Come October 1, the insurance landscape for small-business owners will look dramatically different. As the new public health insurance exchanges begin open enrollment, business owners—everyone from solo entrepreneurs to employers with dozens of employees—will get a first glimpse at plans available through the exchanges and will be able to compare those options to their current health plans or what insurers are offering on the private market.
“Business owners need to know what’s out there,” even if they discover that sticking with their current health plan is the best option, says Brian Halbert, principal of Brian Halbert & Associates, a health-care broker and consultancy in Austin, Texas. “There’s a new realm of competition happening right now, and business owners need to take advantage of it.”
But how can business owners make sense of all these new options? And how can they navigate the insurance exchanges wisely and make sure they’re making the right decisions and comparisons?
1. Shop around broadly. Once the exchanges go live, it'll be an excellent time for small-business owners to shop around for health insurance, Halbert predicts. That’s because insurers, faced with new competition on the exchanges and greater price transparency, will be eager to ensure their customers don’t “flee to the exchange,” he says. Even businesses that are content with their current coverage should use the public exchanges to comparison shop and consider going back to their current insurer to see if they might qualify for a better deal, he says.
The self-employed will be able to more easily compare their options on the public exchanges and some—particularly those with preexisting conditions or who are in their 50s or 60s—may find much better pricing on the exchanges. Insurers will no longer be able to deny coverage or charge more because of preexisting conditions, and older individuals won’t face nearly the same price penalty compared with younger individuals as they have in the past.
2. Don’t overlook the private market. Beyond the state- or federal government-run public exchange, businesses should also explore their options on the private market. Many insurers already seem to be offering their clients more competitive pricing for 2014 in anticipation of competition from the exchanges, Halbert says. Moreover, some benefits providers have begun introducing their own “private exchanges,” that will allow employers to better control their health insurance costs. Employers can give employees a set dollar amount to spend on the exchange each year and then employees can select their coverage. Drugstore chain Walgreens announced recently that it plans to move 160,000 of its workers to a private exchange offered through Aon Hewitt in 2014.
3. Be careful comparing plans. Despite the greater transparency offered by the exchanges, it will still likely be tricky making an apples-to-apples comparison between various insurers’ health plans. Plans may offer different co-payments, deductibles, coinsurance, benefits and other features that affect their value to a business. Just because a plan is cheaper, of course, doesn’t mean it’s the better option. “What we’re seeing is there are going to be more scaled-down choices” for business owners on the public exchanges, says Stephanie DeGrandi, partner at The Health Consultants Group, an employee-benefits broker based in Plainville, Connecticut. Another key consideration, she adds, is the network of doctors and health-care providers a plan offers. More affordable plans may have more limited networks than costlier plans.
4. Understand the incentives. Certain businesses will have incentives for buying insurance through the public exchange. The Small Business Health Options (SHOP) exchanges will be available to any employer with fewer than 50 full-time equivalent employees in 2014 and will jump to those with 100 FTE employees in 2016. However, businesses with fewer than 25 FTE employees who earn an average salary of $50,000 or less can qualify for a Small Business Health Care Tax Credit worth up to 50 percent of their contribution toward employees' premium costs in 2014 and beyond. Businesses that qualify for these tax incentives may find purchasing coverage through the public exchange even more beneficial.
5. Get ready for 2015. The employer mandate piece of federal health-care reform has been delayed until 2015. However, that means businesses have an extra year to prepare for it. Companies with 50 or more FTE employees will be required to provide health insurance to their employees or face an annual penalty that starts at $2,000 per employee. The opening of the SHOP exchanges will let employers who currently don’t offer coverage explore their options and at least start making plans for when the mandate takes effect.
6. Don’t go it alone. The role of health insurance brokers and consultants—some who have dubbed themselves “navigators”—could become even more vital once the exchanges go live and Obamacare takes effect. While the exchanges will make it easy to explore health plan options, business owners will want to compare their alternatives in the private market and make sure they’re not making any reckless decisions with their health coverage. A trustworthy consultant will help businesses evaluate their options both on and off the exchange to find a plan that’s the right fit. Business owners “really don’t have time to focus on making sure their health insurance is the biggest, baddest plan at the cheapest rate,” Halbert says. “That’s where consultants come in.”
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