Small Business Health Insurance Program
Covered California for Small Business
The Patient Protection and Affordable Care Act (PPACA) created a place within the Healthcare Exchanges where small businesses are able to provide health insurance for their employees. This place used to be called the Small Business Health Options Program, otherwise known as the “SHOP.” It has since been changed to Covered California for Small Business.
As of 2016, employers with at least 1 but no more than 100 eligible employees are able to choose up to 2 levels of coverage (Dual Tier Choice) that they are willing to provide for their employees, as well as choose the level of employer contribution. Once the levels of coverage have been chosen, the employee may choose their insurance company within the Exchange. Employers make one monthly payment to the Exchange instead of having to pay each insurance company individually.
Qualified Health Plans (QHPs)
The plans within Covered CA are provided by private health insurers. The four levels of coverage available are:
* Bronze – 60% coverage
* Silver – 70% coverage
* Gold – 80% coverage
* Platinum – 90% coverage
The information for each plan is presented in a standard format for easy comparison of price, coverage, quality of services, and additional features. Each plan will be required to provide 10 Essential Health Benefits as follows:
* Ambulatory patient services
* Emergency services
* Hospitalization benefits
* Maternity and newborn care
* Mental health and/or substance abuse treatment and services
* Prescription drugs
* Rehabilitative and habilitation services and devices
* Laboratory services
* Preventive and wellness services
* Pediatric services (including dental and vision care)
Whereas pricing used to be based on the age, gender, and medical history of the applicant, now premiums are established according to community rating. California is divided into 18 regions. Each region is evaluated as to the current cost of medical care in that region, as well as the availability of care. Once that is determined, premium pricing is established for each plan. This levels the playing field for everyone. The result is young, healthy individuals end up paying a little more than they used to, and older, less healthy people pay a little less. There are no restrictions or adjustments for pre-existing conditions.
The business must not have more than 100 calculated full-time equivalent employees (FTE’s). This means that the employer must take into consideration how many hours of labor are provided by part-time employees and include them in the calculation.
Employers who shop through Covered CA may be eligible for a tax credit of up to 50% of the employer’s contribution. This tax credit is available for the first two years of enrollment.
- Employers with 25 employees who average less than $50,000 per year in wages will be eligible for a tax credit.
- Employers with 10 or fewer employees who average less than $25,000 per year in wages will be eligible for the maximum tax credit.
Employers who provide insurance through Covered California are eligible to take advantage of pre-tax savings for themselves as well as their employees.
OUTSIDE OF THE EXCHANGE
Employers are not required to purchase their group insurance through the State Exchange. There are private exchanges, as well as working directly with a particular insurance company. An independent insurance broker, like Pronoeo Insurance Agency, has access to all of the different ways to obtain your employee health plan and can help you decide which way is best for you and your business.
Employers will be able to use a Broker, shop on-line independently, or call a toll-free phone number to assist them in enrolling. (See “Why to Use a Broker”)
Individuals, families, and self-employed
If you are looking for insurance for yourself or your family… click here to learn more