The Affordable Care Act (ACA) continues to effect sea changes for United States citizens and businesses alike, and beginning in January 2016, the definition of “small employer” will expand: Employers with more than 50 employees, but less than 101, will also be considered small employers. If they wish to purchase healthcare plans, they will purchase products as they are currently available to groups between two and 50 employees.
Overall, small businesses often wish to use healthcare coverage as a tool for attracting and retaining employees. The statistical “dip” in small business healthcare coverage actually partly stems from husband-and-wife teams that no longer qualify for small group healthcare coverage, as stipulated by the ACA’s rules.
Michael J. Considine, vice president, consumer and small group markets, at Horizon Blue Cross Blue Shield of New Jersey, explains, “For the husband and wife groups, and also 1099 groups (essentially consulting-only groups), the ACA has requirements that no longer allow those two components to be considered eligible for small employer coverage. Therefore, [those groups] have left the market, and have gone to individual [plans]. But, in terms of small employers saying to their employees, ‘You are on your own; go to the [federal marketplace] exchange’ … We have seen some of that, but we have not seen a groundswell.”
The Sole Proprietor and Husband-and-Wife Teams
For the individual businessperson with no employees, or, again, sole husband-and-wife teams operating a company, two healthcare-plan-purchasing options exist: They may either purchase individual plans on the exchange (sometimes exercised if the applicants qualify for a subsidy), or they can also choose to purchase insurance directly from insurance companies. Either way, an independent insurance broker can guide these individuals through choices, balancing costs against, among other aspects, the freedom to visit specialty physicians, at will. In many cases, lower-cost healthcare plans may require more out-of-pocket patient expenses, and also require patients to first visit primary care doctors in order to obtain referrals for cardiologists, neurologists, and other specialists.
Of note, the ACA no longer permits “bare bones” health plans, in which patients would receive medical care only if they had a catastrophic health issue, such as a broken leg. Experts say the mindset behind this change is to ensure patients receive preventive or consistent medical care in order remain healthy, thus preventing heart attacks, strokes or other life-altering and expensive illnesses.
For small businesses that qualify for “small business” plans, again, a skilled insurance broker can explain the various options available to them and their employees. Of note, the New Jersey Department of Banking and Insurance offers a primer titled “NJ Small Employer Health Benefits Program Buyer’s Guide,” which can help businesses begin the process.
Mary Beaumont, vice president, health and legal affairs, at The New Jersey Business & Industry Association, advises, “If I were somebody just starting [a business], I also might want to talk to another business owner. [Purchasing health insurance] is the kind of thing where if you try to do it on your own, you might find it confusing and difficult to figure out.”
Joseph Berardo, Jr., CEO of MagnaCare, adds, “I would ask for references [from insurance brokers]; references from different group sizes. In other words: ‘Give me a customer of yours that has five employees; give me one that has 25; give me one that has 75.’ I think it is worth making those calls.”
Tailoring the Plans
Plan choices are plentiful. United Healthcare of New Jersey’s CEO Paul Marden explains, “What we allow employers to do – which is great for them, in terms of choice – is to offer up to four different plans to their employees. This gives them a lot of flexibility. So, they can combine ‘metal levels’ and networks to give a spectrum of choice [for their employees].”
Industry-wide “metal levels” are silver, bronze and gold, and differ based on cost sharing: The employer pays a premium up to certain percentage, and then the employee must pay the remainder.
NJBIA’s Beaumont explains, “The bottom line is that the employer can balance healthcare costs through cost sharing with the employees.”
United Healthcare of New Jersey’s Marden indicates that for the most part, higher-cost plans, again, provide the broadest access to medical care (more doctors to choose from), and the benefits are much richer.
He explains that when an employee has a “very rich” benefit program, meaning that he or she pays very little out of pocket, he or she soon receives maximum benefits. Marden argues that the patient then does not truly need to pay attention to the cost of the medical care.
He continues, “They probably aren’t provided any incentives to look for more effective, efficient medical care, or even shop around, because there is no financial incentive. They are getting full coverage, so they can pretty much go wherever they want, and there’s no repercussion in terms of overall cost. And then there is the other extreme, at the other end of the spectrum, with the high deductible plans. When employees have a lot of stake in the game with high deductibles, or they are paying a significant portion of their medical care, they then very carefully examine all of their options to ensure they are receiving the highest quality care, at the lowest cost possible.
