One of the most confusing things business owners have to navigate is healthcare insurance options for their employees. Under the Affordable Care Act (also known as ObamaCare), businesses with fewer than 50 full-time employees are not required to offer coverage, while businesses with 50 or more full-time employees are at risk of penalties if they don’t offer coverage options. Even if you fall into the former category you might want to explore offering coverage for your employees. It can be the key benefit that helps you convince a stellar job candidate that working for you is better than accepting an offer from your competitor. Even better, you can help nurture a more productive workforce by easing your employees’ stress regarding whether they’ll be able to afford a trip to the doctor. There are also some financial advantages to providing employee healthcare in the form of special tax credits. In some cases, you may also be able to deduct your company plan costs as a business expense. And with all the options available today, a healthcare insurance plan for small business doesn’t have to add excessive costs to your bottom line.
Whether you are looking for a new plan to replace your old one or have decided to offer health insurance benefits for the first time, you can start by investigating some of the coverage and plan options available to small businesses in Connecticut. Now is the time to review your options as the November 1 open enrollment period for your employees is fast approaching. Here are four options for you to consider:
•Purchase a group plan through Connecticut’s health insurance marketplace – Several federal and state-run marketplaces were established in the wake of the Affordable Care Act, and these exchanges provide access to coverage plan options that fulfill all the requirements mandated by ObamaCare. The official healthcare marketplace for Connecticut small businesses is Access Health CT Small Business, which offers coverage options through insurance companies such as Anthem. Four basic categories of coverage give businesses the option to contribute between 60 and 90 percent of expenses while employees pay the remainder. The key benefit of shopping through the state-run exchange includes access to plans that are compliant with federal law and may qualify businesses for exclusive tax credits only available through Access Health CT Small Business (tools on the exchange’s website can help you determine whether you’re eligible to receive a tax credit).
•Contribute to individual plans through reimbursements – The main downside to offering a group plan is that they can be pretty expensive, and the options available through Connecticut’s small business exchange are very limited. For small businesses with fewer than 50 employees there’s the option of setting up a Section 105 reimbursement plan, which allows employers to reimburse employees who then pay for their own coverage. Rather than paying for an entire plan, employers can define how much they can afford to contribute to their employees for the purchase of their own individual health insurance. The defined contribution amount could be a flat allowance for all employees or an amount allocated differently depending on job criteria. For example, senior-level managers could receive $300 a month while junior-level employees receive $200 per month. This is an ideal option for businesses that can’t afford a traditional group insurance plan or don’t want to worry about the hoops that come with purchasing and administering one. This option also allows employees to select the coverage that they want through either Access Health CT or through a licensed insurance broker. This is a cost-effective option for employers, but it can end up leaving the majority of the financial burden upon employees.
•Purchase a private small group plan – If your business can afford to pay more for a group plan and you want to explore a wider array of options than is available through Access Health CT, then you can always purchase a private small group plan outside of the state-run exchange by going directly to an insurance provider, such as ConnectiCare. Going with a private plan can help you provide a more comprehensive range of services beyond traditional health, vision or dental care, but these options usually come with a much larger price tag. Even the most expensive subsidized plans available through the state-run exchange are typically more affordable than private plans.
•Offer a private health exchange – Private exchanges are health insurance marketplaces tailored specifically to a company’s employee base. Similar to a Section 105 reimbursement plan, private exchanges involve establishing defined contributions for employee individual plans. When the employee receives their defined amount, they can choose from whichever insurance providers are participating in the exchange. You’ll have to work with an insurance broker to set up a private exchange (the National Association of Health Underwriters has an online tool that can help you find agents based in Connecticut). A private exchange can provide your employees with a wealth of health plan choices so they can find the one that best fits their needs. Your employees will be satisfied with the option to select a plan that’s most affordable to them, but your business may have to foot more of the bill in the long run.
Whether you decide to purchase a plan through Access Health CT or a private exchange, your employees will still need to enroll in coverage during an open enrollment period. The next period is just around the corner, running from November 1, 2016, through January 31, 2017. This will be the only time of year when your employees can switch healthcare options or enroll in a plan for the first time, so start thinking about your decision sooner rather than later!
Written by Melissa R. MacCaull
Director of Marketing, Union Savings Bank