The Affordable Care Act (ACA) has brought changes to the health care industry. As with everything in your business, being informed and flexible can greatly benefit you and your employees.
Insurance agents continue to be a great resource to help you manage your business health insurance needs.
Insurance agents continue to be a great resource to help you manage your business health insurance needs. They are experts in the industry and can help you find the right plan for the coming year. However, with health reform in full swing, it might be helpful to have background information on the upcoming small business health insurance changes.
Here are a few answers to common questions about how health reform affects small employers in 2014 and beyond:
What defines a small employer?
For 2014 and 2015, ‘small’ is defined as less than 50 full-time employees. In 2016 ‘small’ is defined as up to 100 full-time employees.
Do small employers have to pick a plan that complies with the ACA?
The answer is yes and no.
No: In November 2013, the federal government announced it would allow individuals and small employers to keep their existing health plan even if it didn’t comply with the ACA. Priority Health is one of the few insurance companies to allow individual and small business customers to renew their 2013 plans. So if you’re a small employer who chose to keep one of these “transitional” or “as-is” plans, you can continue to renew your policy through 2016, with a possibility for a 2017 extension.
Yes: If you’re a small employer who did not choose to renew into a “transitional” plan, beginning at renewal in 2014, all fully-insured small employers must choose a new plan that complies with the following health reform ‘Essential Health Benefits’ requirements (self-insured plans do not have to comply):
- Ambulatory patient services
- Emergency services
- Hospitalization
- Maternity and newborn care
- Mental health and substance use disorder services
- Prescription drugs
- Rehabilitative and ‘habilitative’ services and devices
- Laboratory services
- Preventive and wellness services and chronic disease management
- Pediatric services, including dental and vision
Are there changes in pricing ‘rating’ rules for small employers?
For small employers in ACA-compliant plans, there are changes in rating rules that may impact you. Under the ACA, plans are no longer allowed to rate based on industry code, duration of coverage, health status, claims experience or gender.
In the small group market, insurance companies can now only set prices for small employers in ACA-compliant plans based on three things:
- Age – The highest to lowest age rate cannot exceed a 3-to-1 radio. For example, if a 21-year-old healthy male today receives an $80 premium, the 64-year-old male in the same region cannot pay more than $240 for the same plan (3 X $80 = $240).
- Tobacco use (optional) – Insurance companies are allowed to increase rates by up to 50 percent for tobacco use. Federal regulators have defined tobacco use as using any tobacco product at least four times per week on average within the last six months. However, regulations require insurance carriers to permit employees to reduce their rate by participation in a tobacco cessation wellness program.
- Geographic area – Just like other goods and services, the cost of health care services vary from community to community. The law makes allowances for this by permitting rating based on geography. There are 16 defined geographic areas in Michigan.
What are the tax benefits of small employers purchasing coverage through Small Business Health Options (SHOP) marketplace?
The SHOP is the only place where the small business tax credit can be accessed in 2014 and after. However, the number of small employers that qualify for this credit is currently very low. A government analysis found that less than 20 percent of the expected employers have filed for this credit.
How does SHOP work?
The online SHOP marketplace opened on HealthCare.gov on Nov. 15, 2014 for the open enrollment period that lasts until Feb. 15, 2015. Michigan opted to delay ‘employee choice’ until 2016 so employers will continue to select a single insurance company and a single health plan option for their employees in 2015. Small employers can continue to purchase plans with the assistance of an agent or directly from an insurer outside of SHOP.
There will continue to be changes to the market over the next few years as everything falls into place. Having a good foundation of knowledge and working with an agent will help ensure that your employees, and your business, is covered.
Contact your local agent to learn more or visit understandinghealthreform.com.
