Just How Does Obamacare Affect Small Enterprises?
Because of the ACA mandate, employers that are considered ALE’s and don’t provide health insurance to employees may be required to pay an ESR (Employer Shared Responsibility) Payment, which really is a income tax penalty. To be an ALE the IRS states that the business has on average 50 more full-time workers, including full-time comparable (FTEs) workers, throughout the previous tax year (“Determining if an Employer is an Applicable Large Employer | Internal Revenue Service,” 2018).
I Heard about SHOP, can I get Coverage With Them?
First, it’s required that you have at least 1 full time employee to enroll in a SHOP plan. If one or more employee enrolls within the plan, then you’re able to register yourself. A relative or part-owner isn’t considered a worker. There are lots of business health insurance programs. You are usually able to select from managed care (HMO, PPO, and POS), indemnity fee-for-service, and HSA’s.
Healthshares are non profit programs administrated through various faith ministries. Most healthshares can be bought for a fraction of the cost of a full coverage health insurance policy. There are some drawbacks though. Because this option is not an insurance policy, some of the protections that a insurance policy typically includes are not included in a healthshare (Zac Bissonnette, Special to CNBC, 2018). The other issue is that they may not be a good fit for large employers with employees with multiple backgrounds. Members must profess to have faith in a higher power and many plans require that members take a conservative stance on several social hot topics.
High Deductible Plans With Supplements
Another option for employers is to take a higher deductible plan and provide products to offset the out of pocket cost. By utilizing supplemental options to your favor you can save a lot of money in premium dollars. An example of this strategy would be going from a $1,000 deductible to a 4,000. At first employees may be upset but with that increase we have included some products that will not only pay that deductible in the event something happens but will also provide cash for things like lost income due to illness or an accident. In this example lets say that the $1,000 deductible plan cost $1,200 a month and the $4,000 deductible cost $700. We will also pay for a $1,000 daily hospital indemnity plan that will pay everyday the employee is in the hospital. This cost an extra $25 a month. Then if we add in a $30,000 critical illness and accident policy that pays if the employee is in the hospital for a accident or if they have a critical illness we might pay another $75 for this. So now our total for the $4,000 deductible is $800 a month as opposed to the $1,000 deductible plan cost of $1,200 a month. Most employees are not going to be too upset when you explain how this works and you just saved $4,800 a year per employee.