ACA Update: Small Business Group Benefits Decision Looming for 2016

Small Businesses Must Choose Employee Benefit Plans for Jan 2016 Plans

Health Care Insurance.

In terms of the Affordable Care Act, companies of all sizes have some decisions to make, but for the small business the impact will be felt the most. At the heart of the ACA, making benefits available to all through individual and state run marketplaces has taken up most of the focus. Companies have turned to benefit administration technology that enables employees to choose the benefits they want at the rates they need, or look to state exchanges for alternatives.

This was a large part of what health care reform was designed to accomplish. However, looming on the horizon are some decisions that companies with 51-100 employees that are participating in larger group benefit plans will have to make by 2016.

The Status of Employee Benefits for Small Companies 

Ahead of the ACA regulations, many small businesses either did not offer health insurance or did not offer enough insurance to employees. Why? Because many companies could not afford to provide these benefits due to low participation and lack of discounts normally provided to larger companies. Many times, employees were left with either no health insurance or having to sign up for public forms of insurance if their household income qualified. The ACA opened the doors for more employees to be able to have access to regular preventative health care.

ACA Regulations for the 2016 Plan Year 

As of the January 1, 2016 benefits renewal period, small businesses will need to transition out of large group benefit plans and into smaller business plans under ACA guidelines.

According to Katie Mahoney, the executive director of health policy at the US Chamber of Commerce, “small employers with 50-100 employees who have formerly gotten coverage in large-employer markets will be required to buy in the smaller business market.” (Source: EBN) The purpose of this change is to make insurance affordable for even the smallest companies by expanding the risk pool for all employers.

The more participants in group health care plans, the lower the risk.

Learning About SHOP

The Small Business Health Options Program, referred to as SHOP, offers up a variety of standard and non-standard small business health care plans, with high deductible health care plans and cost-sharing plans. As each state varies, employers are encouraged to explore the plans for their region to determine the best coverage and rates. The good news is that the SHOP plans offer all 10 of the required benefits for employees, which makes it easier for companies to ensure compliance with the laws. These benefit choices include:

  • Emergency services
  • Ambulatory services
  • Inpatient care
  • Maternity and newborn coverage
  • Mental health and substance abuse services
  • Prescription drug coverage
  • Laboratory services
  • Pediatric care, including vision services
  • Rehabilitative care
  • Preventive medical care, including wellness and chronic disease management

Small employers will need to make their plan choice selections by the end of 2015, with coverage renewal dates effective with the start of 2016.

What Can Small Businesses Do?

It is recommended that small employers begin working with a qualified and licensed insurance broker to choose the right employee benefits for the 2016 season.

This will ensure that all eligible employees will have adequate coverage going into the plan year, and that the rates will be affordable. Some employers may choose to allocate a flat rate to pay for benefits, leaving the remaining balance for employees to pick up. This cost-sharing approach may help to make benefit plans easier to manage, but the employer must pick up the bulk of the fees.