Frequently Asked Questions by Nonprofits About the Affordable Care Act

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Q: Why does health care reform matter to charitable nonprofits? 

Health care reform matters to charitable nonprofits because it will make health insurance, which is a major consideration for any employer, more accessible and affordable for more employees. (Did you know that over 11% of US workers are employed by a tax-exempt nonprofit employer?) Health insurance benefits are a consideration for prospective employees, and offering health insurance can make the difference in a nonprofit’s ability to retain talented staff members. Additionally, the ACA changes how individuals who are served by charitable nonprofits can access health insurance. Consequently, understanding the ACA’s basic elements is important for any nonprofit whose mission intersects with the delivery of health care in our communities, whether or not your nonprofit has employees.

Q: We are a small workplace. Will our nonprofit be required to provide health insurance to its employees?

There is NO requirement on employers to provide health insurance -- but there is a penalty (that is only applicable to  employers with 50 or more full-time employees) under the Act’s employer “shared responsibility” provisions that will be effective starting in 2015 if the employer does not provide a minimum level of insurance coverage to their full-time employees. (If your nonprofit has close to 50 full-time employees, make sure to learn more about how to determine if your nonprofit has 50 or more, “full-time” workers, as defined by the IRS.) The ACA does NOT require employers to provide health insurance to part-time workers.

Q: I’ve heard about the “SHOP" "Exchanges” and "Marketplace" – What are they?

"SHOP" refers to the ACA’s Small Business Health Options Program, commonly referred to as the “Marketplace” which is how individuals and small businesses, including nonprofits, ("small" means 50 or fewer employees) access health insurance through state-based competitive health insurance marketplaces (formerly referred to as "exchanges"). Marketplaces are where individuals and small employers can shop for and purchase health insurance online. The Marketplaces allow consumers to go to a website and compare benefits and costs of different plans, making insurance markets more transparent and facilitating consumer choice. In addition, low and moderate income individuals can receive premium and cost-sharing subsidies to help offset monthly premiums that will only be available through Marketplaces. None of the plans available through the Marketplace are permitted to deny coverage on the basis of a preexisting condition, and all of the plans must include an affordable basic benefit package that includes prevention and protection against catastrophic costs.

Q: If our nonprofit is located in a state that isn’t establishing a state-based Exchange, does the ACA have any impact on our operations?

Yes. Every state has an Affordable Insurance Exchange, or "Marketplace." 

Q: Is our nonprofit required to purchase health insurance through the Marketplace?

Your nonprofit is not required to purchase insurance for employees through the Marketplace. However, if your nonprofit employs fewer than 50 employees, it will be considered a “small employer” and it will be eligible to purchase health insurance through the state-specific “SHOP” programs. These programs are intended to make it easier for smaller workplaces to find affordable options for health insurance for their employees. Through the Marketplace your nonprofit:

1.can offer a single plan for all employees;

2.can decide how much it wants to contribute towards premiums;

3.receive one monthly invoice, and pay with one monthly payment;

4.enroll throughout the year on a monthly basis, so the nonprofit can decide when to begin coverage and what the "plan year" will be.

Q: Can our nonprofit elect to continue to provide coverage through our existing insurance plan?

Yes. Enrollment in health insurance through the Marketplace is on a rolling monthly basis.

Q: I’ve heard about the “subsidies” to help individuals purchase health insurance. How will they work?

Some individuals purchasing insurance through the marketplaces will be eligible for lower-cost premiums, based on their income. A subsidy will only be available to those who purchase insurance through the marketplace (which assumes that they don't have employer-provided insurance). Also, annual out-of-pocket maximums will be lower for people who make less money. The actual percentages and dollar amounts of the subsidy/lower premium will depend on the individual’s income and whether or not they are single, or a family.  

  • Subsidy calculator (Henry J. Kaiser Family Foundation) With this calculator, you can enter different income levels, ages, and family sizes to get an estimate of eligibility for subsidies.

Q: How can nonprofits participate in the "tax credit" for small employers that pay health insurance premiums for their employees?

Federal legislation included a provision that gives small employers, including nonprofits with fewer than 25 employees, the right to receive a Small Business Health Care Tax Credit (that tax-exempt organizations experience as a refund) for insurance premiums paid by the employer for their employees' health insurance.  (The Council of Nonprofits and its network worked hard to have this provision included in the Affordable Care Act.) For tax-exempt nonprofits the credit is actually a refund on quarterly payments the nonprofit has made to the IRS for income tax withholdings or Medicare withholdings from employee wages.  IRS Information on the tax credit.  How to apply.

Q: Can we claim the Small Business Health Care Tax Credit for prior years?

Yes. This credit has been available since 2010. If your nonprofit was/is eligible but did not apply in past years, you can still file for the refund. (Be sure to read the instructions for Form 8941 for the applicable year.

Q: How will nonprofits that have employees in more than one state participate in the SHOP Marketplaces?

Nonprofits that employ employees working in more than one state should set up an account in one state’s Marketplace. The Marketplace procedures will permit employees who reside and work in other states to participate.

Q: If I don't see my question here, where can I find more information?

If you have general questions about health insurance through the SHOP programs in the state Marketplaces: The Health Insurance Marketplace Small Employer Contact Center phone number is: 1-800-706-7893 and 1-800-706-7915 (TTY). 

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