What Is the Health Insurance Marketplace?

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Offering health insurance is more than just an attractive benefit. It may be required by law or at least strongly encouraged. The Affordable Care Act made health insurance more accessible to many individuals and families. Passed in 2010, the ACA, sometimes referred to as “Obamacare,” made several significant changes to health insurance requirements.

These changes include forbidding health insurance companies from excluding individuals with pre-existing conditions and eliminating the practice of charging higher premiums to women. Another way the ACA made health insurance more accessible is by requiring businesses to provide health insurance to their employees. The requirements are based on the size of your business.

The health insurance marketplace is a resource that allows individuals to purchase health insurance that meets the requirements of the ACA. If you have a small business that’s not required to provide health insurance, you may be eligible for a tax credit if you voluntarily provide health insurance to your employees. If you don’t provide health insurance, you can direct your employees to health insurance marketplace plans.

TL;DR (Too Long; Didn't Read)

The health insurance marketplace provides health insurance options to individuals and families without access to other health insurance options.

Are You Required to Provide Health Insurance?

The requirements for providing health insurance depend on whether you are considered a large employer or a small employer. If you have no employees, you are not required to meet the ACA requirements for businesses. Applicable large employers are required to share responsibility with their employees for the cost of health insurance and report their health insurance offerings to the IRS.

Your business has to have at least 50 full-time or full-time equivalent employees to be considered a large employer. An employee is considered full time if she works at least 30 hours per week or at least 130 hours per month. Seasonal workers and workers with health insurance through the Department of Veteran Affairs are not counted toward the number of full-time employees.

Applicable large employers must offer at least minimum health insurance coverage to their employees as well as the dependents of their employees. Minimum health insurance coverage means that the insurance pays for at least 60 percent of covered services and a significant amount of coverage for doctor services and inpatient hospital services. Employers can require their employees to pay for part of their health insurance, but that payment can’t exceed 9.5 percent of the employee’s household income.

Penalties for Not Providing Health Insurance

If you qualify as a large employer, there are penalties for not providing the minimum required insurance to at least 95 percent of your full-time employees. If you are an applicable large employer and even one of your employees receives a tax credit for enrolling in a health insurance marketplace plan, you could be fined $2,000 per year times the total number of full-time employees you have. Your first 30 full-time employees don’t count toward the penalty. You aren’t required to offer health insurance to part-time employees.

Large Employer Requirements for Reporting

Large employers are required to report on several aspects of health insurance coverage. For example, if you are a large employer, you must withhold an extra 0.9 percent of any employee wages above $200,000. You also must report that withholding. You may also be required to provide your employees with the cost of their health insurance on their Form W-2.

Large employers are also required to report information about the health insurance they offer to the IRS. Depending on the size of your business, you may be required to report this information electronically. In 2018, you have until March 31 to file if you’re filing electronically and until February 28 if you file by paper.

Small Business Health Care Tax Credit

If you are the owner or manager of a business with less than 50 full-time equivalent employees, you are not required to provide health insurance. You can direct your employees to options on the health insurance marketplace for 2019 or you can reap the benefits of providing health insurance to your employees.

The small business health care tax credit provides you with a tax credit that is equivalent to 50 percent of the premiums you pay for your employees’ health insurance. If their health insurance premiums are $15,000 for the year, then you would receive a tax credit of $7,500. You can receive the tax credit for two consecutive tax years.

To get the tax credit, you need to have fewer than 25 full-time employees. You also need to pay your employees an average salary of $53,000 or less per year. You have to pay at least 50 percent of your employees’ annual health insurance premiums. The last requirement is that in most cases, you have to purchase your employees’ health insurance through the Small Business Health Options Program marketplace.

To claim the tax credit, you or your tax preparer must use IRS Form 8941, the Credit for Small Employer Health Insurance Premiums, to determine the amount of your credit. That amount is included as part of your general business credit on your tax return. You may be able to carry the credit forward or backward to another tax year. If you’re a tax-exempt employer, you might be able to get a refundable credit.

Small Business Health Options Program Marketplace

You can research potential plans through the Small Business Health Options Program marketplace website. If you want a small business health insurance marketplace 2018 plan for your employees, you will need to work directly with an insurance company or an insurance agent or broker who is registered with the marketplace. You don’t need to create a health insurance marketplace login for the website. Instead, you will enroll through your agent, broker or health insurance company.

