For many business owners, it may be challenging to decipher your role, responsibilities and options as they pertain to your employees’ health care. You have three basic options for health plans:
- Keep current health plan
- Choose a different health plan
- Discontinue your current health plan and pay any applicable fines
If you decide to stick with your current plan, you may see an increase in your insurance premium. You may decide to switch to a different plan, but you’ll need to consider certain factors to ensure that you’re choosing the right plan for your business needs, your employee needs and compliance with the ACA. Consider the following as you shop for plans.
Most people are familiar with traditional HMO, PPO and PSO plans, but there are other options that may work for your business, such as an administrative services only (ASO) plan, also known as a self-insurance plan. In this type of plan, the company pays out of its own pocket for all employee health costs including physician fees and other costs for care; the employees pay a monthly premium, co-pays and co-insurance fees. An insurance company is often contracted to handle the claims processing, but all funds come from you. If you choose this type of plan, you may opt out of certain elements that other plans are required to provide, but it shifts the majority of risks from an insurance company over to you.
Another option is known as a consumer-driven health plan, or CDHP. This type of plan gives your employees a savings account funded by pre-tax dollars provided by you, your employee or a combination of the two. All health-service-related costs are paid for with the money in that account. When the money runs out, the employee pays the full cost until the deductible is reached and then enters into a traditional co-insurance setup.
Regardless of the plan you choose, you need to ensure that your employees’ portion of the premium falls within the affordable category as determined by the ACA. For the purposes of the ACA, “affordable” is defined as any offered plan that has a premium which doesn’t exceed 9.5 percent of an employee’s household income. Depending on your employees’ situations, this may mean shifting some of the costs to you or choosing a less expensive plan. You’ll also need to ensure that the plan covers at least 60 percent of costs of care.
If you’re trying to save, you may be looking at plans with less coverage or lower premiums. You’ll need to ensure that the plan meets the minimum essential coverage requirements set out by the ACA, as detailed by the Centers for Medicare & Medicaid Services. If you’re choosing an ASO plan, you may opt out of certain coverage, but in doing so you should ensure that you are still compliant with the ACA mandate to avoid paying penalty fees.
Deciding which option is best for your business and your employees can be daunting. To assist you in making the best choice possible among the available health plans, you should speak with your broker or visit HealthCare.gov for more information about the ways in which the Affordable Care Act will impact your business.