In a couple of weeks, businesses with 100 employees or fewer can begin buying health insurance through a new electronic marketplace called the health insurance exchange.
Some businesses that employ no more than 25 people can receive some significant tax relief when they sign up for coverage.
The exchanges and the tax breaks are a major building block of the federal Affordable Care Act, also called Obamacare. They are designed to make it easier for individuals and small businesses to get insured.
Exchanges also are supposed to help keep the cost of insurance down by bringing more people into insurance pools and by encouraging competition among companies.
The New Mexico Health Insurance Exchange estimates 2,000 employers will enroll 8,600 people in the first year of the exchange’s operation.
This is how businesses will use the exchange, according to Mike Nuñez, New Mexico Health Insurance Exchange interim chief executive officer.
All transactions will be handled through the exchange website, www.nmhix.com. The website will begin accepting business enrollment Oct. 2.
Step by step
Once on the welcome page, you will click on the tab for employers. That will open the portion of the website that allows businesses to enroll.
The first option occurs at this point. The exchange is designed to be completely self-service, if that’s what you prefer. But you also can select a tab that allows you to choose an insurance broker to handle enrollment for you.
Terry Linton of Linton and Associates will be one of those brokers. He said an employer might want to use a broker to take advantage of his knowledge of carriers and of the type of insurance that other employers in the same business offer.
One of the biggest challenges in making insurance decisions is choosing the products and companies that offer the provider network that the employees need. Brokers spend their entire working lives gathering information about the companies selling insurance, their provider networks and the differences in the products they offer, Linton said.
Any broker licensed by the state to sell insurance can register with the exchange. Linton said he expects about 10 firms will do so.
Going it alone?
If you’ve decided to go it alone, the website will ask you to build an employer profile, including the name of the business, contact information and a tax identification number. You next enter the names and salaries of your employees who can obtain coverage through the exchange.
The exchange requires that half of your workforce enroll. But the exchange will waive that requirement for businesses that enroll in the first two months of operation, Nuñez said.
Traditionally, employers have decided which insurance coverage sold by which company will be available to the workforce. The exchange doesn’t work that way.
Instead, you will choose the level of coverage you are prepared to help pay for and the percentage of the premium you will pay. Your employees then will choose which company’s products they want to buy.
You will have four levels of coverage to choose from, depending on how much coverage you want to offer and how big a premium you are willing to pay. The levels are:
Bronze: This is the least expensive plan and provides what the Affordable Care Act defines as essential health benefits. It covers 60 percent of the plan’s benefit costs.
The law limits the employee’s out-of-pocket expenses to an amount pegged to Health Savings Accounts limits. The details will be available on the exchange website.
Silver: This also provides essential health benefits, pays 70 percent of benefits costs and has the same out-of-pocket limits as the bronze plan.
Gold: This is the same coverage, but it covers 80 percent of benefits costs.
Platinum: This one pays 90 percent of benefit costs.
Nuñez said the website will provide tools to help you decide which plan level you will buy. For example, a tool will show you what your cost will be depending on how much of the premium you will pay on your employee’s behalf. The exchange does require the employer to pay at least half of the premium.
The law requires that no employee pay more than a certain amount of his salary for coverage, so the website also will tell you if the plan choices you’ve made are within those limits.
Once you’ve chosen a plan level and the amount of premium support you’ll provide, you’re done. It’s now the employee’s turn to go online.
Figuring it online
The employee will get a identification number via email from the exchange. On Nov. 1, your employees will go to the same website and log in using their identification number.
They will be given a choice of buying insurance that fits the plan level you chose from Blue Cross and Blue Shield of New Mexico, Lovelace Health Plan, New Mexico Health Connections or Presbyterian Health Plan.
The employee can research the differences among the plans, including each plan’s cost and its provider network, online. The exchange website will link to the companies’ websites. Then the employee will choose a plan.
The exchange will notify the insurance companies of the employees’ choices.
Billing for the insurance begins Dec. 15, and coverage begins Jan. 1. You can enroll at any time, but there will be a three-month lag between enrollment and the beginning of coverage.
The exchange will have you authorize an automatic withdrawal from your business checking account to pay for the insurance. You will deduct the employee’s share of the coverage from his or her paycheck. If an employee leaves your company or a new employee is hired, you’ll go on the exchange website and modify your roster.
If you qualify for a tax credit, you’ll claim it on your federal income-tax return.
The credit is available to employers with no more than 25 employees who earn an average annual wage of less than $50,000.
You can claim up to 35 percent of your contribution to the employees’ insurance premium this year if you employ 10 or fewer employees with an average annual wage of less than $25,000. The value of the credit declines as the firm size and average wage increases.
Starting in 2014 and ending in 2016, the credit is up to 50 percent of your contribution to the premium, once again phasing out as the firm and wage get bigger.