When you’re looking into small business health insurance options, you will need to decide on coverage options. You may want to offer one plan or give employees a choice between two or more plans. You may also want to offer additional coverage, such as dental or vision insurance. Your broker or insurance company can help you sort through your options.

Health Insurance Marketplace

Providing your employees with health insurance may not be a viable option, especially if you only employ a small number of people. In that case, your employees will need to explore other options. They may be able to obtain health insurance through a spouse. If they aren’t married or their spouse doesn’t have health insurance, their best option is to explore the health insurance marketplace.

There is a federal marketplace. Some states also have their own health insurance marketplaces. For example, California has a website called “Covered California” that offers marketplace plans for eligible California residents. Maryland has the Maryland Health Connection website.

When you’re looking at individual plans on the health insurance marketplace or small business health insurance plans through the Small Business Health Options Program marketplace, they fall into one of four categories. Plans in the bronze category pay for about 60 percent of your medical costs. Plans in the silver category pay for about 70 percent of your costs. Plans in the gold category pay 80 percent, and plans in the platinum category pay 90 percent.

Plans in all of these categories provide free preventative care. Some plans also offer free or discounted services before you meet your annual deductible.

Understanding Health Insurance Marketplace Coverage

Each level of health insurance plan purchased through the marketplace has a premium, which is the amount you pay each month, and a deductible. A deductible is the amount you have to pay out of pocket before your health insurance starts. Bronze plans have the lowest monthly premiums and the highest deductibles. This means you pay less each month, but your overall health care costs are higher if you need health care.

A silver plan will have slightly higher coverage than a bronze plan. It will also have a lower deductible. If you qualify for extra savings, you must pick a silver plan. Gold and platinum plans have higher monthly premiums and lower deductibles. Higher cost plans will cost more up front, but they will save you more money if you need medical care.

Another option for some people is a catastrophic plan. You can automatically purchase a catastrophic plan if you are under age 30. You can also purchase a catastrophic plan if you qualify for a hardship exemption. You can qualify for a hardship exemption in several situations, including if you’ve filed for bankruptcy, you have had high medical expenses or if you’re facing foreclosure or eviction. You can apply for an exemption through the federal or state health insurance marketplace website.

A catastrophic plan has very low monthly premiums. This is because the deductible is quite high. For example, in 2017 the deductible for all catastrophic plans was $7,150. Catastrophic plans do cover some preventative care for free, though.

Saving Money on Health Insurance Marketplace Plans

Your employees may be able to save money on health insurance depending on their income, filing status and number of dependents. They may qualify for a premium tax credit if they meet certain income requirements. The income requirements are based on the federal poverty line. They may qualify for the credit if their income is between 100 percent and 400 percent of the federal poverty level. If their income is below the federal poverty level, they may qualify for other assistance, such as Medicaid or state medical assistance programs.

For example, in 2017 a family of four could have an income between $24,600 and $98,400 to qualify for the premium tax credit. Your employees can use their adjusted gross income to determine their eligibility. Your employees must also file jointly, as head of household or as an individual. If they file as married filing separately, they will not be eligible for the credit.

The credit is based on a sliding scale. In general, the lower their income, the larger their tax credit. They can have all or a portion of their tax credit applied directly to their health insurance premiums. They can also wait and receive the tax credit when they file their tax return. If they qualify for the tax credit, they will need to file Form 8962 with their tax return.

If they have significant life changes, they should report those changes to their health exchange plan. These changes may include marriage, divorce, having a child or adopting a child. These changes may impact their eligibility for a tax credit.

Penalty for Not Having Health Insurance

If your employees don’t have health insurance, they may be subject to a tax penalty. The tax penalty has been removed beginning with the 2019 tax year. For the 2018 tax year and before, though, there is a penalty of $695 per adult and $347.50 per child if they don’t have health insurance. The maximum penalty per family is $2,085. There are exceptions to this penalty, though. If your employees were experiencing a serious hardship, such as a death in the family, they can apply for an exemption so they don’t have to pay the penalty.