more benefits to buying a SHOP plan, because small businesses will no longer be charged more for female workers, who had been paying up to 50% more for their premiums before the healthcare reform law. In addition, employers will no longer pay more for workers with pre-existing conditions and will benefit from new limits regulating health insurance costs for older workers.

Health & Disability Advocates, a non-profit with 16 full-time employees, is an example of a small organization that used the SHOP and found a better deal. Both HDA and its employees gained – the non-profit is now spending approximately $20,000 less on healthcare, while its workers have lower premiums and have access to a wider network.

The Downside of Sticking With Your Current Plan


As many as 80% of companies with up to 50 employees opted to renew their non-compliant plans for 2014, and a similar percentage will likely try to do so this year. Small business owners who decide to renew their old plan may not save money and may instead see a price increase for 2015. This is why investigating all health insurance options, including those offered through the SHOP, could benefit small businesses. Many could save money by purchasing a plan through the health insurance marketplace, or through selecting a plan with better coverage for about the same cost.

How to Start


In order to begin the enrollment process and explore options, Illinois small businesses can visit the SHOP online, or contact a certified health insurance broker to assist with the enrollment process. The more small business owners know, the easier it will be for them to get their employees more-affordable insurance coverage. Once owners have found a reasonable option for their small business, they can stop worrying about health insurance and do what they do best – run the companies that make up the backbone of our state and our nation.

Jesse Greenberg
Director, West and Midwest
Small Business Majority

Affordable Care Act ("Obamacare"): Things Businesses Should Know

Either as an individual or the owner of a small business, you may be affected by the Affordable Care Act tax provisions. The Affordable Care Act (also known as Obamacare) was signed into law by President Obama on March 23, 2010, and recently survived a challenge in the United States Supreme Court. While the main focus of the Affordable Care Act is health reform legislation, there are several tax provisions that will take effect as different parts of the legislation are implemented. The following is an outline of some of the important tax-related consequences of the Affordable Care Act that have already been implemented and some information for what you can expect as the legislation is fully rolled out between now and 2014.

In addition to making sweeping changes to the U.S. health care system, the health care reform legislation added a number of new taxes and made various other revenue-increasing changes to the Code to help finance health care reform.

One of the provisions that were enacted in 2010 was the Small Business Health Insurance Tax Credit. For tax years from 2010 through 2013, the maximum credit is 35% of health insurance premiums paid by small business employers. A small employer is one that has fewer than 25 full-time equivalent employees, pays an average wage of less than $50,000 a year, and pays at least half of the employee’s health insurance premiums. The credit is scheduled to increase to 50% for small business employers after 2013. However, in tax years that begin after 2013, an employer must participate in an insurance exchange in order to claim the credit, and other modifications and restrictions on the credit apply.


In 2011, insurance companies were required to prove they spent at least 80% of the premium payments on medical services, rather than on things like advertising and executive salaries. Those that didn’t were required to provide rebates to policyholders. You may have seen letters, or even rebate checks, hitting your mailboxes recently stipulating to these facts. These rebates may be taxable income to you if you previously received a tax benefit from a deduction for the insurance premiums paid. Your tax advisor should be consulted.

In 2012, employers are required to disclose the aggregate cost of applicable employer-sponsored coverage on an employee’s annual Form W-2. Reporting is for informational purposes only. However, for 2012 Forms W-2 (and W-2s issued in later years, unless and until further guidance is issued), an employer is not subject to reporting for any calendar year if the employer was required to file fewer than 250 Forms W-2 for the preceding year.

Upcoming changes in 2013 include an increase in the deduction for medical expenses. Under prior law, medical expenses had to exceed 7.5% of adjusted gross income in order to be deductible for regular tax purposes, and 10% of adjusted gross income for Alternative Minimum Tax (AMT). The Affordable Care Act increases the regular tax limitation to 10% of adjusted gross income for those who are under the age of 65, bringing it in line with the AMT limitation.

The Medicare Surtax will also kick-in in 2013. For single taxpayers making more than $200,000 and married filing jointly taxpayers making more than $250,000, an additional 3.8% Medicare tax on dividends, capital gains, and rental and royalty income will apply. The KOS Bottom Line Bulletin September 2012 edition included an article titled “Get Ready for the Medicare Surtax in 2013.” To read this article, click here or go to the KOS website at www.koscpa.com/announcements.

If you contribute to a Flexible Savings Plan that your employer provides, beginning in 2013 the amount you may contribute annually to that plan will be limited to $2,500. This is down from the $5,000 prior limitation and will be adjusted annually for inflation.

In 2014, the state-run health exchanges will be set up and the penalties for individuals who do not purchase insurance will kick-in. The penalty will increase over the three year period from 2014 to 2017 as follows:

2014 – The greater of $95 or 1% of income.
2015 – $325 or 2% of income.
2016 – $695 or 2.5% of income

Businesses with 50 or more workers will be subject to a $2,000 per worker penalty if they don’t offer health insurance. Those that do receive a tax credit of 50% of the premium cost.

Nearly all businesses will have to make changes in order to comply with the Affordable Care Act. Do you have questions about how this act affects you? As an employer, are you aware of what changes you need to make? If so, you should attend our breakfast seminar on November 14 titled “What Does the Affordable Healthcare Act (AKA “Obamacare”) Mean for Employers?” This FREE program takes place from 8:30 until 10:30 a.m. at the KOS office at 1101 Lake Cook Road, Suite C in Deerfield, Illinois. To reserve a space, contact Kelly Wallaert at 847.580.4100 or kwallaert@koscpa.com.

Christie Butcher, CPA, MST
Manager, KOS Public Accountants

(This article was originally posted on the Kessler Orlean Silver website here)