Group insurance strategies for business owners in TN
Change brings opportunity and we are entering a time of great change in terms of providing health insurance and employee benefits to your staff. Now that ACA has taken affect for most small businesses we know what the impact is and how to work with the options. What should you do? Begin by finding a group insurance professional go guide you and explain your options. You have to do things differently or at least your plan will look and work differently.
New groups have to comply with the new rules beginning or after January 1, 2014. For those lucky companies who have current coverage most carriers are allowing you to "grandmother" and keep the old policies (this is expected to end in 2016), at that point your medical plan will be required to meet the minimum essential benefits, community rating, guarantee issue and fall into one of the new metal classifications. There will also be a host of new taxes and fees so many may see substantial rate increases.
Tennessee Small Business Health Insurance Plans
Many business owners in Tennessee will ask, "should I continue to offer health insurance to my employees? Most we have met with should and will continue offering benefits and helping to cover all or part of the cost. The tax benefits are simply too attractive for the company and employees. There are a couple of situations where it may actually benefit the employees to NOT offer insurance. The first is if your employees earn a below average income. In this situation they will qualify for a very large premium and benefit subsidy so their insurance can and probably will cost less than you can provide it. Another situation is more about their dependents, the law states that if an employee has affordable health insurance available through their employer, their dependents are not eligible for any tax subsidies. That means that while the employee can have affordable insurance through your workplace, the spouse and children can't afford your dependent premiums and there is no help from the government because you are trying to do the right thing.
Employee benefits and offering group health insurance:
Some carriers are changing participation and contribution requirements allowing small groups to design and build their group insurance strategy to the benefit of all employees. This will only work if you have less than 50 Full Time Equivalents (FTEs) and carriers in your state change the current employer requirements.
The problem many employees will have under the new ACA rules is that the affordability question is based only on the employees earnings and employee only health premium. Most plans today will pass that test making the dependents ineligible for any kind of premium subsidy through the marketplace.
One strategy we are seeing is for companies to reduce the employee contribution to a very low amount making the policy "unaffordable when looking at the 9.5% income test. Where they may have paid 75% of the employee cost previously, this is reduced to only 25% with the savings given to the employee in other forms of compensation or benefits to keep the employee whole. The increased cost for employee only insurance allows those employees who may now be eligible to receive premium or benefit subsidies to legally buy coverage through the marketplace. If they earn too much for a sizable subsidy, they can continue to purchase group coverage through their employers plan. The higher wages would be used to pay the premium through the Section 125 plan to not increase the employer's payroll liabilities.
This does several things; first those lower income employees can get affordable federally subsidized coverage and choose the plan that best serves their situation. Those with higher earnings can continue to get the pre-tax benefit of group insurance and the employer contribution to help cover the cost of insurance.
Not Looking to buy Health Insurance in Nashville, TN?
While we service all of the Nashville, TN area including Brentwood, Franklin, Hendersonville and more, we also consult with brokers in many other states so this may not be an option in your state. Talk with your broker in your state to see if you can use this strategy to give your employees more options.
We have many other money saving ideas throughout our website, I hope they help you make the best decision for your company. And if you're looking for some simple answers on health insurance, visit our Understanding Health Insurance Basics page.
Have questions? Want a second opinion? We can help 615-724-1699