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The Case for Individual Coverage


Attention business owners with less than 50 employees: want to know how to cut health care costs? Stop offering it. Between government-funded subsidies, a wide net of networks and an enormous risk pool, you and your employees could be better off choosing individual and family health plans through the Affordable Care Act Health Insurance Marketplace.

First, remember that business owners with fewer than 50 full-time employees are not required to provide health insurance to their employees. If you value health coverage as a competitive advantage to recruit and retain employees, you can still offer health-related incentives without carrying the burden of administering a health plan.

Here are my top reasons why small businesses should get rid of group coverage:

  1. Government subsidies. If any of your employees make less than $47,000 per year, they qualify for Marketplace insurance plans with lower monthly premiums, plus potential savings on out-of-pocket costs, like deductibles and copayments. The hospitality and nursing home care industries can benefit significantly from this offering

  2. Right-sized plan options. When applying for coverage on an individual or family basis, employees can choose the plan that best fits their lifestyle, income, expected medical care and preferred cost share. New this year, the Marketplace includes information on the doctors, medical facilities and drugs different insurance plans cover. Changing networks can be a deal-breaker for some people, so to choose a plan based on their current network could be an ideal situation.

  3. 10 essential health benefits. All plans in the Marketplace offer the same essential health benefits, such as doctor visits, prescription drugs, hospital visits, maternity and newborn care and preventive care. Some plans cover other services, like vision, dental, or medical management programs.

  4. Affordability for the employee. In many cases, the individual and family Marketplace insurance plans are more affordable for the employee than your group plan - the risk pool alone beats your payroll by the thousands, if not millions. Even in the cases where the premium is higher than your group plan, the deductible and out-of-pocket maximum could be lower, or more services may be covered. Educating employees on health coverage will be key in this transition, just like any annual enrollment process.

  5. Cost predictability for the employer. Employers that switch from group to individual coverage typically want to offer some contribution as part of a benefits package, whether it is to encourage lifestyles of health and wellness, as a competitive advantage, or to demonstrate to employees you are invested in their future. You can still offer health benefits through a defined contribution to a Health Savings Account or by reimbursing a portion of their premium. This way, you have a consistent health care budget instead of dealing with the unpredictable variability of your current plan year-to-year. You also avoid minimum and maximum contribution requirements.

With all of the changes unfolding in health care, the best time to get out is now. Already enrolled for 2016? No problem. You can work with your insurance agent or health care consultant to adjust your benefits offering at any time throughout the year.

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