This week’s “Ask the Mompreneur” features an interview with Kent Kingsley, an independent health insurance broker located in Charlotte. To learn more about the new North Carolina health insurance exchange, visit his website www.obamacarefornc.com.
Ask the Mompreneur
As a small business owner, how does the Affordable Care Act affect me?
The Patient Protection and Affordable Care Act (PPACA) was passed into law in March of 2010. Since its passing many of the provisions have already been implemented by insurance carriers; however the biggest impact will be felt starting on January 1, 2014.
The PPACA has established health insurance marketplaces for every state as a resource where individuals, families, and small businesses can learn about their health coverage options, compare health insurance plans based on costs, benefits, and other important features, choose a plan, and enroll in coverage.
For this year open enrollment is from October 1 – March 31. For years ahead the enrollment period will be from October 15 – December 7 with coverage starting on January 1.
Small businesses with employees
Under the PPACA, businesses with less than 50 employees do not have to offer health insurance to their employees. Many small employers currently pay only a portion of the employee’s premium, leaving the employee responsible for the full premium for their spouse and children. This often makes it cost prohibitive to the employee as small group premiums are traditionally higher than individual plans. In the past, this made individual health insurance a great option for these situations.
However, individual health insurance prices are rising starting January 1, 2014. To complicate matters, most of the time subsidies are not available to people that have access to employer-sponsored coverage through their employer or spouse’s employer. The law deems coverage to be “affordable” when the employee’s portion of the premium is less than 9.5% of the employee’s salary. For example, this means someone making $50,000 a year could “afford” a monthly employee premium of $395 dollars.
For many, group coverage today will be considered “affordable.” But if the employee portion of the premium is greater than 9.5% of the employee’s salary and the employee is between 100% and 400% of the Federal Poverty Level, the employee is now eligible for a subsidy. (The Federal Poverty Level, or FPL, for a family 4 is currently set at $23,550.)
I anticipate that many small businesses with employees under 400% of FPL will look at dropping employee coverage because the employee will likely be able to get better coverage at a lower cost if they qualify for subsidized premiums. A second option would be to lower the percentage the employer pays for the employee’s coverage to meet the 9.5% threshold. This allows the employer to continue offering coverage while also letting the lower income employee qualify for the subsidy and possibly better coverage.
Freelancers and self-employed individuals
If you typically work on a contract basis, you may not have access to employer-sponsored coverage, unless through a spouse. If do you not have access to employer-sponsored coverage, you could qualify for a subsidy if your household Modified Adjusted Gross Income (MAGI) is under 400% FPL.
If you fall in this category you will need to purchase your coverage “on the exchange” through participating carriers. In North Carolina, these are CoventryOne and Blue Cross Blue Shield of North Carolina. Coventry One is offering 20 metal plans (bronze through platinum) and 5 catastrophic plans, while BlueCross BlueShield of North Carolina is offering 26 metal plans and 2 catastrophic plans.
If your MAGI is greater than 400% FPL, then you will need to purchase “off the exchange,” with more choices of carriers but without a subsidy. Please note that “on the exchange” public market and “off the exchange” private market are both offered through the same online source.
Keep in mind that each situation is unique and that it often makes sense to have your personal situation reviewed by a professional that works in the health insurance marketplace.
Jennie Wong, Ph.D. is a business coach and the creator of CartCentric.com, an online tool for getting product recommendations from family and friends.