Can Small Businesses Use The Acas Health Insurance Marketplaces
The Affordable Care Act created an enrollment platform called SHOP , an exchange where businesses could compare health insurance plans and enroll in coverage for their employees.
- Health insurance & health reform authority
Q. Can small businesses use the ACAs health insurance marketplaces ?
A. The Affordable Care Act created an enrollment platform called SHOP , an exchange where businesses could compare health insurance plans and enroll in coverage for their employees. Originally, the SHOP exchange was an option in every state, but in the 36 states that use HealthCare.gov, the availability of small-business plans in the exchange changed in 2018. And even among the states that run their own exchanges, some are no longer offering SHOP coverage due to lack of insurer participation.
Instead of having small businesses use the exchange to enroll in coverage, HealthCare.gov now directs them to seek out a broker or contact an insurance company directly. And although the site still maintains a tool where employers can check to see if there are SHOP plans available in their area , the tool no longer shows any available plans in most areas. But as described below, there are still SHOP-certified plans available in parts of nine states that use HealthCare.gov.
Do Small Businesses Have To Offer Health Insurance To Employees
With the Affordable Care Acts passage in 2010, small businesses have greater responsibility for covering health insurance benefits when theyre of a certain size. Its confusing to figure out what a small company needs to provide, though, and what options are available at a rate they can handle.
Here are a few things to know about the health insurance requirements for small businesses:
As A Small Business Owner Are You In Need Of Health Insurance
As a small business, it’s important to assess your needs for health insurance plans for employees. Many times, providing access to coverage is a big benefit to employees and one they appreciate. If your company has 50 or more employees, finding affordable health insurance options is essential, especially if you plan to cover some or all of the costs for employees. Even companies with fewer than 50 employees benefit from health insurance coverage, especially if employees want it.
What Do Employers Need To Communicate To Their Employees If They Offer Small Business Group Health Insurance
If you decide to offer small group health insurance, you will need to provide your employees with specific information about the Marketplace health insurance offering:
- Who qualifies to participate in the companys group health plan. Small business employers are required to offer full-time employees the health coverage. Full-time means the employee works on average at least 30 hours per week. You are not obligated to offer coverage to employees family members but should disclose whether or not dependents may be covered by your companys plan.
- If you have new hires and you are uncertain whether they will work full-time, you are permitted to have a wait period, usually no more than 90 days from date of hire, to determine if the new hire is eligible to participate in the plan. Your employee communications should include a description of this wait period, if applicable.
- Benefits covered by your group health insurance plan. You must provide employees with a standard Summary of Benefits and Coverage form explaining what their health plan covers and what it costs. The purpose of the SBC is to help employees understand their health insurance options.
Are Businesses Required To Offer Health Insurance
You must provide health insurance if you have 50 or more full-time employees. If you have fewer than 50 employees, you may be exempt from this federal rule. But some stateslike Hawaii, for examplemay have stricter requirements where you must offer health insurance regardless of business size. You need to be familiar with both the state and federal guidelines for small business health insurance.
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Which Businesses Are Required To Provide Employer Health Insurance
Learn if your business is required to provide employee health insurance and the consequences of failing to do so.
The Affordable Care Act changed the way U.S. businesses approach employer health insurance by making employer-sponsored coverage mandatory for businesses with 50 or more employees. In addition to health insurance requirements, certain details of the ACA can sway employers and employees options, and hefty tax penalties arise if these requirements arent met. The more details employers, providers, and consumers are aware of, the better everyone can navigate the changing landscape of health care reform.
Option : Qualified Small Employer Hra
If youd like to get away from offering traditional group health insurance all together, a QSEHRA is a formal, IRS-approved benefit for employers with fewer than 50 full-time equivalent employees that doesnt require you to offer a group health insurance plan along with it.
A QSEHRA works much like an ICHRA, with a few exceptions. Unlike an ICHRA, employees dont need to be covered by a qualifying individual health insurance policy in order to participate, but reimbursements will be free of income tax for employees if the employee is covered by a policy providing minimum essential coverage .
Also unlike the ICHRA, QSEHRAs come with annual allowance caps that employers cant exceed. A QSEHRA is often the best choice for small businesses because it allows for complete personalization. Employees can purchase what best fits their needs, while employers are free to set their own budget.
QSEHRAs also offer value to small businesses in unique situations, such as those with employees who are covered under a spouses or parents group policy, and even those with employees without insurance.
