For many optometrists running their own clinic, the Affordable Care Act can feel like a moving target. However, for businesses with under 50 employees, the options for small group health insurance are clearer.
Small groups have five main options for health insurance:
The first option is a relatively simple approach, yet it achieves results: direct employees to the individual health insurance Marketplace in the state where they reside to purchase individual health insurance. Eligible employees can access discounts on their premiums via the individual health insurance tax credits.
If the vision clinics would like to contribute to employee's premium expenses, they can use defined contribution allowances to reimburse employees for the unsubsidized portion of their premium. And, premium reimbursement allowances can be set based on job description (e.g. $200/month to managers and $100/month to entry-level). For many vision clinics, this is the most cost-effective solution because the clinic can contribute any amount they desire and individual health insurance costs are, on average, less than small group plans.
The ideal business for this solution is a small clinic who is priced out of group health insurance, wants to offer health benefits for the first time, or who doesn't want the administrative hassle of a group health insurance plan.
The SHOP Marketplaces are new state- or federally-run exchanges for small businesses. Small group health plans are available on the Marketplaces and could be a good coverage option for employers with 50 or fewer employees, if they can meet certain requirements. For example, in Massachusetts employers participating in the SHOP must contribute at least 50% of the premium amount, employers with 1-5 employees must have 100% of the employees enrolled, and employers with 6-50 employees must have at least 75% enrolled.
For eligible vision clinics, the SHOP Marketplace gives access to the small business tax credits which as of 2014 are only available through the SHOP.
With a private exchange the vision clinic gives employees a set contribution to use towards a menu of plan options. The plan options can be individual- or group-based. Private exchanges are a type of “defined contribution” strategy.
Joining a co-op for health insurance is a more traditional approach for small businesses. The co-op exists to increase buying power and spread the risk among a larger group. Each co-op is structured differently, so the co-op may offer better insurance rates than a group policy or SHOP depending on regional insurance underwriting laws and the co-op itself.
Purchasing a private small group plan is also an option for vision clinics. Clinics may find more options and carriers to choose from on the private market as compared to the SHOP, where some states only have one or two plans to choose from.
Group health insurance is largely broken for employers and employees. The lack of portability, rising costs, and existing alternatives are all contributing to the mass abandonment of traditional group health insurance. Individual health insurance with premium reimbursement or private exchanges paired with individual health insurance are the future of small business health insurance -- and are the best options for all small vision clinics.