ACA update: small business exchanges

By Emily McKinley, Health Information Specialist

Last month’s ACA Update: Marketplace Report reviewed the upcoming changes to the insurance marketplace, namely the formation of exchanges from which individuals and small business employees will be able to compare and purchase health care coverage. All plans featured on these exchanges will meet benchmark standards and include certain essential health benefits. (We will review the final rule for essential health benefits (EHB) in a future update.) The marketplace exchanges were slated to be up and running on October 1, 2013, for plan purchases with coverage beginning January 1, 2014.

This will no longer be the case for small business exchanges, also known as Small Business Health Options Program (SHOP). As the October deadline quickly approaches, insurers expressed concern about their ability to design and offer health coverage plans that meet all the requirements of the small business exchange. Thus, this exchange will not be fully operational until 2015. This delay will apply to the federally operated exchanges, in which 33 states including Indiana are participating. The remaining states also have the option of delaying the fully operational small business exchanges.

What does this mean for consumers? Individuals and families who purchase health insurance from the individual health coverage exchanges will not be affected by this delay. It is also unlikely that many small business employees will really note the effects of the delay. That is to say, currently, most small businesses that offer insurance simply offer one plan option to their employees. Employees must then weigh the pros and cons of the coverage and costs to determine whether they will participate in the employee-sponsored benefit. The small business exchanges are intended to offer employees variety. So, instead of simply offering one coverage option to their employees, employers will select a level of coverage. Employees will then have the option of comparing plans within that designated level of coverage. The delay that was announced earlier this month simply states that employees will not have the option to select a plan from a pool of similar plans until 2015; rather, businesses will continue to choose only plan to offer employees in 2014.

What does this mean for small businesses? Again, small businesses will be largely unaffected by the delay insofar as this delay essentially maintains the status quo when it comes to providing health coverage for employees. That said, many small business owners who offer coverage to employees were looking forward to competition within their market as well as offering choices to employees and have expressed disappointment with the delay. On a positive note, small businesses do still have an incentive to participate in the exchange prior to the full implementation in 2015: businesses that participate in the exchange may be eligible to receive certain tax credits, up to 50% (35% for nonprofit organizations).

For additional information on this topic and how the marketplace will work for you, please visit this site, http://www.healthcare.gov/marketplace/index.html. To learn about the ACA provisions affecting small business, we recommend visiting http://www.healthcare.gov/law/information-for-you/small-business.html.  You may also contact Family Voices at info@fvindiana.org or 317.944.8982, and we will be happy to discuss the changes with you.