The health insurance landscape for small businesses can be confusing. Owners are grappling with changing premiums and complex Affordable Care Act (ACA) provisions like tax credits and penalties. To help demystify the ACA, HealthMarkets reviews and explains the coverage options for small businesses.

Businesses with fewer than 50 full time employees have two basic options: individual coverage or group health insurance. A HealthMarkets Insurance Agency survey found 69 percent of businesses whose employees have individual coverage were somewhat very confident in their understanding of the healthcare law, but 73 percent of those with group coverage found the process harder to understand.

The reason is pretty simple, when you review both options.

Group Insurance Plans

Let’s start with group plans, where the employer purchases the policy and offers it to eligible employees and their dependents. The cost for these plans is usually split between the employer and the employee (with a minimum rate that businesses must contribute to employee premiums). While providing a group plan maintains the familiarity of the status quo for employees, according to a 2013 report by the Kaiser Family Foundation, employers paid $3,335 more a year for group insurance than they would have paid if employees purchased a plan on their own. For family coverage, business owners paid $10,800 more per year. Additionally, 65% of small businesses are expected to see an increase in health insurance costs this year, making group coverage more difficult for business owners to budget for unpredictable costs. 1

Individual Insurance Plans

Individual plans are just that–plans that a person buys independently, either for themselves or their entire family. In many cases, the net cost of individual health coverage to employees after federal subsidies is less than the cost of a group plan to employees. The United States Department of Health and Human Services has announced that on average, enrollees through the exchanges are receiving subsidies totaling 76% of the insurance premium2. However, employees are precluded from pursuing an individual option if they are offered insurance through their employer (even if they do not participate in the group plan).

Every business owner must evaluate their specific situation to determine which option is best for their company and employees; however, trying to navigate the complexities of ACA isn’t easy. There are a variety of different requirements, exemptions, tax credits and subsidies to consider, and that doesn’t even cover comparing the plans themselves. Small business owners looking for help in understanding ACA and navigating the insurance marketplace often come up short. In fact, nearly half of business owners with less than 50 employees surveyed by HealthMarkets said there aren’t enough resources to help them choose insurance through ACA.

We strive to demystify ACA for small business owners by providing information through our small business blogs, social media posts, and licensed insurance agents located in communities across the country. Why not let us help? With just one call to one of our agents, HealthMarkets reviews your options and answers your questions to find solutions that fit your needs.

 

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References

1 2014 CMS Report to Congress on the impact on premiums for individuals and families with employer-sponsored health insurance from the guaranteed issue, guaranteed renewal, and fair health insurance premiums provisions of the Affordable Care Act | 2 “Federal insurance exchange subsidies cut premiums by average of 76%, HHS reports”, The Washington Post, June 18, 2014.

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