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How Many Employees Must A Business Have To Qualify For Group Health Insurance
When it comes to securing health insurance for your employees, buying individual plans is never the way to go. Instead, group health insurance is the most affordable way for small businesses to provide health insurance. It is often considerably cheaper than purchasing individual plans, as the insurers risk is dispersed between a group of policyholders.
To qualify for small business group health insurance, your small business must have between one and 50 employees. Though, this can vary slightly based on the state you live in. Other requirements include:
- You must have an office in the state you are applying for insurance coverage .
- You must enroll no less than 70% of your uninsured, full-time employees.
Your part-time and seasonal employees do not count towards the group, though you do still have the option of offering them group health insurance.
Note:If your small business is family-run, make sure to verify your eligibility for group health insurance, as you must also have employees that are not related to the owner in some way. If your company only consists of family members, you will need to apply for family health insurance instead.
Small Business Health Insurance Options
Thanks to the ACA, small business owners can buy health insurance for their employees through approved insurance companies with the Small Business Health Options Program . Getting insurance through the SHOP Marketplace allows employers to offer health plans from multiple insurance companies and qualifies them for the Small Business Health Care Tax Credit, which can help with the cost of providing coverage.
Small business owners can also work with an insurance broker who conducts all plan research and comparisons to find the best plan for your business at no additional charge.
Group plans for small businesses are organized by metal tiers: bronze, silver, gold and platinum. Each tier features different premiums, deductibles, copays and out-of-pocket limits, catering to people who prefer to pay higher monthly premiums for more extensive coverage and those whod rather pay a lower monthly premium and risk higher coverage costs in the event that they need to seek care. Employers have flexibility in which type of plans they choose to offer their employees.
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Under The New Aca Law Rules A Company With 50+ Full Time Equivalents Has Tooffer Aca Compatible Coverage To Full Time Employees Or Face A Penalty
The penalty for not offering coverage is $2K per eligible employee.
What if you offer a scaled down health plan, sometimes called a MEC plan?
In this case, there’s a $3000 penalty for each employee that gets a taxcredit from the Exchange since your plan is not ACA compliant.
What makes the most sense…offer a MEC, ACA health plan, or no coverage ?
It completely depends on your company’s situation.
We can run the quote for your situation here:
What we consistently see as the best outcome financially and in terms ofemployee morale is the following.
Shop Enrollment Lagged From The Start
The Small Business Health Options Program never really took off. As of 2017, HHS reported that there were fewer than 39,000 people enrolled in SHOP coverage across the 26 states that had fully federally-run SHOP platforms at that point. Hawaii was the first state to obtain approval for a 1332 waiver, and its purpose was to eliminate the states SHOP exchange as of 2017.
Arkansas, Mississippi, and Utah used to run their own SHOP platforms , but had switched to the federal SHOP platform or a direct-to-carrier process by 2019. Arkansas noted that they would no longer have a SHOP option because insurers were no longer participating in SHOP in Arkansas.
And the lack of insurer participation in SHOP has not been limited to states that use the federally-run exchange. The same thing happened in Washington state as of 2018. And Minnesota, which has a functional state-run exchange for individuals, has discontinued its SHOP platform.
Best For Plan Options: Cigna
Cigna offers a good range of small business health insurance plans to accommodate most small business needs, including flexible premium and deductible options. While it’s only available in 10 states, it has an impressively detailed website, good customer service, and a large provider network to support it.
Mixed ratings on ConsumerAffairs
Founded in 1792, Cigna has earned an A rating with AM Best. Cigna received 2.5 to 4 overall ratings on a scale of 1 to 5 from NCQA. The company received the highest ratings in four of the 21 award-eligible regions however, they also received several below-average ratings in the J.D. Power 2021 U.S. Commercial Member Health Plan Study.
Cigna is a global company with 180 million customer and patient relationships in more than 30 countries. The companys network includes 1.5 million relationships with providers, clinics, and facilities. It is licensed to underwrite health insurance plans in Arizona, Colorado, Florida, Illinois, Kansas, Missouri, North Carolina, Tennessee, Utah, and Virginia.
Cigna offers small business health insurance in these states for companies with more than 50 employees. Administrative services for self-funded plans with as few as 25 employees are also available.
Cigna offers the following group health insurance plans:
The costs vary depending on where you live. You will have to speak with a local representative for complete plan details.
Your Options For Health Insurance For Small Business
Historically, small-group insurance has been the primary option for many small employers who are looking to offer health benefits for their employees, but that’s just not the case anymore.
