There likely will be a lot of talk this week about how we make health insurance more affordable for small businesses. If the timing stays on track, the state’s Small Business Health Options Program, a new small group health insurance marketplace that is part of Covered California, will soon announce the plans and rates it will offer to employers with one-to-50 employees.
Whatever the rates, the small business owners I work with hope the SHOP announcement marks a serious effort to bend the cost curve and bring some sanity to ever-rising health insurance premiums. According to a 2009 MIT report, without reforms, over the next decade small businesses with 100 or fewer employees would pay nearly $2.4 trillion in health care costs for their workers. That, clearly, is unsustainable.
The idea behind SHOP is that the state’s health benefit exchange will be able to use its purchasing power to ensure small businesses gain access to some of the benefits larger employers have, such as a number of plans to choose from, plans with strong provider networks, and rates offered at more competitive prices. The SHOP also seeks to make health care coverage more affordable by offering tax credits for some small businesses, credits that can cover up to 50 percent of the insurance premiums.
Officials also say that the SHOP should help lift the administrative burden that many small business owners face when they consider purchasing health care coverage. In purchasing insurance through the SHOP, employers should be able to participate in a streamlined enrollment, premium collection and plan payments process that will reduce the mounds of paperwork that can be so time consuming and daunting.
Important for small business owners to know is that the SHOP will standardize coverage in four plans, often referred to as “metal plans” because they are marketed as Bronze, Silver, Gold, and Platinum. The big difference between the plans is that the more a small business pays for the plan, the less they pay in out-of-pocket expenses. For example, a Platinum plan costs more but pays 90 percent of covered medical expenses, while a Bronze plan pays for 60 percent of covered medical expenses.
While the insurance companies that will offer plans through the SHOP, as well as the price of those plans, is slated to be announced this week, employers will have time to decide if purchasing health insurance through the SHOP makes sense for them. Open enrollment officially begins on Oct. 1 and the health care coverage will take effect Jan. 1, 2014.
Small businesses, right now defined as those that have 49 or fewer workers, will have a chance this fall to go online at www.coveredca.com and do comparison shopping on their own. However, because it is difficult to navigate the health insurance marketplace, employers are strongly encouraged to work with certified insurance brokers who will explain coverage options and ultimately help business owners choose a plan that works best for their company, budget and employees –whether the plan is offered inside or outside the SHOP. Also, licensed agents can support HR compliance, provide alternate funding options, voluntary and ancillary coverages like life, dental, vision and disability insurance not offered in the exchange.
While much remains unknown, the hope is that the soon-to-be announced SHOP plans and rates are a step in the right direction as California continues to implement the Affordable Care Act. Let’s hope the SHOP does give small businesses more purchasing power, provides administrative streamlining, offers apples-to-apples comparison of plans, and gives employers and employees more affordable choices for health care coverage.