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An array of insurance options for Idaho small businesses

Padma GadepallySmall businesses, typically defined as those with fewer than 500 employees, represent 96.9 percent of all employers in Idaho and employ 57.4 percent of the private-sector workforce. These businesses are a large part of the state’s economy, and as such are central to Idaho’s health and well-being.

As Idaho’s small business owners well know, the passage of the Patient Protection and Affordable Care Act has brought a host of new requirements for employers, some of them potentially quite costly. Prudent choices can help Idaho small business owners reduce their costs, minimize their risks, and ultimately save money.

PPACA created the Small Business Health Options Program, or SHOP, as part of Idaho’s health insurance marketplace, where small businesses with fewer than 50 full-time equivalent employees can shop for group health plans. Qualified Idaho small businesses can get tax credits if they have 25 or fewer employees and a workforce with an average wage of up to $50,000. Tax credits of 35 percent of the premium costs are available in 2013, and they will increase to up to 50 percent in 2014.

Starting Jan. 1, 2015, PPACA requires Idaho small businesses with more than 50 full-time equivalent employees to provide “minimum essential” health coverage to full-time employees as part of the “employer mandate.” Employers that choose not to offer employer-sponsored group health coverage, do not pay at least 60 percent of employees’ premiums, provide insurance that does not meet the minimum benefits of a “bronze” plan as required by the PPACA, or provide insurance that exceeds 9.5 percent of family income will have to pay a shared responsibility fee or penalty. The penalty would be a fee of up to $2,000 per employee if any of them get government-subsidized coverage through Your Health Idaho.

The first 30 full-time employees will be, however, excluded from the assessment. Group health plans in effect as of March 23, 2010, are grandfathered under PPACA and will be considered “qualified coverage” that meets the employer mandate.

Small business owners must compare for their business the costs and benefits of the following three options: a) offering traditional small business health insurance coverage, b) offering a health reimbursement arrangement that reimburses employees for individual health insurance coverage, or c) offering none. Idaho small businesses can choose from either a group plan or an individual plan as primary categories of health insurance.

Idaho small businesses also need to know about preferred provider organization, health maintenance organization, health savings accounts-qualified and indemnity health insurance plans. Defined contribution plans, like the HRAs, allow Idaho employers to get out of the health insurance business and simply provide select employees monthly allowances to buy their own health insurance policies through the state exchange. Idaho employers using these plans typically report less cost than group health plans, and this could ultimately result in savings for both the employer and the employee.

Although the state exchange, Your Health Idaho, provides another way for small businesses to purchase employee health insurance, it’s not necessarily the answer for all the small businesses in Idaho. The private-market options can still hold a lot of value, and it is best to look at the pricing, network, size and the administration costs of the plans to make sure you’re making the best decision for your company. Idaho small businesses for whom the exchange might be viable option need to think about either going to the exchange directly or working with a qualified broker appointed on the state exchange.

It is important for Idaho business owners to understand the price and competitiveness of their purchased health plans, and the effect of changing staff and health insurance enrollment on business property and casualty policies. Another potential area of savings would be streamlining each company’s insurance program, through close monitoring of employee benefits to ensure proper compliance. The employees named on the health insurance should match the employees and payroll on the specific package policy, and on worker’s compensation. Small businesses need to check the contact information on all their policies to make sure they are consistent.

Compliance at a reasonable cost is a major key for small businesses. Companies can be fined if they offer health plans that do not meet the “minimum essential” health coverage or if they don’t properly notify employees of health care options, among other things.

Dr. Padma Gadepally is a physician and a public health professional in Boise. She can be reached at padmaag@yahoo.com.

About Padma Gadepally