Health care: Small businesses facing new challenges
If you haven’t already, you will probably be getting a notice from your employer about the new health insurance marketplaces through the Affordable Care Act.
The notices, which are required by the health care reform law but carry no penalty if employers fail to provide them, are seen as just one more way for the government to get the word out about the marketplaces, which open Oct. 1.
Herbert Egert wants to do the right thing by his employees, so he’s working on his notice. Egert runs a small group dental practice in Maryland that has long provided health care coverage to many of its employees. All of the practice’s employees who work at least 24 hours a week have medical insurance — two through Medicare, one through a parent’s insurance policy, and five who are covered by their spouses’ plans. The remaining nine employees are covered by the practice.
“We pay 85 percent of individual coverage, which works out to 70 percent of parent plus child, 60 percent for a husband and wife, and 50 percent for family coverage,” said Egert, managing partner of Affinity Dental Associates.
Here’s Egert’s dilemma. The insurer covering his employees offered to renew the contract, which ends in March, by the end of December. Egert believes the early renewal proposal, which came with a 32 percent increase, was a move to keep his employees from seeking coverage through the marketplaces.
“I think this offer is just an attempt to take advantage of Obamacare paranoia and that we will be able to do better with the exchanges,” he said.
As a small employer with 50 or fewer full-time employees, Egert may be able to provide group coverage through the Small Business Health Options Program Marketplace, and possibly receive a health care tax credit worth up to 50 percent of premium costs.
Egert doesn’t know what to tell his employees. They may do better in the exchanges, or they may not. Until open enrollment starts, people can only guess what’s best.
“What do you think I should indicate in the letter to the employees?” asked Egert, who has been my dentist since I was a young adult.
I told him to lay out all the options he’s considering for them. When I consulted government officials, they said the same thing. “Employers shouldn’t worry that they will be locked into any future benefits coverage because of this notice,” said Phyllis C. Borzi, assistant secretary of labor for employee benefits security.
The Labor Department has created template letters that employers can use as a model to send to their employees. One letter is for employers who currently offer health insurance, and the other is for those who don’t.
If the Fair Labor Standards Act covers your company, your notice should at least include the following:
Information about the health insurance marketplace, where you will be able to shop around and compare plans sold by different insurance companies, should be provided.
You should be told that, depending on your income and what coverage your employer offers, you may be able to get lower-cost private insurance in the marketplace.
If you buy insurance through the marketplace, you may lose your employer contribution to your health benefits, if there is one.
If your employer offers health coverage that meets certain standards, you will not be eligible for a tax credit.
If your employer does not offer health coverage, your letter would point out that you might be eligible for a tax credit that lowers your monthly premium.
If the cost of an employer plan that would cover you — not including other members of your family — is more than 9.5 percent of your household income for the year, or if the coverage your employer provides does not meet the “minimum value” standard set by the Affordable Care Act, you may be eligible for a tax credit.
As I told Egert, just be up-front with your employees. If you aren’t sure what will work best, then say that. He’s got some time to decide. Open enrollment in the individual marketplaces begins Oct. 1 but doesn’t end until March 31. Regardless, Egert said he isn’t changing his commitment to his employees to provide quality health care.
“Most of my staff are confused by and afraid of the ACA calculators that are out there,” he said. “I have already told my employees that we will play it by ear, but we still intend to supply insurance that is at least as good as what they have now.”
Michelle Singletary is a financial columnist for The Washington Post.