State of Delaware
Health Insurance Exchanges
and
the Small Group Market
Delaware Restaurant Association
Education Symposium
February 21, 2012
Employer Eligibility for Exchange
• Small Business Health Options Program (SHOP) Exchange will offer
health insurance plans to small employers starting in January 2014
 Businesses with fewer than 100 employees are allowed to purchase
coverage through the SHOP Exchange in 2014 and 2015
•
States can elect to limit to 50 employees
 Starting in 2016, the SHOP Exchange must offer coverage to
businesses with ≤100 employees
 States may choose to expand to larger groups in 2017 and beyond
• Total employees for Exchange eligibility = full time workers, part time
workers, and seasonal employees
 For seasonal, employee count is equal to the proportion of days worked
in a year.
Page | 1
Tax Credit Eligibility
• Employers with < 25 low wage employees may be eligible for tax credits
 Low wage = maximum of $50,000 per year
 Tax credit may equal up to 50% of employer share of premium
Page | 2
Employer Mandate
• ACA requires large employers to provide minimum coverage to all full
time employees

Minimum Coverage = 60% actuarial value (bronze), employee
contribution is ≤ 9.5% of the employee’s W-2 wages

If your employee earns $28,000 per year, they may pay a maximum of
$222/month for their share of the premium
• If an employer chooses not to offer coverage to their employees, the
employer will be charged a penalty if:
 An employee enrolls in an individual Exchange plan AND qualifies for a
federal subsidy (income less than 400% FPL)
 Penalty = $167 per month per full time employee (less 30 full time
employees)
Page | 3
Large Employers and Full Time Employees
• Large Employer for Purposes of Penalty:
 Average of 50 or more full time employees on business days during the
preceding calendar year
 A business can claim an exemption from large employer status if:
•
The total number of full time employees only exceeded 50 for less than
120 business days, OR
•
If the full time employees in excess of 50 were all seasonal employees
• Full time employee: An employee who worked, on average, 30 hours per
week during the calendar year
Page | 4
Who is considered an employer?
•
Sec 414 (b): Employees of a controlled group of corporations are treated as
though they are employed by a single employer
•
Sec 414 (c): Employees of partnerships, proprietorships, etc, that are under
common control are considered employed by a single employer
•
Sec 414 (m): Employees of an affiliated service group or organization (e.g.
groups that are shareholders or regularly perform services for another
organization, including managerial services) are employed by a single employer
•
Sec 414 (o): The Secretary of the Treasury may provide additional regulations to
prevent the avoidance of employee benefit requirements through the use of
separate organizations, employee leasing, or other arrangements
Page | 5
Who is an employee?
• Common Law of Agency Principles for the employee-employer
relationship
 You have the right to control and direct the individual who perform the
services provided
 You have the right to discharge the individual
 The individual is economically dependent on the business for whom
they are providing services
Page | 6
How an Exchange Works
• General process for purchasing coverage in the SHOP:
1. Employer logs into Exchange website
2. Employer enters basic information about employees who will be offered
coverage
3. Employer sets parameters for plan options
4. Employee logs in using “access code” from their employer
5. Employee views all options that the employer has chosen for them and the
premium they will pay after their employer’s contribution is deducted
6. Employee chooses option and completes enrollment
• There are four potential purchasing models for the Exchange...
Page | 7
Note on Exchange Purchasing Models
• Federal regulations proposed a defined contribution model for Exchange
plans
• Currently, defined contribution is 50% of employee premiums for small
group plans in Delaware
• However, no specific contribution requirements have been issued for the
Exchange
• The following models include examples of employer contributions and do
not propose a specific employer contribution level
Page | 8
One Carrier, One Plan
Monthly Premiums for Single Coverage
Plan/Carrier
Carrier A
Carrier B
Carrier C
Carrier D
Platinum
$540
$531
$518
$554
Gold
$480
$472
$460
$492
Silver
$420
$413
$403
$431
Bronze
$360
$354
$345
$369
Employer chooses one plan and pays 50% of premium, or $207.
Page | 9
One Carrier, Multiple Plans
Example of Contribution Split Between Employer and
Employee
Carrier B
Total Premium
Employer
Share
Employee
Share
Platinum
$531
$207
$324
Gold
$472
$207
$265
Silver
$413
$207
$206
Bronze
$354
$207
$147
Page | 10
Multiple Carriers, One Plan Level
Example of Contribution Split Between Employer and
Employee
Silver Level
Total Premium
Employer
Share
Employee
Share
Carrier A
$420
$207
$213
Carrier B
$413
$207
$206
Carrier C
$403
$207
$196
Carrier D
$431
$207
$224
Page | 11
All Carriers, All Plans
Example of Employee Share of Monthly Premiums
Plan/Carrier
Carrier A
Carrier B
Carrier C
Carrier D
Platinum
$333
$324
$311
$347
Gold
$273
$265
$253
$285
Silver
$213
$206
$196
$224
Bronze
$153
$147
$138
$162
Employer share is fixed at $207 (50% of Silver Level Plan from Carrier B)
and employee pays the difference
Page | 12
All Carriers, All Plans
Example of Employee Share of Monthly Premiums
Plan/Carrier
Carrier A
Carrier B
Carrier C
Carrier D
Platinum
$373
$364
$351
$387
Gold
$313
$305
$293
$325
Silver
$253
$246
$236
$264
Bronze
$193
$187
$178
$202
Employer share is fixed at $167 and employee pays the difference
Page | 13
Employer Affordability Safe Harbor
• 9.5% affordability is based on Box 1 of the W-2 for that employee from
you (as an employer), not on the employee’s total household income.
• Affordability is based on self-only coverage.
• If an employee chooses to enroll in coverage through their employer,
even if it doesn’t meet the affordability standard, no penalty would apply.
Page | 14