Health insurance for small businesses has become problematic in this staggering economy. Traditional plans require employers to contribute to the cost of premiums and require participation rates that are now difficult to meet amid layoffs.
That’s why this year’s small group special enrollment period running November 15 through December 15 is especially important. Even businesses with as few as two employees — and only one plan participant — can switch to a great group plan with no employer contribution required. And the employee can pay the premium on a pre-tax (salary deduction) basis.
This special deal is courtesy of the Affordable Care Act, which mandated small businesses have a once-yearly chance to set up a plan offering the same comprehensive coverage as the generous plans negotiated by large businesses in your state. During this period, all insurance companies that are selling plans in your state, on or off the health care exchanges, must agree to accept all small businesses that apply for coverage.
Why does this come as a surprise? Few insurance agents are pushing these plans, because they are a nuisance to the insurers and don’t generate big commissions for the agent. So it’s up to you — the small business owner — to ask for this coverage.
Here’s how this small business insurance deal works:
—Dates: Businesses must apply between November 15 and December 15. The plan becomes effective January 1, 2021.
—Qualifications: Businesses can set up a plan even if only one full-time employee joins. So, if some employees are covered by a spousal plan, a less expensive ACA plan or Medicare, and only the business owner wants this coverage, the plan is qualified.
—Coverage: The plan must offer equal coverage as group plans for large businesses in the state. Generally this means access to a wide network of hospitals and physicians.
—Premiums: The monthly premiums must be comparable to those offered to traditional small group plans. The employer is NOT required to contribute. Any employee joining the plan can pay premiums on a pre-tax basis.
—Pre-existing conditions: There are no limitations, because of the provisions of the ACA.
These requirements offer the opportunity to be very creative in solving health insurance needs. For example, a small business could cover the owner and spouse if they form an official partnership. (Spouses cannot be counted as employees to qualify for these plans.) A business owner who is older and covered by Medicare does not have to join the plan — but can offer the insurance to employees.
Part-time workers cannot qualify for coverage under this plan, but they are considered as one of the two employees required for eligibility. So, a sole proprietor could set up a plan if he or she had a qualified part time employee — even if the employee is paid by 1099.
Think about your own insurance situation, and those who worked for you and might have been laid off during the pandemic. If the cost of insurance was the barrier to rehiring them, this could alleviate that problem. And if your existing small business coverage is in jeopardy because you’re required to pay a significant portion of employee insurance, this solves your cost issue and gives employees tax-deductible group insurance.
During this pandemic health insurance coverage is ever more important. Ask your insurance agent — or go to the specialists to get guidance: Vesta Benefits Group (www.vestabenefitsgroup.com) and eHealth (www.ehealthinsurance.com).
Allen Wishner, CEO of Vesta, says that this program was started for small businesses that couldn’t afford to provide health insurance. Now, Wishner says, “This pandemic has made health insurance unaffordable for many struggling small businesses that are currently offering it — just as it is most needed.” He urges small businesses to fill out the “employee census” at his website to see if they can qualify and find the costs — and to begin the paperwork so applications can be submitted on November 15.
I know this is the one deal that sounds too good to be true. But it is true! And that’s the Savage Truth.
(Terry Savage is a registered investment adviser and the author of four best-selling books, including “The Savage Truth on Money.” Terry responds to questions on her blog at TerrySavage.com.)
© 2020 TERRY SAVAGE
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