Small businesses have intriguing healthcare choices

Posted7/23/2012 6:00 AM

There are some interesting strategic benefit options that have gotten lost in the bluster surrounding Obamacare, the Patient Protection and Affordable Care Act (ACA).

The first is easy:


• Businesses with fewer than 50 full-time employees are not required to provide health insurance benefits for their employees. If your head count hovers around the 50 mark, you have a decision or two to make. (If you have fewer than 25 full-timers and meet other stipulations, you may qualify for a tax credit if you offer health coverage.)

The second option is more intriguing:

• Businesses with 50 or more full-time employees that do not provide health care coverage beginning in 2014 face fines up to $2,000 per employee.

But canceling what often is expensive health benefit coverage and paying the fine instead is an interesting choice that at least some businesses are considering. The fine, explains Tim Lavin, could be less costly than an employer's contribution to employee health care premiums.

"The ACA," says Lavin, "almost incents business to take the penalty charge (because) doing so may be cheaper."

Lavin, president of The Lavin Insurance Agency, Schaumburg, says employees in such situations could go to the Illinois Affordable Insurance Exchange to purchase low-cost coverage -- assuming the state gets its Exchange set up. The Exchange, expected to be functioning by Jan. 1, 2014, is intended to be a resource where individuals and small businesses can find low-cost health insurance.

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Still, Angela Holten, whose DeKalb-based Holten Financial Group Inc., serves small businesses throughout the Chicago area, says that "The typical small business owner wants to offer benefits." However, some of the larger businesses she covers "may consider paying a penalty," Holten says.

The premium-or-penalty decision does not have to be made now, but it is a strategic option. If it's one of your options, factor in how employees might react to losing their insurance benefit and being forced elsewhere for coverage.

There are other health benefit issues popping, too. Holten, for example, sees increased interest in defined contribution plans where an employer "picks as many different plans as she wants, pays a fixed amount for each employee and tells workers, 'You choose the plan you want and pay (any) difference."'

Health Reimbursement Plans, which provide a tax benefit for both employer and employee, are popular as well.

The only near-term ACA requirement for employers offering health insurance coverage is distribution of a plan summary to each employee eligible to participate, whether they do or not, and to every new employee. The summary is required for annual enrollments after Sept. 23, two months down the road.

Other than the plan summary and perhaps counting employee heads, there's little ACA-related action to undertake now. Having lunch with your benefits adviser might be a good idea, though.

• Jim Kendall welcomes comments at 2012 121 Marketing Resources Inc.

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