There has been lots of discussion about how businesses are positioning themselves to minimize the impact of health care reform on their bottom line. From reducing hours to eliminating full-time employees, we have heard many options that will have a detrimental effect on employees. I agree that businesses need to plan for 2014, and realistically, some of the above mentioned will likely happen. Let’s discuss some other ideas for you and your business.
If You Have An Individual/Family Policy
If you are a business owner who purchases insurance for you and your family on an individual basis (not a group plan), then most importantly, you want to see if your current plan is “grandfathered in.” Basically, has it been in effect since March 23, 2010, without substantial changes made to it? If so, we highly recommend not making any changes until you have thoroughly reviewed all options, including keeping your current policy. Once grandfathered status is lost, it cannot be regained.
If you do not currently have health insurance, there may be a good reason to purchase a policy before the end of the year. Industry experts are estimating significant rate increases beginning Jan. 1, 2014. While many Americans will be receiving subsidies to help cover the cost of health insurance, some business owners will not qualify for these subsidies because of their income. Purchasing a policy before January may, at a minimum, delay the inevitable requirement to purchase health care before only “qualified” plans are available, most of which will likely be more expensive than the plans today.
If You Have A Group Health Plan
For businesses that offer group insurance, there are several ways to prepare/strategize for health care reform. First and foremost, it is just as important for businesses to identify whether or not their group health insurance policy is “grandfathered.” Since grandfathered policies are exempt from many of the rules and regulations, businesses should be aware of the advantages this brings before making certain changes.
One strategy for businesses is to request an early plan renewal from the insurance company for November or December this year. By renewing your policy later this year, a business can gain as much time as possible to evaluate the effects on group insurance rates and the options available on the SHOP (Small Business Health Options Program) and Marketplace.
Another idea is to consider implementing a defined contribution approach to health insurance. With traditional group insurance, an employer offers one or two benefit plans and then contributes a percentage of the cost. Under a defined contribution strategy, an employer offers a variety of medical plans and then provides a fixed monthly allowance to use toward the cost of the plan of his/her choice.
If you do not currently have a group plan the SHOP may be an option to consider in the coming months. Beginning January 2014, the current small business tax credit is increased to 50 percent for health insurance purchased through the SHOP.
If You Receive Benefits From Your Employer
As an employee, you typically have a couple of options from which to choose. If you are not currently enrolled in a health savings account qualified plan, this year may the year to look deeper at the advantages these plans have. First they are typically less expensive than traditional plans, which give participants an immediate opportunity to set aside money on a monthly basis into a health savings account. These accounts are often referred to as triple tax advantageous. Money deposited into them is tax deductible (or pre-tax); they grow tax-free and finally, as long as you use the funds for qualified expenses, you are not taxed when the money is used.
Want to learn more? Attend one of our free Health Care Reform seminars. Call Benefit Logic at 928-526-5691 for dates and times. We are committed to helping you understand and navigating through the new law. FBN
By Ed Gussio