Friday, November 1, 2013
Much has been said recently about the Affordable Care Act (or Obamacare as some like to refer to it). At it's root ACA was designed to spread the benefits of health insurance to more people. From that point of view it's a boon to those who are not employed, uninsured, and/or have pre-existing conditions. It's also a fantastic new way for CEOs of startups and individual owners to get health insurance without the 15% penalty that organizations like the RBA and the insurance companies liked to charge for "owner policies" or "individual policies". But it doesn't stop there. ACA can also be a fantastic way for small businesses to create a dynamic, customized marketplace for their employees to shop for health benefits, and still offer to cover some or all of the cost!
At OS-Cubed, Inc. prior to Jan 1, 2014 we've offered a generous health insurance package that included an Excellus BC/BS plan that covered most health needs with a co-pay. It was not quite the "Cadillac" plan that has been tossed around but it's way better than the industry average high deductible plan. In addition, the company paid for a significant portion of the plan, leaving only a small amount per month for employees to pay. But the problem is that with such a small company we could only do one plan - and as owner I got the unenviable job of trying to decide what one plan might fit all my employees. It's an impossible task. When you have employees of all ages, health statuses, family situations etc - someone's health care is bound to not be met by a single plan.
All that changed with the ACA. The new law includes an option for small businesses called "SHOP" where as a company I can register on the website, create a roster of my employees and then offer them all or some of the available individual plans on the market. The market rate for these plans is about $10/month more than what I pay now for the EXACT SAME PLAN off-market for a family of 3 or more - in other words realistically the same price.
NYS then bills me for all the premiums for the plans my employees select - I determine a single set percentage or fixed rate or a percentage up to a specific rate per plan that I will pay - and deduct the rest pre-tax from their paycheck. They can select anything from a high end Platinum plan to a much less expensive high deductible account. If they select a high deductible plan they have the option of setting up their own HSA. Through our current broker they can also deposit money into an FSA to offset copays, deductibles or non-covered costs.
You cannot understand unless you've been there yourself how much of a relief it is to only have to shop for a plan for myself - and not for every person in my company. I also will save money down the road. This year - as a one-time thing - I raised everyone's salary by the difference between what we're paying now, and the rate for a single insured platinum plan on the market (About $500/month/salaried employee). They can use these dollars to pay for plans, or they can buy a cheaper plan and pocket the difference. If they buy the same plan as they had last year they'll even make money since that plan went DOWN in price by 4% (and all the doomsayers said rates would go up). Meanwhile if I hire a new employee I'm saving significant dollars because after years of ramping up what we reimburse I have ratcheted it back down significantly - with zero impact on my employees take-home pay. So my employees are kept whole, and continue to get great coverage. I save money. My employees can pick the plan that best fits their circumstance. Their benefits are transportable if they leave the company (sans my contribution of course) and if they decide each year to try a different insurance company they can, without fear of rejection because of pre-existing conditions.
In addition, my transition to the state system (so far) has been flawless - none of the reputed sign up issues, or performance issues. Everything works well and was easy to set up. By next week my employees will be able to login and shop for coverage, and sign up for coverage themselves - quickly, easily and without any problems.
All in all I call this a win. For me, for my employees and for health care in general. Criticize away if you like, but this small business owner is quite happy with how this is panning out.
For more info on SHOP in NYS: https://nystateofhealth.ny.gov/employer
For more info on OS-Cubed, Inc.: http://www.os-cubed.com