Business owners have been justifiably wary of the ongoing state of flux that the Affordable Care Act has thrust onto the insurance market, but for the South Sound’s smallest entrepreneurs, a new development may provide a helpful boost.
“If you have less than 50 employees, there’s going to be a new marketplace opening,” said Chris Free, co-principal at Tacoma’s Rapport Benefits Group and former president of the Washington Association of Health Underwriters. “It’s called the SHOP (Small Business Health Options Program) Exchange, or WashingtonHealthPlanFinder Business.
Essentially, Free said, the SHOP Exchange is a mirror of the individual exchange that opened to consumers earlier this year, except it caters to small businesses.
“As we all know, there have already been places for businesses to buy insurance for a long, long time. This is basically just duplicating what’s already existed in the marketplace — but with the added component of channeling tax subsidies.
Established, like the individual exchange, by the state of Washington with federal funds, WashingtonHealthPlanFinder Business is set to open on Oct. 17, offering plans that would begin in January of next year. Or, perhaps more accurately, it’s set to offer one plan — as, for most of the state, only one provider has so far jumped on board.
“That’s a carrier called Moda (Health),” said Free. “There’s going to be two carrriers available in Clark County — Kaiser will be available there, too — but that’s a very small piece of Washington state.
“Moda used to be called Oregon Dental Service. They used to be a dental insurance carrier, but wanted to branch out of both their industrial specialty and out of Oregon, so they rebranded as Moda and are selling medical insurance here in Washington state. They’re using the First Choice network, which is actually a really large network statewide, so patients who sign on with them would have really great access to providers, it turns out.”
So why, then, take note of an exchange that seemingly duplicates an existent marketplace with very limited options?
Well, if you qualify, it’s all about those precious tax subsidies.
“That’s the one thing that the exchange offers that no one else does,” he said. “Mind you, that’s only available if you have less than 25 employees and the average income (within the company) is less than $50,000, not counting the owners. If you purchase health insurance for your employees and you pay more than half the premium for your employees, you might be eligible if you fit those other criteria.”
It’s a narrow category, but for those few businesses who qualify, the exchange might present a big money saver, Free added.
“If you have low income employees and you’re buying them health insurance through the exchange, you could possibly get very large subsidies — up to, I believe, half the premium that you’re paying on their behalf,” he said. “That’s if you’re the perfect candidate. I believe that’s less than 10 employees and all of your employees are low income and you’re paying for all your employees. But that could be a lot of money. That could be $100-$150, maybe even more, per employee per month, so for a small business, that could be quite a sizeable subsidy.
“The larger your company is, and the higher the average income for your employees are, the lower that subsidy gets … I don’t want it to sound like there’s a pot of gold at the end of the rainbow, but there are small businesses in our community that are taking good care of their employees, and some of them may be eligible for some extra federal assistance, and those companies should definitely know about it.”
Notably, Free continued, the rates that Moda will offer on the marketplace are a relative unknown.
“The public doesn’t know (the rates) yet,” he said. “We can get them — or get close to them — by digging around on the Insurance Commissioner’s website, but the exchange hasn’t made quoting available yet. The rating engines aren’t live yet.”
However, he added, in the increasingly pricier insurance sphere, at the very least, the new exchange will represent another option to a marketplace hungry for potential cost cutters.
“If you have 26 or more employees, really, the only benefit is that it’s another option, one more place to look for insurance,” Free said. “But in the era that we’re living in now, I’m having to hand out some really high rate increases from the insurance market. It would be bad for any broker to not look in every place he can to serve the best product possible.”