STATE INSURANCE EXCHANGES

One of the main goals of healthcare reform is to provide small businesses with access to a variety of affordable health insurance plans. Beginning in 2014, companies in Pennsylvania with 100 or fewer employees on a full-time equivalent (FTE) basis are expected to have access to health insurance offered through state insurance exchanges. Open enrollment for these insurance plans is set to begin October 1, 2013.

State Exchange Levels of Coverage

These state exchanges will provide four tiers of insurance with differing levels of coverage. The platinum level would cover 90% of healthcare costs, Gold – 80%, Silver – 70%, and Bronze – 60%. The 2014 out-of-pocket maximum that each plan participant would be responsible for (in addition to the premiums) is $5,950 for an individual and $11,900 for a family.

Small Business Health Options Program (SHOP)

Within the exchange will also be the Small Business Health Options Program – “SHOP”. It is proposed that each SHOP will allow employers to choose a single level of coverage (bronze through platinum) to offer to employees. It is also expected that employers will be able to choose from several contribution methods to include contributing the same amount for each employee, varying the amount by age, or contributing a set percentage of total insurance premium for each employee.

SMALL BUSINESS HEALTH CARE TAX CREDIT

One priority of healthcare reform is to relieve some of the burden on small employers created by mandating that they provide insurance coverage. To that end, for-profit businesses with no more than 25 full-time equivalent employees and with average wages under $50k can generally be eligible for a tax credit of up to 35% of contributions paid for health insurance. Tax-exempt businesses can participate but at a lower percentage.

“PLAY-OR-PAY” TAX

Another priority of healthcare reform is to incent employers to either offer affordable insurance coverage to their employees (play) or pay a penalty tax (pay). This tax applies generally to businesses with 50 or more employees in 2013. In brief – the penalty can be up to $2,000 per employee for those businesses that offer no coverage (with certain deductions). For employers who do offer coverage, but that coverage is deemed to be “unaffordable” for one or more employees, the penalty can be as high as $3,000 for each of those employees.

WHERE TO GET ASSISTANCE

Help is already here in the form of highly-trained consultants focused on assisting companies with these issues. Many brokers and agents are also obtaining the necessary background to support their clients. In addition, the state exchanges are expected to have “navigators” available to assist companies and individuals with finding the appropriate solutions that will be available on the state exchanges.

IHM Advisors is a Healthcare Reform Consulting firm providing services to businesses throughout the region with offices in Allentown. You can reach them at 484-550-7777 or by email at mmh@IHMadvisors.com.