“All told, most of the insurance carriers have examined their networks. We do measure the performance of doctors, quality and also efficiency. For example, with our Garden State network, we have found that the actual care delivered is less expensive than the care delivered through our broadest networks. That’s because we have carefully selected the doctors participating in the Garden State network, to get the highest quality and most efficient care. Therefore, [business’] premiums and costs will be lower, [with that network]. Now, it is not as big a network as our Freedom or Liberty networks, but, in general, if you buy a network that has been designed appropriately, you will actually get more value.”
Even if small businesses choose healthcare plans carefully, it is critical they follow all rules and regulations. MagnaCare’s Berardo says, “It is important that [businesses] pay attention to compliance. They really do need to consult with their accountants or other professionals, as it relates to their group size requirements. They should know that there are penalties associated with non-compliance, which can be stiff. Whether it is the IRS reporting employees’ coverage and affordability information, or whether it is – ‘How do you calculate whether you have 50 full-time employees or not, if you have a bunch of part-timers?’–it is, again, very important that companies seek advice. Whether it is an attorney, an accountant or an insurance broker, employers should be guided. It is certainly not something they should be ignoring.”
Multi-employer Welfare Arrangements (MEWAs) also operate in New Jersey, for which the basic concept is that a number of separate small employers pool workers into a larger group, and thus reduce costs. Berardo summarizes, “Most of those programs actually are designed for employers under 50 lives, and they are designed to give choice, right down to the two employees. They are also designed in many cases to allow each individual employee to choose a different plan that meets the needs of their families. It is a really nice approach to small group coverage.”
Also in the healthcare arena are the 23 co-ops which have been established across the United States; Newark-based Health Republic Insurance of New Jersey is the only co-op in the state. A consumer operated and oriented plan, it invests all of its surplus revenues back into improving the quality of care, reducing rates and providing new benefits (or better medical access), to its members.
Cynthia Jay, chief marketing officer, explains, “We were formed to provide competition to the other large carriers that existed. When [it was clear that the] country wasn’t going to be a single payer, there was a [US] senator who said: ‘Let’s just go ahead and bring co-ops into the picture to provide some competition, and sort of have a niche area that’s extremely member focused, and member centric.’ And that’s how we were born. To that point, we are actually charged with being innovative. We work as diligently as possible. We are entering our third year of enrollment, to provide value-added benefits. We listen to the voice of our members – that’s what co-ops do. The membership in fact can be part of the organization through being on our board. Fifty-one percent of our board will eventually be comprised of members.”
Health Republic Insurance of New Jersey was the first carrier in the state to provide a telehealth system. It partners with Teladoc, and patients can have consultations with New Jersey board-certified physicians, at any time of the day or night. Jay adds, “We are constantly working on innovations; we have a smoking cessation and harm reduction program. We partner with CVS Pharmacy Health, providing member discounts at that particular drug store. Also, we provide free vaccines.”
More broadly, Tom Daniels, director of broker relations, Health Republic Insurance of New Jersey, says, “What I would consider to be a positive aspect of the ACA is that more small employers are identifying with what [health insurance products] they have, versus what is available in the marketplace. Because of that, they are becoming more educated on what plans are available. It got to be very confusing in the market, especially in New Jersey, because the different carriers had different types of products; they also had different provider networks attached to those products. Again, it got to be very, very confusing. And, as mentioned, connecting with – or becoming affiliated with – an experienced insurance broker really helps businesses navigate through the healthcare maze.
“For the small employer marketplace, more and more folks are going to be insured, because there are simply more options out there, and there’s a greater level of understanding. The SHOP program (the small employer program that is offered through the federal government) hasn’t had a big impact on New Jersey yet, because of the income requirements; the income levels are so low, for qualification. But, I still believe that as long as there are small employers out there, and as long as they have a desire to offer benefits to their employees, there are more options out there than there ever have been. When there are more options and more flexibility, typically, things become more affordable.”