Healthcare Reform School - Lesson 21 - What should my small business do now?

Welcome back.  What a crazy week it has been in the New World of health insurance!  The State and Federal Marketplaces (exchanges) are open and were a big topic of news stories both national and local.  I of course was listening with reat interest.  Sadly, much of what I heard was misleading, I don't think it was intentional, but there is so much to learn and so many intricacies in this law that it is actually hard to get it right.  I am sure that the newscasters had researchers create the stories, so hopefully if the researchers did their job they would have a good and true story.  Unfortunately many of the stories told only a small part of the story.

One part that of every story that was true is that the State and Federal marketplaces are woefully inadequate to handle the volume of visitors.  I still have not been able to make it all of the way through an application process and I only know of one agent who was able to.  So while I am authorized and accredited to help clients purchase policies through the exchange, I am putting these clients off for a few weeks until the bugs are worked out.  After all the insurance purchased on the exchange is not effective until January 1, 2014.

Back to the topic of my blog "What should my Business Do Now".  In terms of insurance the most important thing to know is that this law does not affect businesses with less than 50 full time equivalent employees.  So you are not required to change anything.
But here is what I recommend...If you have group insurance plan for your small business change it to a Health Benefits Arrangement (HRA).  First I will explain the reason and then I will explain what this is.

1. Change to an HRA to reduce the financial exposure inherent in small insurance groups! 
1. This means you will drop your current group plans 
2. Set up an HRA theough an On-Line Benefits Provider, Like Zane Benefits.
3. Each of your eligible employees will work with an agent/broker to purchase a customized health insurance plan that fits their needs.

      2.    An HRA is a method for an employer to pay a predetermined fixed benefit amount to each     employee.  And the employee is required to utilize that benefit for health insurance and/or health qualified expenses. 

 The business partner I have chosen to administer the benefits for clients that choose to go with an HRA is Zane Benefits because they take care of everything on-line, the employer only needs to spend literally five minutes per month to review the information.  Everything thing else runs very smoothly, the and the employees see the benefits come through on their pay check so they are reminded each month of the health benefit the they are getting.

You may be wondering how an HRA reduces financial risk.  And the simple answer follows.  A small group insurance plan is its own "Pool of clients" or "Group" in the eyes of an insurance company.  If a member of that group has a lot of claims one year, then the the insurance companies are allowed to increase the premiums on everyone in that group to recoup their expenses.  By law insurance companies can make 20% profit, so they will increase the premiums as much as they can.  In a small pool, the increases can be really high, because there are fewer clients to mitigate the large expenses of medical claims.  However once the small group plan is dissolved, the insurance company has no recourse on the members of the old group, and now that there is guaranteed acceptance by insurance companies for everyone who applies, they have no recousrse on the individual that needed (and may still need) medical care.

Another advantage of the HRA is that the employees are allowed to utilize the benefit you provide to purchase health insurance on the public exchange.  This could mean that they will get a federal subsidy, in addition to the benefit provided through the HRA.  This could lower the cost of their private insurance dramatically.  

For more information on getting set up with an HRA get in touch with me, Steve Breer. 773-972-5343.
To review my previous lessons see below and click into the ones that look interesting to you:

Lesson #1 - Introduction
Lesson #2 - Basic Reason for creating the Patient Protection and Affordable Care Act
Lesson #3 - Public exchanges for Purchasing Insurance
Lesson #4 - Essential Health Benefits that will be added to all Health Insurance policies in 2014
Lesson #5 - Tax Credits to Help Pay for Health Insurance
Lesson #6 - Enforcement and Penalties in the Affordable Care Act
Lesson #7 - Preparing for the Affordable Care Act
Lesson #8 -  Options for Small Businesses
Lesson # 9 - Will my Insurance Premiums change in 2014?
Lesson #10 - What Will Happen to Small Groups in 2014?
Lesson # 11 - Why Should I Buy Insurance Before the Deadline?
Lesson #12 - What does the Delay in the Employer Mandate Really Mean? 
Lesson #13 - Can I keep my Current Health Insurance Plan?
Lesson # 14 - Who is Providing Insurance During Open Enrollment?
Lesson #15 - Out of Pocket Spending Limits - Law Change
Lesson 16 - SHOP - Marketplaces for Small Businesses 

Lesson #17 - Options for Individuals and Small Businesses

Lesson 18 - Advice from an expert

Lesson # 19 - Top Three Questions About the Law 

Lesson #20 - Open Enrollment is Here!