Insurance Insights header
Volume 2, No. 5 - June 2013

In The Know

- Keeping you informed is what it's all about

Questions about Navigators?

The 2013 Florida Legislature passed legislation regarding the registering and regulation of the "navigator" position created by federal health care reform. It was signed by the Governor on May 31, 2013. Beginning August 1, 2013, the law requires individuals acting as a "navigator" under the Patient Protection and Affordable Care Act (PPACA) to be registered with the Department. To be registered as a navigator, an individual must certify completion of federally-required training, submit fingerprints for a criminal background check, and pay a $50 application fee. A navigator will be prohibited from:

  • Soliciting, negotiating, or selling health insurance;
  • Recommending the purchase of a particular health plan or represent that one health plan is preferable over any other;
  • Recommending or assisting with the cancellation of insurance coverage purchased outside the Exchange;
  • Receiving compensation or anything of value from an insurer, health plan, business, or consumer in connection with performing activities as a navigator, other than from the Exchange or an entity or individual who has received a navigator grant under the PPACA.

If a licensed agent acts in the capacity of a navigator, they would be prohibited from receiving compensation or anything of value from an insurer, health plan, business, or consumer in connection with performing activities as a navigator.

For more information about navigators, please visit our website on this topic at: http://www.MyFloridaCFO.com/Division/Agents/Industry/News/Navigators.htm

Health Insurance Agents: Are your Florida business clients ready for health care reform?

By: Rose Naff, Contributing Writer

Business owners need to be fully informed and make decisions in 2013 to prepare for health care reform. You can help them prepare for this looming deadline by talking with them now. Start by asking yourself the following questions:

  • Will any of my business clients miss out on the Small Business Tax Credit?
  • Do my small business clients need to apply during open enrollment?
  • Will my business clients, large or small, be subject to penalties?
  • Are the health insurance rates my clients pay today likely to change?

Small Business Tax Credits

In Florida, it has been estimated that 71.6% or as many as 222,350 small businesses qualify for the Small Business Tax Credit. Even a business that pays no tax can qualify. In some cases, the value of the tax credit may exceed the cost of paying 50% of the premium for employees. If a client has already qualified for the credit during a prior tax year and wants to continue to qualify, you will want to recommend a new plan purchased through the Small Business Health Options Program, or SHOP. Beginning in 2014, the maximum tax credit will increase from 35% to 50% of employer premiums paid when coverage is purchased through the SHOP. Qualified businesses that buy coverage elsewhere may be surprised to learn that the credit they were counting on evaporated. In some cases, a small business with an existing group plan may want to consider ending a plan before its regular renewal date and applying during the small business open enrollment period in order to qualify for the credit.

To be eligible for the Small Business Tax Credit, a business must have fewer than 25 full-time equivalent (FTE) employees and the average annual salary must be less than $50,000. (A FTE is one employee working 40 hours per week or two employees working 20 hours each week, etc.) The business must also contribute at least 50% of the premium at the employee-only coverage rate. In an effort to assist agents and their small business clients, Florida Health Choices is launching a small business on-line calculator to help with this mathematical exercise.

Employer Open Enrollment

Guarantee issue in the small group market will have new meaning this year. Under health care reform, a small group cannot be turned away from coverage for failing to meet participation requirements and this applies to coverage obtained through a SHOP as well as the private market. A small business client is well-served by the agent that assists with calculating a likely participation rate early. If the group can meet the 70% participation requirement of the SHOP, they can enroll at any time during the year. If the group cannot meet the 70% requirement, the group can still get coverage but will have to apply during the annual small business open enrollment period November 15 to December 15. For some groups, missing the first enrollment window in 2013 also means missing the Small Business Tax Credit.

Health Care Penalties

Businesses with 50 or more full time equivalent employees can be subject to financial penalties that are quite steep. The penalty formula is (#FTE - 30) x $2,000 when the employer does not offer a plan with an actuarial value of at least 60% of the new bronze plans that will debut in 2014. When the business with 50 or more FTE does offer qualifying coverage to all employees working 30 hours or more per week, there can still be penalties if any employees qualify for pre-paid tax credits for individuals and enroll through the individual exchange. In this case, there are two penalty options and the business will be subject to the lesser of the formula cited above or #Exchange-Subsidized FTE x $3,000.

Even a small business can be subject to the penalties if there is common ownership or controlling interest. I am aware of a small business owner that would have been subject to penalties for 2014 if he had not become aware that having three small businesses can trigger penalties when the combined FTE equals 50.

Health Insurance Rates

When the Florida Legislature last met, an industry group reported on health care reform’s likely impact on insurance rates. The estimated impact was calculated by actuaries and based on individual and small groups plans offered in Florida today. It was reported that six contributors will have the greatest impact on health insurance rates.

Positive and negative rate impacts vary but, in general, the young and healthy are expected to incur higher premium increases than older individuals. The increase will be most evident in the individual insurance market but small employers will see increases too. The report pegged the small group rate increase at 59%.

These are early estimates but the insurance industry will begin submitting new rates this summer for plans and benefits that will be effective 2014 and beyond. By September of this year, the true impact should become evident.

I have been advising small business owners to talk to their agent and/or tax advisor. The decisions a business makes now may have positive or negative tax consequences and your opportunity to help remedy that may be a short window that occurs during the fall of 2013. It is not too early for you to begin preparing your clients for the changes on their horizon.

Rose Naff serves as CEO of Florida Health Choices, Inc. and is building Florida’s first Health Insurance Marketplace. When launched later this year, the Marketplace will serve Florida’s small businesses that do not qualify for government subsidies. Go to www.myfloridachoices.org to try out the on-line calculator for small business.