“Will work for health insurance!”

There are many reasons to work – to make a living, to gain a sense of personal accomplishment, to be a productive member of society.  But for some Americans, it’s simpler than that.  They work to get benefits.  This is particularly true of individuals in their late 50s or early 60s, who have retired but are still too young for Medicare.  One former client, unable to get a private health policy, donned an incandescent yellow sash each morning to become a crossing guard so she could be covered by the public school’s medical plan.

One benefit of the Affordable Care Act (ACA) is that access to health insurance will have less bearing on consumers’ employment decisions.  In fact, ACA could cause a wave of would-be entrepreneurs, now that they can leave a large group plan and still get health insurance on their own.  ACA also prevents insurance companies from excluding coverage for those with “pre-existing conditions,” as well as creates the architecture for state exchanges, opening in 2014, to provide health care insurance to all those who are not covered under their employer.

In the first post of our three-part series on ACA’s impact on consumers, we looked at employees of large companies and determined that it will be mostly “business as usual” when they choose their health care plans for 2014.  Premiums may rise somewhat and some costs may shift from employer to employee, but providers and plan options will likely stay pretty much the same.

Big changes will occur, however, with small business owners, employees of small businesses, and individuals working on their own. This blog installment focuses on these three categories. Because ACA’s impacts on each are quite different, we’ll take them in turn:*

  • Small Business Owners:  Unlike large companies, businesses employing 50 or fewer full-time employees are NOT mandated by ACA to provide health care coverage to their employees. Further, those already offering coverage can grandfather a health care plan not entirely compliant with ACA.  For small businesses that haven’t previously offered coverage to employees, ACA provides incentives to do so.  In 2014, “small business health option plans” (SHOPs), will go online in each state. Similar to the state-run health insurance exchanges for individuals, SHOPs will allow small businesses to shop among several health care providers, and to garner cost savings and administrative efficiencies afforded by a competitive marketplace. For even smaller businesses with 25 or fewer employees and average annual wages of $50,000 or less, tax credits of up to 50 percent are available for employer-paid premiums, as long as the employer contributes at least 50 percent of the coverage cost.
  • Employees of Small Businesses:  If your employer has 50 or fewer employees and does not provide health care insurance, nor will do so by 2014 or beyond, consider yourself “solo and self-employed” for ACA purposes.  That means you will look to your state-provided health care marketplace for individual coverage.  More on that below under “Self-Employeds.”

But let’s say your employer does respond to ACA’s small business incentives, and decides to adopt a plan through the SHOP marketplace.  While the original intent of ACA was to give small business employees a choice of options through the SHOP marketplace, a July 1 amendment has delayed the “employee choice” feature, allowing small businesses to offer only one insurance option to its employees until 2015.  Furthermore, the employer can choose the level of coverage for this plan, which ranges from 60% of medical costs covered by the insurance to 90%.  If the employer’s plan does not meet your needs, you can go to your state’s exchange, but be aware that you will be ineligible for the premium credits otherwise available to lower income individuals.

  • Self-employeds (with no employees):  You may already have an individual healthcare policy or a group policy through a professional association. Or you may be one of the millions of Americans whose only defense against catastrophic medical costs is keeping their seatbelts fastened and fingers crossed. In either case, you will want to get informed about the status of your state health insurance exchange and what options and providers will be available. Go to healthcare.gov and enter your state of residence to be taken to the corresponding state health care website.  Some states have not yet adopted an exchange, in which case you can use an exchange offered through the federal government.  You can then begin to comparison shop, evaluating the individual insurance you may already have against the exchange options, or comparing what the state/federal exchange has to offer.

What should NOT be a choice, no matter what, is deciding to go without any insurance whatsoever and paying the ACA penalty.  In next month’s “Let’s Talk Obamacare” installment, we’ll look at the economics of buying health care insurance versus being uninsured, particularly as it pertains to young adults.

* To keep this blog post reasonably short and comprehensible, we are not considering those business owners, employees, or self-employed who are covered by Medicare or Medicaid or other federal programs.