(This article originally appeared in the Philadelphia Inquirer)
Beginning this week, the healthcare exchanges open up for an enrollment period that will end in January. It’s a once-a-year opportunity for hundreds of thousands of people in Pennsylvania, New Jersey, and Delaware to enroll, cancel, waive coverage, change plans or drop and add coverage for themselves and family members.
But what about small employers? The Affordable Care Act excludes businesses with fewer than 50 employees from the requirement of providing health insurance for their employees. But although the health-care exchanges are focused on providing coverages for individuals, the open enrollment period presents a good opportunity to consider what options are available for small business owners and their employees.
Buying on the SHOP exchanges
For starters, there is the Small Business Health Options Program (SHOP) exchange where companies with fewer than 50 employees based in New Jersey and Delaware (Pennsylvania does not have this program available) 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 who 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 feel that it’s 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 it’s a more efficient way to deliver benefits than where they are today.”
Helping employees get individual coverage
If your business doesn’t offer health insurance, then it’s a good idea to educate your employees — particularly lower income employees — on the choices they have on the various state health-care Marketplace exchanges. Employees in Pennsylvania and New Jersey without employer-sponsored coverage can visit the Pennieor GetCoveredNJ (Delaware still uses the federal health-care site, healthcare.gov) where they can find out more about which plans may be available to them.
“Small employers can have an important role in educating and encouraging their employees without health insurance coverage to visit these Marketplace websites to find and enroll in an individual and family plan,’ said a representative from the Department of Health and Human Service’s Center for Consumer Information and Insurance Oversight. “For small business employees without employer-sponsored coverage or self-employed individuals, there are major Marketplace improvements for individual and family plans because of the American Rescue Plan Act of 2021.”
Thanks to this legislation, people who buy their own health insurance directly through the Marketplace may be eligible to receive increased tax credits to reduce their premiums.
Consumers who previously qualified for tax credits may have lower premiums than in past years, and consumers with incomes that were previously too high to qualify for premium tax credits may now qualify. According to the HHS, being enrolled in Marketplace coverage is the only way eligible individuals can receive premium tax credits and other savings on their health insurance coverage, if they qualify.
Business owners with no employees, or self-employed individuals, can use the Marketplace for individuals and families to enroll in a health plan that best fits their needs.
Rich Krekstein, a managing director at NFP Corporate Benefits in the Philadelphia area, also advises his small business clients to encourage lower-income employees to consider Medicaid.
“Many employers don’t realize that some of their workers may qualify for Medicaid and should point them in that direction,” he said. “Medicaid is actually a really great plan – it’s relatively low cost and has a pretty decent network. Moving an employee off the company health plan this way may save both the business owner and the employee on premiums.”
Offer Health Reimbursement Accounts
Finally, but perhaps most importantly, small employers who can’t afford to buy group health insurance either through the Marketplace or from an individual broker can still help their employees by offering either an Individual Coverage Health Reimbursement Account (ICHRA) or a Qualified Small Employer Health Reimbursement Account (QSEHRA). Through these plans, a small business can provide non-taxed funds to reimburse employees for qualified medical expenses, including monthly premiums and out-of-pocket costs for individual plans the employees buy themselves.
ICHRAs are for employers of any size, and employees must be enrolled in individual health insurance coverage, like a plan they bought through the Marketplace, to use the funds. Certain small employers, generally those with fewer than 50 employees that don’t offer a group health plan, can contribute to their employees’ health care costs through a QSEHRA. However, providing a traditional group plan or offering an ICHRA or QSEHRA may impact an employee’s ability to qualify for premium tax credits.
Over the past few years Silver, who is an actuary, has become a fan of Health Reimbursement Accounts because, to him, they’re a “risk transfer mechanism” as long as the health-care Marketplace is efficient and delivering benefits in a meaningful way.
“HRAs can be a win for small businesses” he said, because they can give owners a better idea of their health costs over a long period of time. “For the employer that views their health plan as a financial risk and purely a financial transaction (which a lot of employers do think that way) then an HRA approach makes a ton of sense. It allows them to focus on other things.”
If you’re still unsure what’s your best option or whether you should buy your company’s health insurance through a broker or benefits firm, then you can find more information about assistance in your state by visiting the Pennie (Pennsylvania) and GetCoveredNJ (New Jersey) websites or by visiting HealthCare.gov’s Find Local Help Tool.