Options for Employers
Micheil Wallace (00:00):
Thanks Marina. So options for employers, and there are many. Employer sponsored group coverage is the most common type of coverage that is chosen by employers. Um, there are some important considerations when looking at electing, uh, to provide group coverage. Um, in addition, there is also the potential, uh, for eligibility for the health care tax credit, and that could be available for, uh, small businesses that are eligible. Choosing the right plan, though. It can be tricky. And so we want to make sure that you understand that help is available and it’s at no cost to you. Health reimbursement arrangements or HRA’s. So these are a different kind of a, of a benefit arrangement that allow employers to contribute pre-tax funds to help employees pay for medical expenses. Enrollees in an HRA will likely not be eligible for financial assistance to the marketplace though, unless the HRA makes their coverage unaffordable. In this situation, they could still be eligible for financial assistance through the marketplace.
Collin Gabriel (01:12):
I see. And on this one with an HRA, um, so the employer would basically contribute like a lump sum, like, you know, $100 a month or something like that to, uh, cover a range of things, not just the, um, the premium monthly. Is that, is that how that would work?
Micheil Wallace (01:32):
It’s a great question, Collin. Thanks for asking it. Um, yeah, so HRA’s, uh, typically, uh, will have a stipend or a monthly set amount that an employer will contribute towards that reimbursement towards that reimbursement arrangement. Um, and that can be used for medical expenses much more broadly than just a health insurance premium. This could be used to help make co-insurance payments or pay co-pays. It could help, uh, satisfy a deductible, um, or you could certainly use it towards the premiums as well.
Collin Gabriel (02:04):
I see. And then this, this does count against like, what would be like a benefit, uh, you know, like when you’re calculating, uh, if you go on the health insurance marketplace or things like that, this is something that would have to be included as a benefit?
Micheil Wallace (02:17):
It would, yes. Uh, this, if, if the employer’s contributing enough, uh, it, it would in fact, make you ineligible, uh, for, uh, financial assistance through the marketplace. So some things to consider when we’re looking at an employer sponsored group coverage, the first question is, is our business eligible for small group coverage or the shop program? So to be eligible for the shop program, you’ve got to have between one and 50 employees who receive a W2. You might have employees that already have health coverage, but in many cases, uh, employees may have other means of coverage. They may have coverage through a spouse. They may have eligibility for coverage through the Oregon Health Plan where they may be eligible for can the business afford the added costs of group coverage. This is an important question because while group coverage can be expensive, there is a program that can help to make this more affordable for the employer.
Micheil Wallace (03:11):
This is called the small business tax credit. Employers with, uh, between one and 25 employees that receive a W2 who offer to pay at least 50% of their employees, health insurance premiums, and that pay an average salary of less than $50,000 per year, may be eligible for this program.
Micheil Wallace (03:32):
The next question is, will we offer coverage to employees alone or to spouses and dependents too? Well, it might be in the best intentions of the employer to offer coverage to the spouses and dependents of the employees. If that coverage does not come with an adequate subsidy to help them pay for it, um, it can actually cause financial harm as it may make them ineligible for health insurance, with financial assistance, through the marketplace, some additional considerations with respect to small group coverage businesses with one to 50 employees who receive a W2 can purchase a small group plan through SHOP. Group coverage may not make sense for every business though.
Micheil Wallace (04:16):
Group coverage can be expensive and offering coverage to spouses or dependents may make them ineligible for financial assistance through the marketplace. An example, when we look at affordability and what, uh, an employer might offer as far as, um, help in paying for employer sponsored group coverage. And when we talk about that, that affordability, um, benchmark that if crossed would make a person potentially ineligible for financial health to the marketplace, uh, looking at this, this image here, we’ve got Amy Austin and Ben, and in this household, they have an annual household income of $40,000. Um, Amy’s employer offers coverage to her and it cost her a hundred dollars a month or 1200 a year. But to the, to the dependents and the husband, uh, in this case, they’re offered the coverage with much lower financial help, uh, or, or, or a lower subsidy paid by the employer, um, which results in a co, uh, pardon me, a premium of $450 a month for Austin and $450 a month for Ben. So considering this, um, while it’s affordable for Amy, it’s not affordable for Austin or Ben, unfortunately though, when they look at this calculation that determines whether an employer sponsored plan is affordable, they’re looking at employee only coverage. And so while the employer doesn’t offer as rich of a, an assistance or a subsidy level for the spouse and dependents, it it’s considered affordable for the employee, the entire household would be ineligible for financial assistance, and that would include tax credits or cost sharing reductions on a private plan through the marketplace.
Collin Gabriel (06:10):
So this is a, this is a pretty dense slide here. And I think, um, I, one of the questions that I have is, so, uh, just to clarify, the, the idea is that the employer would offer a plan to Amy at the, and Amy is the primary income for the household, I think in this particular scenario, um, at 40,000. And so the employer offers a hundred dollar plan a month, but that, uh, that same sort of benefit doesn’t necessarily extend to her children. And the only thing that they would take into account for cost sharing and benefits, um, is the, is Amy’s, uh, charge, is that what we’re kind of getting at there?
Micheil Wallace (06:52):
That’s correct. That’s, that’s a great question Collin, Yes. Uh, when, when the calculation is done to determine whether or not, um, the employer sponsored coverage makes, uh, or is affordable rather for, for an employee, they’re really only looking at that employee’s situation and not any of the family members of the employee. And so the real slippery slope here, if you will, is that while it may be, you know, with great intention, uh, that an employer offer coverage to spouse and dependents, as well as the employee, um, it can inadvertently do some harm by making them ineligible for coverage and financial health through the marketplace.
Collin Gabriel (07:33):
It is it, is it because they extend the coverage to the children? Um, so like I’ll put myself in this scenario as well as a small business. Uh, we currently have one full-time employee who’s married. Um, and if we, um, extended, uh, like if we got a policy in a similar scenario to our employee, um, if we sort of said, we don’t offer benefits for spouses, it’s only for you, would that change anything about the scenario?
Micheil Wallace (08:03):
That would actually greatly improve this scenario for, for this family, uh, in so much as by only offering it to the employee, it leaves the, the spouse and dependents, uh, open to apply for an and likely to receive financial assistance in this scenario.
Collin Gabriel (08:20):
I see. So almost like the, the lesson learned would be, if you are an employer and you are going to extend coverage to spouses and dependents, you’re going to need to bring a very strong coverage to them. Um, because that’s really the otherwise you’re kind of handicapping them a bit for additional savings.
Micheil Wallace (08:41):
That’s, that’s spot on, Collin. Thank you. Yes. Uh, it really, in the best interest of, of, uh, of the employees, uh, if you’re not able to, to offer an adequate or, or a large enough, uh, level of assistance in paying for those premiums and, uh, for the, for the employee’s, family members, it’s really, probably better not to offer to the spouse and dependents.
Collin Gabriel (09:07):
Great. That’s good. That’s really great to know.
Micheil Wallace (09:10):
So we have a, we have a couple of important resources here, um, and links to these. Uh, the first is, is with respect to the health care tax credit that we covered in a previous slide. Um, this link will, will help to give you information on eligibility for the tax credit and, uh, some other important information that pertains to it. Uh, the second one is, um, on how to estimate your premium costs for health plans in Oregon. This is our shop calculator. This is a great tool for employers to use, to get a snapshot of what it might cost them or their employees for health insurance in Oregon.