Healthcare Benefits Options for Your Small Business Employees

Gene Marks

Welcome to our weekly podcast segment with Gene Marks. Gene discusses healthcare options for your employees.


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Gene (00:02):

Hey everybody. This is Gene Marks and welcome to the Small Biz Ahead podcast. Hey, just last week, November 1st, a pretty significant thing happened in the world of healthcare that affects business owners all around the country. The Affordable Care Act exchanges you might refer to them as the Obamacare Exchanges, they open for enrollment just on November 1st. And depending on the state that you’re in, where you’re located in the country, they’re generally going to stay open until about January 15th, 2022. Now, these Obamacare exchanges, the health care exchanges, are generally for individuals to sign up and buy their health care insurance. So, a lot of my clients that are business owners say, “Well, why should we care?” “Is this something that we should be looking into in any more detail?” The answer is, yeah, you probably should be.

Gene (00:51):

I mean, even though hundreds of thousands of people are going to be, actually millions of people around the country are going to be setting up to renew their health insurance or choose new health insurance, depending on what they decide to do. Employers have a role in this. Now just to remind you, if you employ less than 50 people you know, you’re not required to meet the requirements of the Affordable Care Act, which means you’re not required to provide health insurance. However, we’re trying to find good employees right now. And most employees that are out there looking, they’re looking to work for places that offer health insurance. That’s just the bottom line. So you’re going to be asked about this when you’re recruiting employees. You’ve got to have some kind of an answer, you’ve got to be able to say to your employees:

Gene (01:37):

“Yeah, we do offer health benefits” or “This is the kind of assistance that we give for healthcare and here’s what we do.” So, the opening of the exchange for open enrollment now provides us with that kind of opportunity. So, there are really like sort of three things that you should consider when it comes to these exchanges and what may benefit your business. Okay. The first is this, depending on the state that you live in there might be available, what’s called a shop exchange, which stands for small business health options program. Okay. And that is where, like, for example, where I live in Philadelphia, the shop exchange is not available in the state of Pennsylvania’s site. However, it is available for New Jersey and Delaware small businesses. So if you go onto the shop exchanges on your state’s healthcare site, you can buy insurance at pretty competitive, maybe even lower rates than if you went to like a private insurance broker.

Gene (02:39):

In addition to that, for some businesses, there’s a tax credit available, who purchased their insurance through the shop exchange program. I mean, the shop exchanges themselves, they haven’t been like super popular over the years because they were introduced back in 2011. It’s been 10 years, if you can believe it, the affordable care act has been around, but a lot of experts still think it’s a good option to consider. I spoke to one guy who is a senior director at Willis Towers Watson, which is an employee benefits firm. And, he says this, “The market has stabilized in recent years.” He thinks that small businesses should be looking at these shop exchanges because there may be some good options for small businesses. So option number one, now that open enrollment is open, go to your state’s healthcare site and look at these shop healthcare exchanges.

Gene (03:26):

You might be able to buy insurance very competitively, or even less than you would get it with a private insurance broker. Number two, if you don’t offer health insurance to your employees, you can still help them get insurance. So, there are many businesses out there, including some of my clients, I say, listen, we’re too small to offer health insurance, but we do provide assistance. So, you can come to our office administrator or HR person, whoever that you assign and say, listen, we’re going to help you get on the exchange. We’re going to help you find the right plan that’s for you. We’re going to educate you as to what is best for you? I mean, you know, again, I spoke to somebody from the Department of Health and Human Services recently, who said that, you know, small employers really do have an important role in educating and ensuring and encouraging their employees.

Gene (04:16):

Even if they don’t have health insurance, at least to tell them where to go and to give them some advice as to what they can get. I remember for those employees as well, there had been some very generous tax credits, thanks to some of the stimulus legislation. And there might even be more on the way that can really give your employees the opportunity to buy health insurance, really inexpensively on these exchanges. So think about that. Like say, you’re trying to hire somebody. That person is like, “Oh, well, my employer is going to be offering me health insurance.” I mean, we still have to pay for it, but that employer, that prospective employer has got another plan. What have you said to that employee, “Well, hold on, before you consider that other employer consider us, let’s sit down and work through your options on the Affordable Care Act exchanges and with the healthcare credits, look at what you would be paying for health insurance.”

Gene (05:03):

It could even be less than what a competitor is offering, which would then answer that health insurance question for that prospective employee. And perhaps like, make the difference between them accepting a job from you. So that’s another thing that needs to be considered. Next is Medicaid, right? Medicaid is for lower income employees. So, if you have employees that are working for your business, whether or not you’re offering health insurance and they meet the eligibility for Medicaid, you can be encouraging them, holding their hand, teaching them how to get Medicaid, either through the exchanges or directly through the government, so that they can get very low cost and also high benefit plans, and also get off of your health insurance plan. So, it not only saves them money potentially even offer, it could offer them more benefits, but it would save you money as well.

