By Annika McGinnis, USA TODAY (Dec. 11, 2013)
Just five people work at Michael Cadigan’s law firm, but thanks to his state’s new marketplace for small business health insurance, he’s saving $1,000 a month paying for 100% of their medical coverage.
In the past, “numerous” insurers canceled his employees’ insurance because they didn’t want to deal with a small group, including one person with a rare genetic disorder, said Cadigan, of Albuquerque
Now, he says he can offer the same benefits to the Cadigan Law Firm’s workers as a large business — and for less than he was paying. It took him just 15 minutes to sign up.
Cadigan’s experience illustrates some benefits of the new Small Business Health Options Program, or SHOP, created by the Affordable Care Act. Businesses with 50 or fewer workers don’t have to offer employees health insurance plans, but SHOP tries to make it easier and more affordable for them to do so.
SHOP marketplaces are operating online in most of the states running their own small business marketplaces. That includes 10 states and the District of Columbia planning to run their own marketplaces for individual care, and two other states creating their own SHOP marketplace but using the federal government’s HealthCare.gov site for the individual market.
The other states under the federal system are a different story: Though businesses can still buy SHOP plans, they aren’t available online and lack some of the major features for which they were originally intended.
Until next November, small businesses in those states can work through an insurance broker, agent or directly with an insurer to sign up for SHOP insurance plans. HealthCare.gov can still be used to compare plan options and insurers in different areas, though businesses can’t use it to sign up.
To encourage smaller businesses to offer coverage, the government is expanding the small business health care tax credit that began in 2010. Businesses with fewer than 25 employees that purchase a SHOP-qualified plan — whether from an agent, broker, insurer or a SHOP marketplace — may be eligible for the tax credit. Starting with the 2014 tax year, it will cover up to 50% of employer-paid insurance premiums, compared with up to 35% now.
Tax credit: Small businesses can save
Businesses in many states operating their own SHOPs will enjoy some advantages over those elsewhere. In most of those states, employers can offer employees a choice of plans and receive one bill.
Both those features will be unavailable until next November in SHOP marketplaces operated by the federal government.
Taken together, the federal government’s delays mean small businesses in the 36 states with federally run SHOP marketplaces will see very similar plans — in terms of costs and choice — whether they buy SHOP plans or insurance in the general market, says Janet Trautwein, CEO of National Association of Health Underwriters.
These SHOP plans “are not going to have too many bells and whistles,” she said.
Some states are also lagging. Maryland announced in November that its SHOP marketplace wouldn’topen for enrollment until April 1. In Vermont, where small businesses and individuals buy through the same exchange, glitches with the website led many businesses to buy coverage straight through insurers or have their current coverage extended until the problems are fixed.
But almost every state-run marketplace offers some degree of employee choice, and in eight states — New York, Minnesota, Nevada, Hawaii, Oregon, Rhode Island, Vermont and Utah — employers can offer workers a choice of any plan on the exchange, according to a July report by The Commonwealth Fund, a health care research foundation.
In Kentucky, 1,109 small businesses had started applications through the state’s online SHOP marketplace as of Dec. 6, and about 40% had finished the process, said Jill Midkiff, a spokeswoman for the Kentucky Cabinet for Health and Family Services.
About half of participating businesses are offering their employees a choice in plans, Midkiff said.
Small employers “can choose to offer their employees one plan; they can choose to offer them all plans; they can choose to offer all plan options under one insurer,” Midkiff said.
Five insurance companies sell 24 plans on Kentucky’s SHOP. The individual market only has one more carrier — Humana. It’s still evaluating whether it’ll join SHOP next year, Humana spokeswoman Kate Marx said.
In some states, the difference in participating insurers is even greater.
In Washington, SHOP is only available in two of the state’s 39 counties, and there’s only one participating insurer, Kaiser Foundation Health Plan of the Northwest. Anthem Blue Cross, the state’s largest insurer, withdrew its participation in July. In contrast, eight issuers offer plans on the state’s individual marketplace.
In Las Vegas,, Ron Nelsen, owner of Pioneer Overhead Door, said his insurer, Saint Mary’s Health Plans, withdrew from SHOP. Just two carriers are left, he said.
Nationwide, business owners are confused and misinformed about the health care law, said Todd McCracken, president of the National Small Business Association.
In an October study by the National Federation of Independent Business, 45% of small-business owners said they were dissatisfied with the information they’d received on the law. Although 66% said they were familiar with the act, more than half weren’t sure if their state was operating a working marketplace at the time of the survey.
Facing “information overload,” many businesses are choosing to renew policies they’ve had in the past rather than investigate SHOP, said Amanda Austin, NFIB director of federal public policy.
“We’re still seeing mass confusion on what they’re supposed to comply with, what they’re not supposed to comply with — can they keep their old plan? Do they have to purchase through the exchange?” Austin said.
But no matter the policies of their states, small business owners who don’t investigate SHOP-qualifed plans could be missing out on huge subsidies, Nelsen said.
With just five employees, Nelsen expects to get SHOP tax credits amounting to almost $5,000 in the next two years. He says next year will be the first time he can afford to offer his employees dental insurance.
“It’s a no-brainer for me” to buy through the SHOP, he said.
Credits aren’t for everyone: The largest ones are only available to the smallest, lowest-paying employers — those with annual average wages of $25,000 and an average of 10 or fewer workers, said Timothy Jost, health law expert and professor at Washington and Lee University School of Law. But he said those were the ones that usually don’t offer health insurance.
He added that non-profits should remember they are also eligible for SHOP plans and tax credits. His wife’s non-profit, with five to eight employees, has been offering them health care since the small employer tax credit went into effect in 2010 — the first time it was able to offer its workers insurance.
Nelsen, the Las Vegas door dealer, said buying SHOP plans for his workers was worth it beyond the cost savings.
“If you’re a small employer like me, five employees or 10 employees, this is the first time you can offer your employees high-quality insurance,” he said. “It helps you retain employees, compete against larger employees, keep people at work. And on a moral footing, it’ll make you feel warm and fuzzy that you’ve done this for your employees.”