Healthcare reform rollout in Durham
With partisan arguments and conflicting stories swirling around the news cycle, it’s difficult to sort out what health reform will mean for businesses and for employees who buy insurance through an employer.
In the midst of the debate, it’s important to remember that every major change to our health insurance system requires businesses to recalibrate the benefits that they offer to workers. But actuaries with the consulting firm Milliman estimate that the number of people covered by an employer plan will not change much in North Carolina once health reform is implemented in 2014.
Small businesses are mostly impacted indirectly by reform. There is no requirement that employers with fewer than 50 full-time workers offer insurance.
There will be an online marketplace through which businesses can buy coverage for their employees, although in the first year only Blue Cross and Blue Shield of North Carolina will be offering plans through this Small Business Health Options Program (or SHOP).
So why would a business want to buy insurance through this marketplace? Some businesses with fewer than 25 employees can get a tax credit to cover 50 percent of their premium costs if they purchase through the SHOP. There are also proposals to ease the administrative burden on businesses that buy in the new marketplace but these benefits will not be available in the first year.
As with individuals, business owners can find more information about the small business insurance market at www.healthcare.gov.
Large employers, those with at least 50 full-time employees, will have a new requirement to offer insurance to employees starting in 2014. If a large business does not offer coverage, and at least one of its employees gets premium assistance in the new insurance marketplace, the company will be assessed a penalty. The fee ensures that the business is contributing to the premium help flowing to its workers so that taxpayers aren’t left to foot the entire bill.
Although the requirement on large employers to offer insurance still stands, the federal government delayed the penalties, so the law will not grow teeth until 2015.
A ream of news reports are hyping announcements from various business owners that they are cutting hours or dropping coverage. Health reform is driving some of these decisions but many corporate changes are just the normal churn we see every year. Health reform offers an attractive out for people who have to explain an unpopular change in benefits.
The truth is that most large businesses currently offer insurance coverage and most will continue that practice in 2014. A survey by The Midwest Business Group on Health and a recent analysis by University of Michigan researchers confirm that few companies plan to nix their employer plans. Besides the employer requirement, there is still a substantial tax advantage to offering health coverage, and insurance is an important tool for attracting top talent.
There is one business group that stands to gain tremendously from reform: small entrepreneurs.
Many self-starters with a big idea are afraid to leave their jobs because they need the protections of a group policy. A pre-existing condition can sap the momentum from these potential business owners. The self-employed may be willing to risk their savings but they don’t want to face the financial catastrophe of getting sick without insurance.
Health reform will revive the plans of some entrepreneurs. In 2014, insurance companies will be required to offer plans to everyone without charging more based on gender or medical history. Previously these protections were available only for group policies.
The Affordable Care Act extends these protections to everyone. This will not only provide new security for families in Durham; it will also be a boon to small business.