Small employers that dont meet minimum participation requirements under the Affordable Care Act have a secret or little-known window of time in which they can enroll for group health care coverage, but benefit experts say adviser help is imperative to avoid doing employees more harm than good.
The Affordable Care Act requires health insurance issuers to offer an annual one-month special open enrollment period (from Nov. 15 Dec. 15) to employers in the small group market who do not meet the employee minimum participation or employer minimum contribution requirements.
Many state laws (and federal rules on the Small Business Health Options program, better known as SHOP) allow health insurers to refuse coverage to employer groups that do not meet employer minimum contribution or employee minimum participation requirements, usually 70% of eligible employees. Employer contribution rules require employers to contribute at least a specified percentage of the lowest-cost premium for employee-only coverage.
Kenneth Statz, an adviser and owner of Brecksville, Ohio-based Statz & Associates, says hes looking at the SEP for several of his groups, and adds that many small employers are not aware of the special enrollment period.
Michael Lujan, chief sales officer at LimelightHealth and president-elect of the California Association of Health Underwriters agrees, saying, Many employers arent aware of it and those that are, know about it through their agent.
With all of the revisions, additions and changes to the ACA, this special enrollment period has probably gotten lost in the shuffle for many employers, he adds.
The pros and cons
The special enrollment period gives small employers who dont meet the minimum participation or contribution requirements the opportunity to provide an employer-sponsored plan as a benefit for attraction and retention of employees, says Statz. However, he cautions that while it can be beneficial for some small employers, it may not be appropriate for others.
Employers need to be careful their offer of coverage doesnt disqualify their employees or employees families from receiving subsidies on the federal marketplace exchange, he says.
If the employer offers coverage and its deemed affordable based on the employee income and employee premium and the employee waives off, they would be disqualified from getting a subsidy on the federal marketplace, he adds.
There are going to be specific situations where it will be beneficial, but its extremely important that the employer is working with a broker or adviser that is knowledgeable about the rules. So that as part of the process they dont do harm to the employees, Statz says.
The SEP, for instance, could be beneficial for a franchise employer in which management wants to participate in an employer-based health care plan but the majority of employees, whether seasonal or part-time, do not.
It can also be beneficial to small employers hoping to escape the employer mandate penalty. Once the ACAs employer shared responsibility rule becomes effective, employers with at least 50 full-time employees could be subject to a penalty if they dont offer health coverage to at least 95% of full-time employees. Small employers, however, who want to offer group health plans to their employees could be declined by carriers if they dont meet minimum participation requirements.
Many advisers have been hesitant to enroll their small employer clients via the SHOP exchange due to limited plan choice and technical difficulties that have plagued SHOP rollout.
See related: SHOP is a flop for brokers across the nation
Statz says his firm is happy to be able to evaluate SHOP through early access to the exchange in Ohio, but says he is also currently looking at the SEP for several of his groups.
The SEP could be beneficial for insurers, as well, considering many small businesses are dropping health insurance for their workers and choosing, instead, to send them to the exchanges.
WellPoints small business insurance products lost 300,000 people this year, the company said in an Oct. 29 conference call with investors.
Youve got exchanges up and running and functioning well, Wayne DeVeydt, WellPoints chief financial officer, said on the investor call. Small group employers will have an opportunity to re-evaluate whether they choose to go to an exchange for their employees.
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