While these plans are the most widely known and understood, they are not the only option. You actually have THREE options! What works best for you depends on how your company is set up, how individual and group plan costs vary in your geographic area, and the health of the individual market near you. Check out your local market factors with the cool interactive maps that Vericred put together.
Here are your options for health insurance for small business:
It’s that last option we are jazzed up about. But first, let’s drill out the details in each option just to cover all of the bases.
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Where To Find The Right Coverage
For finding the right coverage, some can use SHOP to source and sign up for employee health insurance plans. But, for others, its not as straightforward. While anyone can use SHOP, there are a few other options open to employers with 50 or more FTEs. Here are those options:
If reaching out to insurance companies on your own seems daunting, dont worry you can ask someone else to do it. Licensed insurance brokers are a great resource for small business owners and will greatly help you circumnavigate all of the paperwork and popular pitfalls of finding an employee health insurance plan. Intuit has recently added this service as an add-on to its Payroll offerings. By partnering with SimplyInsured, Intuit Payroll customers can choose to purchase this surface and work with licensed and knowledgeable insurance brokers. Its all part of Intuits full-service small business solutions.
If youve had some experience with purchasing health insurance before, this might be your best option. Not all health insurance companies will work directly with businesses, but some do. Make sure to conduct due diligence and check out ratings on sites like Consumer Affairs and the National Committee for Quality Assurance . JD Power also publishes an annual ranking of the best health insurance options by state.
Additional Details On The Employer Mandate
Employers with 50 or more full-time and/or FTE employees must offer affordable/minimum value medical coverage to their full-time employees and their dependents up to the end of the month in which they turn age 26, or they may be subject to penalties. The amount of the penalty depends on whether or not the employer offers coverage to at least 95% of its full-time employees and their dependents.
Employers must treat all employees who average 30 hours a week as full-time employees.
Dependents include children up to age 26, excluding stepchildren and foster children. At least one medical plan option must offer coverage for children through the end of the month in which they reach age 26. Spouses are not considered dependents in the legislation, so employers are not required to offer coverage to spouses.
Assume each employer has 1,000 full-time employees who work at least 30 hours per week.
The regulations allow various calculation methods for determining full-time equivalent status. Because these calculations can be complex, employers should consult with their legal counsel.
Here are some considerations to help determine how part-time and seasonal employees equate to full-time and FTE employees.
U.S.-issued expatriate plans meet the employer mandate.
Effective July 16, 2014, the employer mandate no longer applies to insured plans issued in the U.S. territories . A territory may enact a comparable provision under its own law.
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Buying On The Shop Exchanges
For starters, there is the Small Business Health Options Program exchange, where companies with fewer than 50 employees based in New Jersey and Delaware can buy insurance at competitive or even lower rates than what is offered by private insurance brokers. There is also a tax credit available for some small businesses that purchase insurance through this program.
Although the SHOP exchanges have not been as popular as hoped after the Affordable Care Act was introduced in 2011, some experts believe that its still a good option.
The market has stabilized in recent years, said Alan Silver, a senior director at benefits consulting firm Willis Towers Watson in Radnor. So I think small businesses should be looking more at those SHOP exchanges to determine whether or not its a more efficient way to deliver benefits than where they are today.
Fact #: Brokers Usually Offer More Expensive Plans
Health insurance brokers commonly offer fully-funded plans. These are health coverage options created by more traditional, larger insurance carriers. Fully-funded plans tend to be relatively expensive because the carrier holds the policy risk.
Fully-funded plans are often not the best option for small businesses with an overall healthy staff because of their high prices, lack of flexibility, and fewer added benefits.
If you are already discussing possibilities with a broker, be sure to ask about the type of plan they are quoting, along with all the terms and conditions. If they offer one or more fully-funded plans, widen your search to include additional, more modern options, such as self-funded and level-funded plans.
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Where To Go For Information
The Small Business Administration has information on its website about what small businesses need to provide in terms of health insurance, along with links to their SHOP program and information on tax credits. You can also find out about webinars and in-person training sessions run through small business development centers, SCORE chapters or Womens Business Centers. The website is constantly being updated, said the SBAs Natalia Olson. Healthcare.gov is another good resource for ACA health insurance information.
Olson recommends also talking to your lawyer and accountant, as they should be up on how the latest government changes affect small businesses. A health insurance broker is a key person for finding small business health insurance plans. It can be challenging to find an effective and knowledgeable broker, given that brokers arent highly compensated for small group plans, says Farris. Through networking, you can find a broker to help you.
With government regulations constantly changing, its tough to stay abreast of the requirements. Continue networking with other small businesses, which may have helpful information as well.