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Small Business Employee Benefits and HR Blog

Will Your Employees Benefit From the Health Insurance Marketplaces?

Starting in 2014, health insurance coverage for individuals will become available through new state individual health insurance marketplaces. Most importantly, the individual health insurance tax subsidies will only be available for coverage purchased through a state health insurance marketplace.five benefits of marketplaces for employees

According to the administration, the goal of the individual health insurance marketplaces is to make it simple and more affordable for individuals and families to purchase health insurance that can't be canceled or denied because of a pre-existing medical condition.

So, why should employees care? And, which types of employees will benefit the most from the health insurance marketplaces?

Here are five groups of employees who may benefit greatly from the health insurance marketplaces and individual health insurance reforms.

Individual Health Insurance Marketplace Overview

  • All state marketplaces will open October 1st, 2013 for open enrollment, with coverage starting January 1, 2014. The marketplace that’s available to employees will depend on what state you live in (look up your state marketplace here).

  • Employees will be able to shop online, in person, or by phone for health insurance in every state. 

  • A website will provide a variety of online tools to learn more about the range of health plans that will be offered through the state health insurance marketplace. Consumers will be able to make "apples-to-apples" comparisons of health insurance based on levels of coverage (“Bronze,” “Silver,” “Gold,” and “Platinum” -- known as the “metal levels”).

  • For eligible employees, there will be federal financial assistance to help lower the amount employees pay for health insurance premiums. Employees who are not offered "affordable" group health insurance through an employer, and who meet income requirements, may be eligible. Again, these health insurance tax subsidies are only available through the individual health insurance marketplaces.

  • Eligibility for the health insurance tax subsidies is based on a standard called the "federal poverty level" (FPL). The subsidy will cap the cost of health insurance between 2% and 9.5% of an employee's annual income. Employees who earn up to 400% of FPL may be eligible. This translates to an individual earning up to $45,960 in 2013 and a family of four earning up to $94,200 in 2013. Read more on the health insurance tax subsidies here. 

5 Types of Employees Who Will Benefit the Most

 

1) Uninsured Employees

In 2011, an estimated 47.9 million people in the US under the age of 65 were uninsured, with 78% of these uninsured individuals in working families. That's 37 million people. These uninsured workers are either not offered health insurance through an employer, or they cannot afford the coverage offered through their employer. 

Uninsured employees stand to benefit from the health insurance marketplaces because:

  • Individual health insurance becomes more accessible with easier to understand options

  • Employees can’t be denied coverage because of medical history ("guaranteed-issue")

  • Health insurance tax subsidies will be available to eligible employees

 

2) Employees with a Stand-Alone HRA

For employees with a stand-alone HRA through their employer, the health insurance marketplaces provide more health insurance options to employees. Many employees with a stand-alone HRA already have individual health insurance plans. 

Employees with a stand-alone HRA can benefit because having an HRA does not disqualify them for the health insurance subsidies. 

Employees with a stand-alone HRA stand to benefit from the health insurance marketplaces because:

  • Individual health insurance becomes more accessible with easier to understand options. Like they can now, employees can select any plan from any carrier (through the marketplace, or not)

  • Employees can’t be denied coverage because of medical history ("guaranteed-issue")

  • Health insurance tax subsidies will be available to eligible employees 

 

3) Employees Paying a Lot for Their Premium

If employees are currently spending a large portion of their paycheck on their health insurance premium, the marketplaces (and health insurance tax subsidies) may help with premium affordability.

Note: For employees with employer-sponsored health insurance, the amount employees pay for their health insurance premium (for single-coverage) must be no more than 9.5% of their household income in 2015. If it's more than this, the employer may face a penalty in 2015 if the employee shops for an individual health insurance plan through the marketplace and receives a health insurance subsidy.

 

4) Older Employees (But Not Yet 65)

Typically, it is older employees, not yet eligible for Medicare, who have the most difficult time currently finding affordable individual health insurance. And, one of the greatest fears of this age group has long been losing access to health insurance before reaching age 65 and qualifying for Medicare.

Older employees stand to benefit from the health insurance marketplaces because:

  • Uprating based on age will be allowed in 2014, but the ratio is controlled by health reform (3:1 compared to 5:1 now). Individual health insurance will likely be more affordable in 2014 than it is today for this age group.

  • Employees can’t be denied coverage  because of medical history ("guaranteed-issue")

 

5) Employees with High Medical Expenses

Starting in 2014, annual and lifetime limits on coverage will no longer be allowed by any health plan. Currently, it’s relatively easy for employees reach an annual or lifetime limit if they have an ongoing health issue or major medical issue. The prohibition of annual and lifetime limits on coverage benefits employees with high medical expenses and may help prevent medical bankruptcies.

What types of employees, individuals, or groups do you see benefiting from the health insurance marketplaces? Join the discussion by leaving a comment.