Stephanie Dwilson

Small Business Health Insurance: Is Off-Exchange Right for You?

Using the health insurance exchange isn’t quite as confusing as it may sound. If you’re a small business owner providing health insurance, your main decision boils down to whether you want to provide your insurance off-exchange or on-exchange. How can you determine if an off-exchange plan is the best? Read on for more details.

On-Exchange vs. Off-Exchange

Individuals can buy health insurance that covers the ten essential benefits either on-exchange or off-exchange. On-exchange plans are available through government-created marketplaces. Individuals buy their plans through state or federal ACA marketplaces. Small businesses with 50 or fewer full-time employees, on the other hand, can buy their on-exchange plans through the SHOP program. As of May 2017, fewer than 233,000 people were covered through SHOP plans, CNBC reported, and how the program works may be changing in 2018.

Off-exchange plans, meanwhile, can be purchased through an individual health care company, a broker or a private marketplace website that combs through all of the off-exchange plans and compares them in one menu.

Pros & Cons of Buying Insurance Off-Exchange

The biggest disadvantage of off-exchange plans is that they don’t include subsidies or tax credits. If individuals are buying a plan and their income is low enough to qualify for a tax credit, they won’t get it through an off-exchange plan. In addition, small businesses with fewer than 25 full-time employees can only get a tax credit themselves if they purchase a plan through the exchange, explains HealthCare.gov.

However, if these credits aren’t a concern, then there are a number of benefits that off-exchange plans may bring.

  • Off-exchange plans may offer a plan that costs less.
  • An off-exchange plan might be accepted by more doctors in the region.
  • Some states may add extra requirements, like pediatric vision, that off-exchange plans don’t include. This can lower the cost of off-exchange plans.
  • Some carriers now only offer plans off-exchange and have pulled out of state and federal exchanges entirely. So off-exchange plans may have more variety.
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How to Buy Insurance Off-Exchange

Individuals can no longer get individual plans on or off the exchange until the next open enrollment period unless they qualify for special enrollment. Non-compliant short-term plans are the main option for most individuals until the next open enrollment period. Small business owners, however, can still offer on-exchange SHOP insurance or off-exchange insurance at any time, explains HealthCare.gov.

If you want to get a plan for your small business employees that is off the health insurance exchange, just talk to a broker to determine what plans are available. Or, if you have an insurance company that you already know you prefer, you can speak to that company directly. Getting insurance off-exchange isn’t difficult or complicated and, for businesses, it isn’t limited to an open enrollment period.

As a small business owner, you have many more options than individuals when it comes to choosing health care. While individuals are limited to an open-enrollment period, small business owners can peruse the on-exchange and off-exchange plans to find out what makes the most sense for their staff. Of course, with the current political climate, health care laws and options are frequently changing. So talk to a health care broker to get a better sense of what’s available in your region.

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