Small businesses with less than 50 employees will have the choice to purchase health insurance plans for their employees either in the traditional setting (outside of the exchange), or inside their own exchange called the SHOP (Small Business Health Options Program,) which is separate from the individual exchange. Please note that Sage Benefit Advisors will have access to all options, in and out of the exchange.
Small business owners will have four basic options when the Affordable Care Act is implemented in January of next year.
1. They may offer a fully insured plan either through the SHOP or outside the exchange.
2. Alternatively, they may offer an ASO (Administrative Services Only) plan which is essentially a self-funded plan where the employer pays for claims on an as needed basis (this is not legal in all states).
3. Another option is for the employer to contribute a fixed amount to each worker that is intended for the employees to use to purchase an individual health plan (though this option is riddled with pitfalls).
4. Finally, a small business with less than 50 employees may opt to not offer any insurance to their personnel.
Similar to the individual exchange, SHOP plans may be subsidized by the government. For those businesses offering SHOP plans, and who employ less than 25 employees whose salaries average less than $50,000 per year, increased tax credits will be provided. This credit will cover up to 50% of insurance premiums (35% for small nonprofits). The credits will be offered for the first two years that the employer offers plans through the exchange, and the credit amounts adjust accordingly as group size and salaries increase or decrease. To estimate the tax credit for your small business, try Connect for Health Colorado’s Small Business Tax Credit Calculator.
This can get complicated for small business owners hoping to attract quality talent. Call us today for more information or to discuss insurance concerns for your small business in depth! 970-484-1250