Gene (05:53):

Cause you wouldn’t be paying for their healthcare premiums if that’s the kind of benefit that you offer. So far, just to recap, consider the shop exchanges, that’s number one. Number two, even if you don’t offer health insurance, provide some education so that your employees can know truly what their cost of health care would be on the Obamacare exchanges, because it might be less than what some competitors are offering. And number three is for those lower income employees or even ones you want to recruit, take them off your health insurance and help them get Medicaid because that could be a more affordable solution for them and for you as well. Which brings me to the fourth and last recommendation that I have and that is to consider health reimbursement accounts or HRAs. HRAs when the Affordable Care Act was first introduced back in 2011 were not really allowed, president Trump issued an executive order during his administration allowing HRAs.

Gene (06:52):

And president Biden, I know he overturned a lot of executive orders of president Trump but this one he let stand because HRAs have really become very popular. So it is a way that you can help your employees to get health insurance. And it also takes you out of the health insurance business. So, you want to consider two types of HRAs. There’s the individual coverage HRA or there’s the qualified small employer HRA. I mean, through these plans you can provide a non-tax funds to your employees. You can contribute pre-tax money to an individual employee’s HRA account. So, you get a deduction, they don’t get taxed on it. And then they can take that money out and use it to buy their own healthcare and pay for their premiums. They can buy it on the healthcare exchanges.

Gene (07:46):

They can get it from an individual broker wherever they decide to purchase it themselves. So here, imagine you’ve got an employee sitting across from you and saying, hey, what healthcare plans do you offer? And you’re like, well, we don’t offer a healthcare plan, but we have a great HRA plan, a health reimbursement account plan, where we as a company contribute to you pre-tax a certain amount every month. And then you can just take that money and buy your insurance, wherever the heck that you want to buy it. Now, if you get one of those individual coverage HRAs, they’re open to any employers of any size and the employees, they have to get their, their health insurance coverage somewhere to qualify for it, right. They can buy the marketplace or use the funds to get it from an individual broker.

Gene (08:31):

Okay, even if you have more than if you have less than 50 employees, this all applies to you here. You can set up that qualified small employer, HRA, where you contribute to it yourself. It’s not just the employees putting money away, you put money away and then they can take that money and purchase their own health insurance. Be aware of that one, one caveat, if an employee wants to use their HRA money and buy a health plan on the Affordable Care Act exchanges. Some of those tax credits that I mentioned earlier may be a little bit in jeopardy. They may not qualify for them, so they have to watch and see, but even so, I mean, my goodness, it can be such a win for small businesses. I mean, if you’re an employer that views your health plan as like a financial risk or just a financial transaction, which so many of us do, the HRA approach, it just makes a ton of sense.

Gene (09:25):

We’re basically outsourcing the insurance. We’re saying to the employees, listen, we don’t want to deal with health insurance. We’re going to give you the money pre-tax. You go and deal with it on your own. Okay. So in the end, you need to do a little bit of investigation. Now, if you go to, you will find something called the find local help tool. It’s forward slash find dash assistance. And if you do that, that will immediately match you up to your state’s healthcare exchange. Then you can go onto your state’s healthcare exchange and see what all the options are that’s available for you or shop, plan or whatever. So one final recap just to make health insurance is complicated. So, number one, when you’re thinking about health insurance, now that enrollment is open on the exchanges, talk to your employees, even if you’re not providing health care plan, help them choose the right healthcare insurance for themselves, because by doing so, they might get a cheaper plan than what even a competitor is offering.

Gene (10:26):

And you can take healthcare off the table. It won’t get in the way of you hiring them. Number two, if your state offers it, check out the shop plan, the small health care plans for small businesses, because they might be a way better deal than buying healthcare directly through a broker. Number three, if you’ve got lower income employees, try to get them off your healthcare plan and help them assist them to get Medicaid because Medicaid might be less expensive and offer just as many, if not better benefits than if they were on your health care plan. And finally consider an HRA, a health reimbursement account. A health reimbursement account is where you can put money away. Pre-tax your employees can pull the money out without any tax effect. They won’t get taxed on it. You get a deduction and then they can buy their insurance wherever the heck they want to buy it for. It takes the insurance decision kind of away from you. So I hope this helps. My name is Gene Marks. Thank you so much for listening to this podcast with The Hartford Small Biz Ahead. Hey, listen. If you need more advice, consultation tips for running your business, please visit us at The Hartford site has got a ton of great information for you. So again, thank you again. My name is Gene Marks. We’ll see you again next week. Take care.

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