Health Coverage for Small Businesses: Look for Affordability, Stability
For months, Americans have watched the national stage to see how health insurance might change under the new presidential administration.
With no new legislation to date, the Affordable Care Act (ACA), aka “Obamacare,” remains the law of the land, but things could change at any time.
“For small businesses and employers, there’s no reason to wait to ensure your employees have good yet affordable coverage,” said Deb Muller, Chief Executive Officer of Avera Health Plans.
“In the health insurance world, small groups are defined as anywhere between one and 50 employees,” Muller said. Small employers are not required by the ACA to provide health insurance to their employees.
Yet health insurance as a benefit of employment is considered to be table stakes by many. “As a small employer, I would want to have a health insurance offering for my employees in order to compete with other employers, both small and large, who can offer this important benefit in a very competitive labor market,” said Rob Bates, Executive Vice President of Insurance Services and Population Health at Avera Health.
An open enrollment period for individual coverage on Healthcare.gov runs from Nov. 1–Dec. 15 of this year. But small employers can set up a small group anytime, Muller said. “They don’t have to wait until open enrollment.” Coverage is generally set up for one year, and when your coverage year has ended, you can renew or consider other options.
Businesses that are incorporated – even if they have only one or two employees – may qualify to set up a small group. In the past, some businesses may have turned their employees to healthcare.gov to get individual coverage. But in many cases, health insurance companies are offering more competitive rates for small groups. “It’s a more stable market than the individual market,” Muller said.
The employer’s portion of the premium is a deductible expense on income tax, and in some cases, eligible for tax credits. Employees’ contributions are paid from their pre-tax salaries, which reduces their taxable income.
Provider networks within small group plans help ensure greater affordability.
- Seeing in-network providers results in preferred co-pays and deductibles leading to lower out-of-pocket costs.
- When needed, second opinions and out-of-network specialty care can be received through extended specialty care networks.
- Emergency care is covered when you have an emergency and the nearest emergency care center in not in network.
- College students or non-resident employees can receive coverage through regional and national networks.
Employers may have plans that were “grandfathered” because they were in place before the ACA took effect March 23, 2010. However, these plans may lose “grandfathered” status if they are significantly changed to reduce benefits or increase costs to consumers. There are also transitional plans whose life was extended, or “grandmothered” plans.
Initially, the cost to renew these plans was lower than adopting ACA-compliant plans. But that’s changing. “If you have a grandfathered or grandmothered plan, it’s worth it to check the rates because in some cases, the costs on these plans are getting more expensive, even though ACA plans have more benefits. That’s because the ACA pool is getting larger and more stable,” Muller said.
For small business owners, a health insurance agent is a wealth of information. “You can also go out and shop online for small group coverage,” Muller said.
Employers and employees alike are looking for affordability, Bates said. “Our focus at Avera Health Plans has been to provide a level of stability and affordability so employers don’t have to move their people to a new plan and a new network every couple of years,” he said. Also, frequent communication keeps employers in the know of any factors that could affect their coverage or insurance cost in the future. “That helps prevent any surprises when it comes time to renew the policy,” Muller added.
- If your small business is incorporated and you’ve been getting health insurance for yourself or your employees from the healthcare.gov individual exchange, you might get better rates by setting up a small group, even if that group is as small as one or two people.
- If you have a grandfathered or grandmothered (transitional) plan, look into what it would cost to set up a new ACA-qualifying plan. It might be more affordable than the plan you’re holding onto.
- If you have been automatically renewing your insurance plan each year without getting new quotes, you might be missing out on opportunities to save. Shop around and get new quotes to keep your insurance rates as low as possible.