Small firms’ exchange has a big problem: It’s off to a very slow start

Print Friendly and PDF By: Hyacinth Empinado Published: Apr 9, 2014
The owners of this antiques and home decor business aren't interested in the small business insurance exchange.

The owners of this Braselton antiques and home decor business say they aren’t interested in the small business insurance exchange.

The health insurance marketplace for small businesses is now open.

But Mom and Pop aren’t buying.

Many small employers do not even appear interested in checking out this feature of the Affordable Care Act, which is different from the better-known individual exchange where people buy coverage for themselves.

Jackie Stowe is a small business owner trying to settle into a new location.  She and her husband, Mike, recently moved their antiques and home decor store from Hoschton to Braselton.

Stowe plans to add a couple more people to the JarFly Station payroll, but she’s been so busy with the move that she admits health insurance hasn’t been on her agenda.

Meanwhile, everyone in the store’s small workforce already has insurance. Mike is also employed with Keller-Williams Realty, and he and his wife are covered through that company. And the couple’s two employees get health insurance through their spouses.

Stowe says she needs to do more research, but she hopes that she does not have to get a plan through the Small Business Health Options Program (SHOP), the government’s health insurance marketplace for small businesses.

“I don’t really want to go through it,” she said.

And she’s not alone.

An option, not a mandate

 

“I think it’s become so complicated that the reaction for people is just to shut down,” said Ann Murray, head of the employee benefits practice at the law firm McKenna Long and Aldridge.

Unlike with some other programs of the ACA, this is an option, not a mandate. The health law does not require businesses with fewer than 50 employees to offer health insurance to their workers.

But SHOP is meant to help small business owners find affordable coverage. As incentives, the government offers certain tax credits and deductions to employers with fewer than 25 employees who set up coverage through SHOP and help pay for it.

Currently in Georgia, the only way to sign up for a SHOP plan is to go see an agent, broker or insurance company and fill out the paperwork.

Interested employers can view SHOP plans and prices through an online premium estimation tool.  However, to enroll in SHOP coverage, employers need to enroll directly with insurance companies and pay them the first month’s premium.

Online enrollment won’t be available till later this year.

To get the tax credit, employers need to submit an application to determine their SHOP eligibility. Interested employers can download the application online and send it by mail; apply by phone; or work with an agent, broker or insurance company.

‘Not our most popular offering’

 

While some companies enroll in the small business exchange because of the tax breaks, some employers prefer to skip SHOP’s “intensive” paperwork and just advise workers to seek their own coverage through the individual exchange, said Bert Kelly, director of communications for Blue Cross and Blue Shield of Georgia,

Blue Cross is one of the companies that offer SHOP plans in Georgia, but Kelly said, “It’s not our most popular offering.”

The goal of SHOP is to provide a variety of health insurance options to both employers and employees of small businesses.

Under the original ACA design, workers from different small businesses could enter the SHOP exchange and be able to pick a health plan from several options, similar to what large employers offer.

But currently in states that have federally run insurance exchanges, such as Georgia, only employers can choose the plan they will provide. Employees will not be able to choose their plans until late 2015 or even 2016.

On top of delayed and only partial implementation, eligibility requirements are complex.

“A lot of the people are confused,” said F.J. Fenn, president of the Jackson County Area Chamber of Commerce.

The Jackson Area Chamber of Commerce say local businesses are confused about the SHOP option.

The Jackson County Area Chamber of Commerce says local businesses are confused about their ACA options.

Fenn says the law’s new policies could have been introduced and explained a lot better. He encourages business owners to talk to their current insurance provider to make sure they really understand how the law is going to affect them as individuals and as business owners.

But mom-and-pop owners have little time to wrestle with new rules about health insurance because they’re juggling payrolls, books and inventories, legal expert Murray said.

Enrollment barriers and launch delays for the online exchange have discouraged a lot of people, she said.

In February, to help with the transition to the ACA’s requirements, the Obama administration delayed the mandate for employers that have to provide insurance to full-time employees. Businesses with 100 or more employees will not be fined for failing to provide health coverage till 2015, and businesses with 50 to 99 employees will not face fines until 2016.

 

Larger paychecks rather than benefits

 

Meanwhile, many Jackson County business owners are not even thinking about providing health insurance for their workers, much less using the government marketplace as a way to do it. Some of these owners have very small businesses and don’t employ anyone but themselves, while some hire people who already have coverage through parents or spouses.

Shawn Watson, owner of Legacy Landscape Management in Jefferson, has given the matter some thought. And he says that his employees would rather have larger paychecks than benefits.

“In the past, most employees were not interested in insurance,” he said in an email.

Watson has personal health insurance coverage, and said he knows that six of his eight employees are covered either through their spouses or through an individual health plan. He does not know about the other two.

According to an analysis done by the Kaiser Family Foundation, workers at businesses with fewer than 50 employees are 25 percent of the workforce, but they account for 40 percent of all uninsured workers.

Ultimately, suggests Murray, what happens with small business health insurance will be up to individual workers, not employers. The business owners will have to worry about providing such coverage only when – and if – their workers start calling for it.

But uninsured workers will probably not take that step until they face their other options under the ACA: either to buy insurance themselves or pay a penalty.

“Until it hurts the individual, [they’re] not going to start complaining” about small businesses’ lack of coverage, she said.

Hyacinth Empinado is a freelance science writer. She is currently a first-year graduate student in the health and medical journalism program at the University of Georgia.

 

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