Your Insurance Solution

Understanding Premiums and Out-of-pocket Costs

Under the Affordable Care Act, all plans offered the Marketplace must provide a set of essential health benefits including free preventive services and coverage for pre-existing conditions. When you offer SHOP coverage, the plan’s category has nothing to do with the quality of care it provides. It does affect how much your employees are paying for things such as deductibles, copays, premiums, and out-of-pocket costs.

Here’s some guidance that small business owners should be aware of:

  • For plans that pay a smaller share of medical costs when employees get care, premiums are usually *lower. For instance, a bronze plan has lower monthly premiums than for a gold plan but your employees will probably pay more when they use medical services.

  • Platinum plans have the lowest out-of-pocket costs for services and highest monthly premiums. If your employees use a lot of services or experience a health crisis, these plans will likely provide better financial protection.

  • As a general rule, the lower the premium, the higher the out-of-pocket costs. The higher the premium, the lower the out-of-pocket costs.

  • If you offer one health plan, you’ll set a fixed percentage that you would like to contribute toward premiums for employee-only coverage. This applies to all employees who accept your offer of coverage.

  • After you select a plan for dependent coverage, your percentage contribution will be calculated based on the individual plan premium for each employee and dependent which varies based on age.

For more details on SHOP eligibility, click here. If you have more questions, contact your IBG agent today.

Explaining Changes in Coverage Requirements for Small Businesses

Employers offering a full-insured small group health plan are affected by the changes and coverage requirements of the Affordable Care Act – there are new taxes to pay and increasing premium rates. Here are some of the highlights:

  • Starting September 2012, carriers and group health plans are required to provide qualified participants with summary of benefits and coverage.  This is intended to help individuals to better understand their options.

  • Premium rates in individual and small group markets vary per family size, geography, and age. Other rating factors such as group size, health status, medical history, gender, and industry are now prohibited.

  • Under the Affordable Care Act, employers with fewer than 50 full-time equivalent (FTE) employees are not subject to employer shared responsibility, also known as the employer mandate. The employer mandate started January 1, 2015 for employers with 100+ FTEs and January 1, 2016 for those with 50+ FTEs.

  • Any annual dollar limits or lifetime dollar limits must be removed and all fully-insured small group employers are required to cover Essential Health Benefits.

  • Deductibles for non-grandfathered small group plans must be limited to $2,000 for individuals and $4,000 for families.

  • All non-grandfathered plans that cover Essential Health Benefits must limit annual out-of-pocket costs (in-network). Coinsurance, copays, deductibles, and other expenses should not exceed out-of-pocket limits set by the IRS. Some of the out-of-pocket limits have been delayed until 2015.

  • ACA plans cannot impose a pre-existing condition exclusion for all ages.

For more information about the health care law on small businesses, click here

Planning for Health Benefits: 3 Things Small Business Owners Need To Know

As you begin planning for health benefits this year, there are important things every small business and HR professional should know. First you have to determine how many employees you will offer the benefits to and how many of those will participate. This affects your budget and eligibility for a group insurance plan.

To save you from simple mistakes and bring in a successful new year for your business, consider these things:

Budget. Every business has a unique set of needs and knowing your budget will help you choose an appropriate plan. Group health plan and individual health reimbursements are just some of your options. In a group plan, monthly premiums are paid by both employer and employee, called a cost-sharing percentage or minimum contribution. On the other hand, health care allowances don’t have a minimum contribution amount. The employer reimburses employees for individual health insurance.

Health benefits program. Your plan of action has a substantial impact to you and your employees. You should have someone to manage health benefits internally.  If you don’t have a dedicated HR team member, consider an individual health insurance.

Health benefits goals. Set goals as you plan for health benefits and at the end of the year, evaluate your efforts and continue strategies that make the program a success.

Remember to discuss coverage options with your employees. While federal laws prevent you from asking information about an employee’s personal medical history, you can assess which kinds of benefits are important to them. This will be valuable to your decision-making.

Health Insurance Options for Small Businesses


Under the Affordable Care Act, small business owners with fewer than 50 full-time equivalent employees are not subject to employer mandate. Although they are not required to provide group plans, offering health coverage is a crucial part of recruiting and employee retention.

Here’s a list of health care benefit options for small businesses, startups, and non-profit organizations.

SHOP Marketplace. In the Marketplace, small businesses are given more options for their health care plan. The Affordable Care Act provides tax credits for eligible employers to help pay for coverage. This is available to employers with less than 25 full-time equivalent employees and has an average wage of less than $50,000 per employee annually.

Individual Health insurance. If you opt to give your employees an annual bonus, increase in compensation, or tax stipend, they can purchase health insurance on their own. Directing employees to individual health insurance allows them to choose the coverage that fits their needs and get access to premium tax credits.

Private Health Exchange. Private health insurance exchanges usually include two or more health insurance options, recommendation on what coverage best fit their needs, and automated billing.

Co-op. Another traditional approach is joining a co-op. The idea is that the co-op increases buying power thus spreading the risk to a larger group. This is structured differently and whether it offers better insurance rates than businesses could get on the open market often depends on local insurance-underwriting laws.

Group insurance plan. This is easy for employees to understand as the concept of employer-based health insurance isn’t new. The money that an employer spends on providing health insurance counts as tax deductible. But it doesn’t necessarily mean paying the whole cost of the premium. Employers usually pay 50-80% of the premium cost depending on particular circumstances.

Do you find it a bit complicated to compare and choose a health insurance plan? Work with an IBG agent today and we’ll help you find the best solution for your business.

Understanding Employer Shared Responsibility

Before some of the Affordable Care Act employer and insurer reporting requirements go into effect, the IRS released guidance providing transitional relief until 2015. This includes the tax penalties for failure to provide the required health coverage to employees. The notice also encourages employers to voluntarily implement the ACA information reporting and get ready for the full application of the provisions next year. As a reminder, effective January 1, 2015, the employer shared responsibility requirements and penalties will be applied.

Last January, the Affordable Care Act requires employers with 50 or more full-time-equivalent employees to offer health coverage to full-time employees and their dependents; otherwise they will have to face tax penalties. This provision is known as the employer mandate or employer shared responsibility.

Moreover, small businesses with fewer than 50 full-time equivalent employees aren’t subject to obligations. For large businesses, offering minimal essential coverage to full-time employees and their child dependents is required. The coverage should be at least 60% of expected costs for an average person or family and is available to at least 95% of full-time employees or five of its full-time employees if that’s greater than 95%.

Employees may be eligible for premium subsidies if their income is 400 percent of the federal poverty level or less, if their employer-sponsored plan doesn’t cover at least 60% of the total expected medical costs of an average person, or if no employer-sponsored plan is available to them.

For more information on the employer shared responsibility payment, here are some helpful resources:

Contact us today if you need further assistance in choosing health insurance plan for your business.

The Water Tower 5331 SW Macadam, Suite 260, Portland, OR 97239 Email: Phone: 503.972.4285 Fax: 503.972.4284