New Ways to Manage Healthcare Costs for Small Businesses

By Rstaib Posted : 05/18/2010

In addition to immediate tax credits available to small companies, state-based Small Business Health Options Program (SHOP) Exchanges will be available by 2014. SHOP Exchanges pool small businesses and their employees to give them better purchasing power and more affordable premiums.

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The Exchanges will also provide web portals with easy-to-understand information for simple comparison of prices, benefits and the quality of various plans and other information specifically for small businesses regarding affordable healthcare options.

Small businesses that grow beyond the upper employee limit of a SHOP Exchange will be permitted to continue to purchase insurance through the Exchange - and states will have the flexibility to allow companies with more than 100 employees to purchase coverage through a SHOP Exchange beginning in 2017.

So-called "Cadillac" plans costing more than $10,200 per year for individuals or $27,500 per year for family coverage (not counting dental and vision plans) will be subject to a 40 percent tax on the portion of the cost that exceeds that limit.

Conversely, companies will be required to cover no less than 72.5 percent of the cheapest health plan for individuals, and no less than 65 percent for families (unless they opt out) or pay the Health Choices Commissioner who administers the state SHOP Exchange fund 8 percent of the average wages paid during a predefined period of enrollment (a lower percentage will be assessed for payrolls less than $400,000).

Companies will be fined if they don't cover employees and don't pay the SHOP fee or try to entice a high-risk (sick) employee away from company-provided insurance and toward the SHOP to try to save money.

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