Dec. 3, 2014 – Small businesses, including law firms, are subject to special rules when it comes to health insurance coverage options. In this article, learn about the rules and how they will impact small business decisions about health insurance benefit plans.
The fourth in a series of articles from the State Bar of Wisconsin’s Insurance and Member Benefits Committee, this article is designed to help State Bar members better understand and evaluate their health insurance options in light of the changes coming under the federal Patient Protection and Affordable Care Act (ACA).
Group health insurance coverage is available to small employers through the Small Business Health Options Program (SHOP) Marketplace and outside the SHOP Marketplace.
Did You Miss Previous Articles in this Series on Health Insurance Options for Members?
This article explores SHOP specifically and other insurance options and is intended to be informational only. It is not an advertisement for insurance and does not provide tax advice.
Who qualifies as a small employer?
In most states, including Wisconsin, a small employer is defined as one that employs at least two employees and not more than 50 employees. Beginning in 2016, all states will be required to define a small employer as at least two employees and not more than 100 employees. A few states have already implemented the change from 50 to 100 employees.
Employees regularly working 30 hours per week or more are generally included in the total employee count, and those working less than 30 hours per week, or working on a temporary or substitute basis, are not included.
What options are available for small employers to purchase group insurance coverage?
One option for small employers is not to provide employer-sponsored group health insurance coverage to employees but to make its employees responsible for purchasing their own health insurance options. The ACA does not impose penalties on small employers under the Employer Shared Responsibility provisions for failing to provide employer-sponsored group health insurance coverage.
Any employer considering not offering employer-sponsored coverage and instead reimbursing employees for all or a portion of their premiums which they are paying to purchase coverage should carefully consider the Internal Revenue Service’s guidance in this area, as well as guidance issued by the U.S. Department of Labor.
This practice has been significantly restricted and there are severe potential penalties for failing to comply with these requirements.
Small employers that have already purchased a group health insurance policy that does not yet comply with all the ACA requirements may be permitted to renew that policy for 2015. You should contact your insurance adviser or health insurance carrier to determine whether this renewal option is available for your plan. Some group health insurance policies are available for purchase through the SHOP Marketplace.
You can enroll in coverage available on the SHOP Marketplace either through the Marketplace link, by contacting the insurance carrier directly, or working through your agent.
Other options for small employers to purchase health insurance policies are available from health insurance companies that have elected not to sell their polices through the SHOP Marketplace. You may obtain quotes for policies by contacting the insurance carrier directly or working through your agent.
Small employers may obtain quotes for coverage by contacting the carriers directly or working with a broker who is appointed to serve that carrier.
Keep in mind that small group coverage is provided on a guaranteed issue basis. This means that small businesses have access to and should consider all small group insurance options available in the region.
The Wisconsin Office of the Commissioner of Insurance has provided a guide for consideration of small group health insurance options in Wisconsin available here.
What rating factors impact small group pricing?
Small group polices that are subject to the ACA requirements are limited in the factors that can be considered in the rates charged for the policy. These are:
Geographic rating area (carriers are required to pool all small groups within certain geographic rating areas to determine rates);
Individual vs. family coverage;
Age of employees (there are limitations on the variation in premium cost based on age);
Need more information?
State Bar members can get information about the possible health insurance coverage options available to them through their own trusted health insurance professional or from one of the following trusted insurance advisors or resources:
Professional Insurance Programs(PIP)
(414) 277-0154 or (800) 637-4676
Bultman Financial Services
(262) 782-9949 or (800) 344-7040
Your own trusted health insurance professional