In many ways, the Affordable Care Act (ACA) won’t directly affect employers with fewer than 50 employees — which describes most remodeling companies — but it will have indirect implications. Premiums may rise, for example, because prevention coverage will now be required. Or instead, a rise might be offset by a group of newly insured people who used to take advantage of the health care system only in emergencies, which is more costly.
Despite possible increases in premiums, Doug Delp, owner of The Delp Group, in Green Lane, Pa., which does human resources consulting and group benefits brokerage, doesn’t anticipate “a mass exodus of small employers saying they’re not going to offer [health insurance] anymore. [It’s still important] for recruiting and finding talent.” But is it worthwhile for your business?
According to a 2012 Kaiser Family Foundation study, about 50% of businesses with three to nine employees offer health insurance; in small businesses with up to 200 workers that offer health care plans, about 61% of employees are covered. To increase the number of small firms (fewer than 25 employees) providing health insurance options, the ACA provides tax credits, especially for those paying low wages.
Business owners — even those with just a few employees — who want to provide health care options should prepare for October 2013, when they’ll need to roll out plans for a Jan. 1, 2014, start date. Two options that are rising in popularity among small businesses are defined contributions and high-deductible plans.
So, what if your company has just 10 employees?
Delp believes 85% to 90% of those in this group of very small businesses that offer health insurance will continue to do so in the traditional way through a group plan. As long as the plan meets the ACA’s requirement for “minimum essential coverage” (see “Coverage Levels,” below) and the employee’s premium isn’t more than 9.5% of his or her “household income” (based on W-2 wages), the plan will be grandfathered in.
To pay for the plan, these employers might offer employees a defined contribution of, for example, $200 per month to put toward a particular private insurer (which will likely offer several options); or let them go out to the exchange — newly created insurance marketplaces in each state — on their own. Or the business itself can go through a SHOP (Small Business Health Options Program) exchange.
Many small businesses are moving toward a high-deductible plan option for employees. Delp says that this is “more in line with what you’ll see on the exchanges, and that’s one reason they’re going there.”
Yet it will be a difficult culture shift for employees used to the traditional low-dollar co-pay system. “It makes the employee a consumer,” says Delp, who believes a high-deductible plan makes people more aware of their own health and might drive down prices.
With 2014 just a year away, it’s time to decide what to do. Even if you choose to not cover employees — a permissible option if you have fewer than 50 employees — everyone will be affected because everyone will be mandated to have coverage. Employers will need coverage too.
If you find that health insurance is still a key benefit, look at wages, taxes, your margins, and the compensation package. See how many dollars you can work into this and come up with a number that fits your budget.
Any insurance plan will have to offer “minimum essential coverage” — what an individual needs to fulfill his responsibility under the ACA requirements. Starting in 2014, the Exchanges will offer Bronze, Silver, Gold, and Platinum plan levels.
Bronze will cover 60% of the cost of a medical visit/hospital, etc., and the member is responsible for 40% — up to a maximum of $5,950 for individual or $11,900 for a family. Insurance covers 100% of anything over and above those personal costs. Coverage goes up with each level, e.g., silver, gold, and platinum cover 70%, 80%, 90% respectively. Premiums are different from these actuarial values and will vary with each insurer.
—Stacey Freed, senior editor, REMODELING. twitter.com/@SFreed