What is the Affordable Care Act?
The Affordable Care Act (ACA) was signed into law on March 23, 2010. The Affordable Care Act, often referred to as ”Obamacare,” addresses health insurance coverage, health care costs, and preventative care. The goals of the law are:
- To make health insurance more accessible – by
making it more affordable.
- Premium tax credits are provided to consumers with household incomes between 100 – 400% of the federal poverty line.
- To expand Medicaid – to cover all adults with income below 138% of the federal poverty line.
Small Businesses and the ACA
For small business owners that fall into the employee range of 2 – 50, the Affordable Care Act may seem like the only option for health insurance. With increasing rates and decreasing value, it is no surprise that small business owners across the country are looking for different options for themselves and their employees. Health insurance is an important benefit that many business owners choose to offer to their employees. Having a rich suite of benefits helps an employer be more competitive in the job market – in turn helping to maintain higher retention of valued employees.
Here is a secret: it IS possible for small business owners to attain the best health insurance coverage at affordable rates. If the increasing rates and decreasing value of the Affordable Care Act are making you rethink your health insurance, these options may be the solution for you and your business.
What are Alternatives to The ACA
1. Cancelling Medical Coverage – High Risk
To avoid paying rising monthly premiums and high deductibles, some individuals may choose to cancel their medical plan. Although possible, this option is not recommended. Health insurance protects individuals and families in the case of unforeseen catastrophic events. Those who are not covered with health insurance could be stuck with high out of pocket medical bills which can lead to financial hardships in the event of a medical emergency.
In addition to the risk of unexpected medical bills, individuals who are not covered by a health insurance plan could end up getting stuck paying the Shared Responsibility Payment fine. This provision of the Affordable Care Act requires the individual and all members of their family to be covered by qualifying coverage for health care. If the individual or members of the family are not covered, they will be required to make an individual shared responsibility payment when filling out a federal income tax return. The fine could be up to 2.5% of a household’s yearly income.
2. Health Sharing Plans – Moderate Risk
Health sharing plans are formed by a group of like-minded individuals who agree to help other members pay their medical expenses. This type of plan started with a religious backing, and some continue to base their organization on religion. These plans were grandfathered in under the Affordable Care Act and are still in effect today.
Some health sharing plans require members to agree to a statement of faith. Others may require members to verify regular church attendance.
Because of the religious affiliation some health sharing plans carry, some health expenses that are related to “non-Biblical lifestyle choice” may not be paid for by the organization. Health sharing plans can choose to deny access to individuals who use tobacco products, use illegal drugs or have a known history of drinking and driving. Birth control, abortions, and treatment of sexually transmitted diseases are traditionally not covered by the plans, as these health expenses could be viewed as “non-Biblical lifestyle choices.”
Another downfall of participating in a health sharing plan is that this type of plan is not required to cover preventative services such as check-ups and screenings to prevent illnesses. This type of plan is also not required to cover pre-existing conditions.
The relationship between members and the health sharing plan is built on trust. There are no contracts. Members trust that the organization will continue to pay the medical bills, and the organization trusts that members will pay their monthly “shares” or premiums.
3. Find a Master Policy – Low Risk
A master policy is an insurance policy that provides coverage on a group basis. Those employees and group members who are eligible can receive coverage from the master policy. A small business owner can typically find a master policy plan by contacting a Professional Employer Organization (PEO). A PEO is an outsourced solution for payroll, human resources, benefits and compliance.
Due to the nature of the group policy, large savings on premiums typically come along with joining the policy. Research shows that rates tend to be between 18 – 34% less than with alternative plans.
Employers who join into the co-employment relationship with a PEO gain access to Fortune 500 level benefits in addition to the master policy – an added benefit suite that is otherwise unattainable for most small business owners. Benefits include:
- Health Insurance
- Dental Insurance
- Vision Insurance
- Life Insurance
- Flexible Spending Accounts
- Long Term Disability / Short Term Disability
- 401(k) Plans
- Human Resource Administration
- Employee Wellness Programs
- Employee Assistance Program
- Payroll Administration
- Benefits Administration
Who Fits the PEO Model?
The PEO model is a great low risk alternative for small business owners who feel stuck with the Affordable Care Act as their only option for health insurance. Employers in the 2 – 50 employee range may find that it is more economical to join a PEO’s master policy.
In addition to the reduced health insurance premiums, employers can take full advantage of the ancillary benefits that are included in the PEO package. This added suite of benefits helps employers to attract and retain top employees. Statistics show businesses that engage in the co-employer relationship with a PEO have 10 – 14% lower employee turnover.
Focus on Your Business – We’ve Got You and Your Employees Covered
Focus OneSource – Iowa’s only locally based and owned Professional Employer Organization – is here to take the stress out of health care. We have helped our clients to save thousands of dollars on health care each year with the use of our master policy. Will you be next?
Call Focus OneSource today to see how we can help save you and your employees money on health insurance.
By Alaina Riley