The Affordable Care Act (ACA) calls for the creation of state-based competitive marketplaces, known as Affordable Health Insurance Exchanges (Exchanges, also known as Marketplaces), for individuals and small businesses to purchase private health insurance. According to the Department of Health and Human Services (HHS), the Marketplaces will allow for direct comparisons of private health insurance options on the basis of price, quality and other factors and will coordinate eligibility for premium tax credits and other affordability programs. ACA requires the Exchanges to become operational in 2013 for plan effective dates on or after January 2014. If you have not spoken to your health insurance advisor recently, now may be a good time.
For Small Businesses
One of the key components of the Marketplace is the Small Business Health Option Program (SHOP), which will allow businesses with up to 100 employees to purchase plans on the Marketplace. While SHOP is still on target, it will not be quite as robust as first thought. At a minimum, a small business should be able to offer multiple plan designs from a single insurance carrier, much like we can do today. In addition, an expanded Small Business Tax Credit will be available for businesses with fewer than 25 employees, with an average wage of less than $50,000 per year and where the employer pays at least half of the employee health premium.
A Catch 22 For Small Businesses
There is a provision in the ACA that gives small businesses a reason to give a second thought to offering qualified coverage to its employees. The subsidy on the Marketplace is ONLY available to individuals who do not have access to affordable coverage through their employer. As it stands today, an employee’s spouse and/or children would not be eligible for a subsidy if affordable coverage is available through the employer. Adding dependents to a group health plan is expensive. So, in some cases, it may make sense for a small business to NOT offer qualified employer based coverage so that its employees and families can take full advantage of the subsidies available on the Marketplace.
For Individuals and Families
Beginning Jan. 1, 2014, under the ACA, everyone will be required to have health insurance or pay a penalty. The Marketplace will be a resource for individuals to compare and enroll in qualified plans. The most important aspect of the Marketplace is that it is the only place where individuals can receive a subsidy toward the cost of insurance. THIS IS HUGE! There has been much speculation about the cost of health insurance in 2014, and from what we have heard, we need as much help as possible. The subsidy will be based on the individual’s or family’s income. While we do not know the costs for 2014 yet, here is an example run on the Kaiser Foundation Subsidy Estimator. A 40-year-old with a family of four and a household income of $55,000 per year could receive a subsidy of $7,995 per year toward the cost of his $12,130 annual health insurance premium. This would leave him with an annual premium of $4,135 or $345 per month. When one buys an individual or family policy from the exchange, the insurance still will be offered by private insurers such as Blue Cross Blue Shield of Arizona, Aetna and United Healthcare. The total premium cost will be shared by the government and the insurance buyer, with the government paying its share of the insured’s premium subsidy directly to the insurer. That’s pretty good news for the average family! There will be no health questions and no one will be declined. The initial open enrollment period will begin on Oct. 1, and will run through March 31, 2014. Those enrolling between Oct. 1 and Dec. 15 will have an effective date of Jan. 1, 2014. Those enrolling after Dec. 15 will have a delayed effective date. Consumers who do not have access to employer based plans can find their estimated premiums by visiting www.benefitlogic.net and clicking on the “Health Reform Subsidy Estimator” link.
More Good News and How Health Insurance Brokers Can Help You
We are expecting to see many different and cutting edge benefit plans available on the Marketplace. Health and Human Services (HHS) has indicated that insurance professionals are key to the success of health care reform. Professionals, like Benefit Logic, will be able to help businesses and individuals through the process of identifying if you are eligible for a subsidy, selecting a plan and handling the enrollment.
We expect many clarifications and regulatory changes between now and October, and our office will be staying on top of the latest developments. FBN
Benefit Logic provides free consultations for individuals and employers.
