With the election over and Thanksgiving weeks away, ‘tis the season for Open Enrollment. This is a very good time for small California employers to catch up on changes in rates, coverage requirements and penalties, and the potential for a tax credit in the coming year.
Open Enrollment begins on November 15, 2014 and runs through February 15, 2015.
In 2015, large employers with 50 or more full-time employees (or equivalents) must offer health insurance to full-time employees. What’s new this year is that there will be a penalty, termed the “employer shared responsibility mandate” for employers who do not.
That penalty will be calculated differently for employers who fail to offer coverage and for those who offer coverage that does not meet the requirements of the law. Most of the latter were weeded out in 2014, and you may recall Hobby Lobby, a Supreme Court case that dealt with what minimal legal coverage had to include.
Counting employees can be tricky because of the “equivalents” portion of the equation. An employer with 2 full-time employees and 100 part-timers can discover that it is a “large” employer required to provide insurance coverage for the 2 full-timers.
Employers with fewer than 50 employees may offer health insurance to employees, and by way of encouragement, California has established a marketplace for small businesses and individuals. In theory, these marketplaces were designed to bring down coverage costs by allowing small employers and individuals to pool risk. The jury is still out on the cost-saving aspect.
Nationwide, these are part of the Small Business Health Options Program (SHOP) marketplace. In California, the name is Covered California.
Very small employers, those with fewer than 25 employees (or equivalents), may have an additional incentive to provide employee health insurance through Covered California. For eligible employers, this incentive comes in the form of a federal tax credit that may be as great as 50 percent.
Small employers who want to offer coverage through Covered California simply select the level of coverage they want to offer (Bronze, Silver or Gold). Employees may then choose among participating insurers.
Covered California Options
In 2015 the number of insurers participating in Covered California will increase from six to ten. These are:
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- Anthem Blue Cross of California.
- Blue Shield of California.
- Chinese Community Health Plan.
- Health Net.
- Kaiser Permanente.
- L.A. Care Health Plan.
- Molina Healthcare.
- Sharp Health Plan.
- Valley Health Plan.
- Western Health Advantage.
Covered California has just announced that premiums in its small business state-run marketplace will increase by an average of 5.2 percent in 2015. For many small businesses, that is still the wrong direction, but at least the rate of increase seems to be dropping from 2014’s projected average of 9 percent, which, itself, represented a decrease from previous years.
Proposition 45, which would have given the Insurance Commissioner the power to review rates, was defeated in Tuesday’s election, so it appears that no large structural changes can be expected in the way rates are set.
After a faltering rollout, the ACA may be more useful to employees and more user-friendly to small businesses in 2015. In any event, it is time for small employers to begin to weigh their options.