“Akamai Money” seeks out local experts to answer questions about business in Hawaii. If you have an issue you would like us to tackle, please email it to business@staradvertiser.com and put “Akamai Money” in the subject line. 

Question: Is the Hawaii Health Connector something a small business should consider?

Answer: Small businesses should compare their existing health insurance to what is offered on the Connector to see what is the most cost-effective option for them. Health care tax credits are only available to small businesses through the Connector and can reduce health insurance premiums up to 50 percent. A recent analysis by Families USA and Small Business Majority estimates that 61 percent of small businesses in Hawaii are eligible for tax credits. 

Q: How do businesses qualify for tax credits?

A: To qualify for the health care tax credit, small businesses must meet the following criteria:

• Employ less than 25 full-time employees (or full-time equivalents);

• Pay average wages of less than $50,000 a year; and

• Cover at least half of the costs of each employee’s health insurance premiums.

To claim the tax credits, small businesses must file a federal tax return at the end of the year and continue to use the Connector through 2015.

Q: How many small businesses in Hawaii have received tax credits to date? What is the average tax credit amount they have received? What determines how much of a tax credit a small business can get?

A: While plans must be purchased through the Connector in 2014 to qualify for the small-business health care tax credit, the employer files for the credit directly with the IRS. Small-business owners who are eligible for the credit will receive the credit when they file Form 8941 with their tax returns for this year, not through the Connector.

A helpful resource for more information is the IRS website, www.irs.gov/uac/ Small-Business-Health-Care-Tax-Credit-for-Small-Employers. We strongly advise that all business owners pursuing the tax credit should work with a CPA or financial adviser to ensure that when they file a return in the spring of 2015, all necessary documentation and information is provided.

Q: How long do the tax credits last?

A: The tax credits are available for two years, but small businesses can get tax credits retroactively from 2010. Your accountant or financial adviser can provide additional guidance.

Q: What is the difference between “grandmothered” and ACA health plans, and why should I shop for an ACA plan through the Connector?

A: “Grandmothered,” or transitional, health insurance plans are policies that existed prior to the launch of Affordable Care Act. To give small businesses ample time to review options, Hawaii is allowing them to keep a grandmothered plan or enroll in an ACA plan. The price you pay for each plan might be different depending on the makeup and health status of your employees, so it might pay to compare your options. By 2016 all small businesses must enroll in an ACA plan.

Q: How can the Hawaii Health Connector help small businesses who don’t qualify for tax credits?

A: While certain older plans are allowed to remain on the market, they may not meet the same level of benefits, and may actually cost more than the new ACA-compliant plans.

One additional benefit for small businesses and their employees is that they can compare plans in one convenient place. The Connector provides plan comparison from multiple issuers side by side, apples to apples. This makes it easier for employers to research their options and potential savings.

Once enrolled, the Connector provides employers with account management tools and one monthly invoice for employee plan premiums, regardless of the number of insurance plans selected. The Connector also gives employees the opportunity to choose a plan that best fits their needs.