Health benefits exchange helps small companies

The Colorado Health Benefits Exchange will give small-business owners and their employees more flexibility and more insurance choices.

So far, business groups say they like what they see from the group responsible for setting up the exchange.

“The exchange is market-driven, and employers and employees will be able to choose which plan fits them best,” said Tony Gagliardi, executive director of the Colorado chapter of the National Federation of Independent Business. “That’s why we’ve always supported them.”

The exchange is set up to provide a virtual marketplace for small businesses and individuals to purchase insurance. Colorado’s version goes live in a year, and insurance policies purchased through the exchange start in January 2014.

Small businesses with fewer than 50 employees can purchase insurance through the exchanges at that time, said Patty Fontneau, executive director and CEO of the exchange. She was in Colorado Springs last month as part of the Southern Colorado Economic Forum. Businesses with 51 to 100 employees can join in 2015.

“(The exchange) is a place to get information on benefits, cost-sharing, quality comparisons with health insurance,” she told the crowd as part of a health forum at the economic forum. “It will let businesses make informed decisions.”

But the exchange doesn’t replace existing plans, necessarily, nor is it a government health-care system, she said.

“This is a Colorado concept,” she said. “And it will allow more transparency, more data. And if you use a broker, then you can still use one. It’s just easier to look at options. This type of plan just brings more power and more control to small businesses across the board. There are a number of tools that will be available, a number of choices. Businesses can choose any carrier.”

Gagliardi said the new exchanges might well offer something not allowed under current law — and give small employers the ability to offer cash to employees to choose their own plan.

“The (exchange) board is just starting to discuss defined contributions,” he said. “And that is very, very important to small businesses. Right now, every year a small business has to go through the re-enrollment process, and business owners say it’s getting harder and harder. They’re ready to throw up their hands and say, ‘I’m not playing anymore.’”

But defined contribution removes the onerous task of re-enrollment into small group plans, he said. Instead, employees can choose which plan from the exchange will fit them best.

“Small group plans are one-size-fits-all,” he said. “With the exchanges, there’s just more flexibility for employers, and for employees who want to choose their own plan.”

The Colorado Health Benefit Exchange is independent from the Patient Protection and Affordable Care Act, more popularly known as ObamaCare. It was set up to give the state the ability to create a Colorado-specific program, instead of having the federal government fashion one based on a national model. While it currently is receiving federal grants to build the network and to implement it, the exchange can operate even if Congress revokes the PPACA.

One option makes the state exchange different from federal law: It protects insurance brokers, the people who provide insurance advice and guidance to employers. Under the Colorado law that set up the exchanges in 2011, Senate Bill 200, brokers keep their jobs, something the NFIB insisted on when discussing the legislation in committee.

“We weren’t going to sit back and let an entire industry disappear,” he said. “So if a small business uses a broker now, they can use a broker when they go into the exchanges.”

The health benefit exchange isn’t mandatory for small businesses, but there could be a tax credit for businesses entering the exchange. The IRS says that in 2014, the first year of the exchange, the credits could be as high as 50 percent of health insurance premiums for some businesses. Nonprofits can get a tax credit of up to 35 percent.

But there are limitations. The full credit is available to small businesses with 10 or fewer employees who make an average salary of $25,000 or less. For larger employers, the credit gets smaller. Gagliardi says only about 8 percent of businesses nationwide are eligible for the tax credits. However, the health insurance exchange website says about 90,000 Colorado businesses might be eligible for tax credits to make coverage for employees more affordable.

But the NFIB has a better idea.

“A better way to curb costs, and the NFIB is promoting this, is to allow tax credits to people who have individual policies,” Gagliardi said. “It’s unconscionable that business get a tax credit and that people who pay premiums through their company do it on after-tax dollars, but individual policy-holders don’t have that benefit.”

While the NFIB supports the exchange concept, it does not support the individual mandate in the Affordable Care Act, he said.

He is “cautiously optimistic” that the state exchange will be formed in a way that promotes small businesses and eases their health insurance burden.

“It’s still early in the process,” he said. “But we think they’re headed in the right direction. We’re talking with the board regularly and keeping an eye on the process. But the exchanges are still in their infancy. There’s a long way to go.”

Colorado Health Benefit Options

Employer plan

  • Stay in current plan
  • Shop for coverage through the exchange
  • Participate in long-term care insurance. A new payroll deduction will allow employees to qualify for long-term care benefits after a five-year waiting period. The program is voluntary.

Costs under employer plan

  • Lifetime dollar limits on insurance payouts are eliminated.
  • Medicare taxes will increase for individuals with annual incomes above $200,000 or families earning more than $250,000.
  • Annual contributions to Flexible Spending Accounts will be capped at $2,500 and no longer can be used for over-the-counter medicines.

Individual policy

  • Keep current plan. New policies must comply with federal minimum coverage standards.
  • Shop for insurance through the exchange. Individuals with income below $43,320 can qualify for federal tax credits to offset premium costs.

Costs and benefits to individuals

  • Lifetime dollar limits on insurance payouts are eliminated, but caps on out-of-pocket costs apply.
  • Medicare taxes will increase for individuals with annual incomes above $200,000 or families earning more than $250,000.

Medicare

  • Basic benefits do not change.
  • Federal subsidies for Medicare Advantage plans will be eliminated, which may cause the private insurers who sell them to cut benefits, reduce enrollment or raise premiums.
  • Doctors who treat patients in rural areas, inner cities and underserved areas will be paid a 10 percent bonus.

Revisions for Medicare patients

  • Free annual checkups and wellness programs, including screening tests.
  • Gaps in drug coverage phased out, beginning with $250 rebate.
  • Monthly premium payments for drug coverage will increase for people with incomes above $85,000 and households earning more than $170,000.

(Source: Colorado Health Benefit Exchange)