Health insurance marketplaces (exchanges): What optometrists need to know as small business owners

March 14, 2013

Many optometrists may be concerned about their role and responsibilities as small business owners in the formation of health insurance exchanges. The Affordable Care Act (ACA) mandated the development of health insurance exchanges, also known as “marketplaces.” A health insurance marketplace is a place where consumers and small business owners can go to purchase health care insurance. Starting in 2014, these marketplaces will be accessible through a variety of means, including the Internet, call centers, agents and brokers, in person, or by mail. There has been much discussion and misinformation circulated regarding the responsibilities of small business owners with regard to providing health insurance coverage to employees both inside and outside of the health insurance marketplaces. The frequently asked questions below provide the information you need to know now.

As an optometrist and a small business owner, where can I go to look at health insurance coverage options for my employees?

Beginning in 2014, Small Business Health Options Programs (SHOP) – insurance purchasing cooperatives within the marketplaces – will be available to small business owners in each state. Through the SHOP marketplaces, employers can review coverage options and provide their employees with qualified health plans (QHPs) to choose from for health insurance coverage. Insurance options and information is also currently available at http://finder.healthcare.gov.

What sorts of benefits will health plans offer in the SHOP marketplaces?

All small group and individual health plans will cover essential health benefits in the new exchange marketplaces or in the traditional open market that remains. Essential health benefits must include items and services within at least the following 10 categories: ambulatory patient services; emergency services; hospitalization; maternity and newborn care; mental health and substance use disorder services, including behavioral health treatment; prescription drugs; rehabilitative and habilitative services and devices; laboratory services; preventive and wellness services and chronic disease management; and pediatric services, including oral and vision care.

The AOA successfully worked with Congress to ensure pediatric vision coverage is considered an essential health benefit in all individual and small group plans, inside and outside the health insurance exchanges. For additional information, see www.healthcare.gov/glossary/e/essential.html.

How do I access the SHOP marketplaces?

The SHOP marketplaces are still under development. Each state has had the option of choosing to create a fully state-based insurance marketplace, develop an exchange working with the federal government, or, if a state is not willing or able to develop an exchange, the federal government will develop and operate the exchange on behalf of the state. So far, 18 states have opted to establish their state-based insurance marketplaces. Other states are expected to announce their plans before the end of March. For more information on the direction of your particular state, visit http://tinyurl.com/65y23ny or http://tinyurl.com/b69w2pm.

I offer health insurance coverage to my employees now, and I’d be interested in using the SHOP marketplace in the future. When can I start?

The open enrollment period for the insurance marketplaces will begin Oct. 1, 2013.

If I currently use an insurance broker to help me purchase insurance for my employees, do I need to continue to use the broker when using the SHOP insurance marketplace?

You are not required to use an insurance broker. If you would like to continue to use a broker you may, but you are also able to purchase insurance independently.

If my employees choose different plans from the options available to them in the SHOP will I be required to make separate payments to all the different plans?

No. You will be able to make a single monthly payment to SHOP.

I don’t currently offer insurance to my employees but I would like to in the future if it is financially feasible. What do I need to know?

The ACA includes some provisions to encourage small business owners to provide insurance coverage to employees. If you have up to 25 employees, pay average annual wages below $50,000 and cover at least 50 percent of the cost of health insurance coverage, you may qualify for a small business tax credit of up to 35 percent. This tax credit was included in the legislation in an attempt to offset the cost of insurance. The credit is supposed to increase to 50 percent in 2014.

The U.S. Department of Health & Human Services has also released some brief guidance regarding issues small business owners may wish to consider if using the SHOP marketplaces. That information is available at http://tinyurl.com/b2nuqb4.

As a small business owner am I required to use the SHOP marketplaces?

No, although at least one jurisdiction has proposed it. In all or nearly all states, you will be able to decide whether or not you would like to participate in SHOP insurance marketplaces. If you currently buy insurance from an insurance company, you can continue to do so. It is important to note the small business tax credit for offering insurance coverage is only available if you purchase insurance through the exchange.

Will I be subject to penalties if I don’t offer health insurance to my employees?

Penalties will only be assessed for employers who have more than 50 FTE employees. Employers that meet the size requirement and do not offer health benefits coverage will be required to pay a fine of $2,000 per year for each full-time employee, excluding the first 30 full-time employees. Additionally, employers with more than 50 FTEs that do offer health benefits coverage but the coverage is considered unaffordable may be assessed a fine of $3,000 per year for each full-time employee receiving federal financial assistance. This payment penalty cannot be greater than the penalty that would occur if the business did not offer health care coverage at all.

How many businesses are expected to incur financial penalties for failing to provide adequate health care coverage?

The HHS estimates less than 2 percent of large employers will be fined.

How is a FTE defined?

Full time is considered 30 or more hours per week. FTEs are calculated by summing the hours of full and part-time employees. As such, two half-time employees are equivalent to one full-time employee.

I have only three full-time-equivalent (FTE) employees in my optometric practice. Am I eligible to purchase insurance through the SHOP marketplace?

Yes, businesses with up to 100 employees will be eligible. However, until 2016 states may limit participation to businesses with only up to 50 employees. State departments of insurance can provide more information on participation thresholds.

I employ 10 FTE employees in my optometry practice. Will I be forced to pay a penalty if I don’t offer those employees health insurance coverage?

No. Employers with fewer than 50 FTE employees will not incur any fines if the employer chooses not to offer health insurance coverage to employees.

I currently have more than 50 full-time employees but I am planning to downsize as I approach retirement. When will it be determined whether I have 50 or more full-time employees?

The U.S. Internal Revenue Service (IRS) has provided detailed guidance regarding when and how to determine the number of full-time employees a business has (http://tinyurl.com/apulhem). In essence, employers can choose either a six-month or 12-month period in 2013 to determine each employee’s full-time status. An employer would review the six-month or 12-month period to determine whether the employee averaged at least 30 hours per week during the specified period that would make that employee a full-time employee.

If I have more than 50 employees can I reclassify some of them as consultants to avoid the requirement to provide insurance coverage?

An employment attorney should be consulted for assistance in classifying individuals you employ. It is also important to note the IRS performs audits to determine whether individuals have been inappropriately classified as consultants.

I don’t offer health coverage to my employees and I don’t plan to in the future. Do my employees have any options for purchasing coverage?

Yes. Your employees and their families will be eligible to purchase insurance coverage through the exchange.

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