Little Known Open Enrollment ACA Small Group Provision.

[AllenChicago]

Greetings All,

I have had 2 existing ACA clients call me about this article that appeared in the Chicago Tribune 2 weeks ago. Here is an excerpt from it:

""If you work for a small business that does not offer health insurance, this column is for you. It falls under the “amazing but true” category: You can have a health insurance plan equal to the best offered in your state, at no cost to your boss, and on a pre-tax basis (meaning premiums are deductible) to you.

Best of all, this type of plan is available to businesses with as few as two employees — even if only one employee decides to get the insurance. So if the owner has Medicare, for example, the other full-time employee(s) can sign up for this full-benefit group plan, with almost no paperwork involved.

Why don’t you know about this opportunity? Because no one has an incentive to sell this plan! It’s a little noticed feature of the Affordable Care Act designed to encourage small businesses to provide health insurance. But because the insurance industry is focused on large companies (with big profits to be made), no one is reaching out to small businesses and their employees.""

The Full Article is here: Small Biz Health Insurance Deal - Terry Savage

QUESTION: Is anyone familiar with this ACA provision, and have used it to write a small group plan with only 1 person insured, who pays his/her own premium?

The two spouses who contacted me after seeing this article are officially paid by their husband's sole proprietor business. (Self-Employed Construction and Dental Tech)

Also, the section of the article stating that the EMPLOYEE can use pre-tax dollars to pay his/her premium, is something I haven't heard of.

Any insight into what type of provision and plan-setup configuration Terry Savage is talking about, is appreciated. Thanks in advance!

-Allen in Chicago

 

[kgmom219]

This isn’t new.

It’s a 1 person group. If a wage and tax exists, you can do pretty much whatever you want, EXCEPT if it’s husband/wife.

If it’s husband/wife, it’s a carrier specific question, even with the wage and tax.

I have about 75 of these, primarily because TX only has HMO for individuals and this is the way to get a PPO.

I’d call a small group rep at BCBSIL and get the steps for 1 person groups and see if they do husband/wife groups.

 

[somarco]

Glad to see both of you posting. I miss the "old" days.

 

[vic120]

This isn’t new.

It’s a 1 person group. If a wage and tax exists, you can do pretty much whatever you want, EXCEPT if it’s husband/wife.

If it’s husband/wife, it’s a carrier specific question, even with the wage and tax.

I have about 75 of these, primarily because TX only has HMO for individuals and this is the way to get a PPO.

I’d call a small group rep at BCBSIL and get the steps for 1 person groups and see if they do husband/wife groups.

I was told the small groups no longer exist under Obama care, Can I do this for my family as an independent agent, Would it make sense to do this instead of on exchange?

 

[SamIam]

I think this is the same thing what Blue Cross IL offers every open enrollment period in Nov & December.

 

[kgmom219]

I was told the small groups no longer exist under Obama care, Can I do this for my family as an independent agent, Would it make sense to do this instead of on exchange?

I actually do this for us in Texas. I am employee #1, hubby is employee #2.

Its state and carrier specific. And they don't advertise it. For me, its to get access to the PPO network. In TX, we only have HMO for individuals. The PPO is significantly more expensive. The HMO group rates are less than the Individual rates (which makes zero sense, but whatever).

 

[kgmom219]

I think this is the same thing what Blue Cross IL offers every open enrollment period in Nov & December.

Assuming its like BCBS Texas, that's correct.

The issue is when its husband/wife.

 

[vic120]

I actually do this for us in Texas. I am employee #1, hubby is employee #2.

Its state and carrier specific. And they don't advertise it. For me, its to get access to the PPO network. In TX, we only have HMO for individuals. The PPO is significantly more expensive. The HMO group rates are less than the Individual rates (which makes zero sense, but whatever).

I'll have to look into it here, I would be happy to lower my cost, With my son with Autism and I have sleep apnea and afib My family medical cost premium and deductable was $27K

 

[yorkriver1]

I actually do this for us in Texas. I am employee #1, hubby is employee #2.

Its state and carrier specific. And they don't advertise it. For me, its to get access to the PPO network. In TX, we only have HMO for individuals. The PPO is significantly more expensive. The HMO group rates are less than the Individual rates (which makes zero sense, but whatever).

The ACA individual rates, I am told, are higher in particular on silver plans due to the need to make up for CSR's given to those under 250% of FPL. Also, just that the plans are individual, rather than spread over employer groups with healthy/not healthy employees.
Some states definitely have different requirements on size, and counting husband/wife.

 

[yorkriver1]

Greetings All,

I have had 2 existing ACA clients call me about this article that appeared in the Chicago Tribune 2 weeks ago. Here is an excerpt from it:

""If you work for a small business that does not offer health insurance, this column is for you. It falls under the “amazing but true” category: You can have a health insurance plan equal to the best offered in your state, at no cost to your boss, and on a pre-tax basis (meaning premiums are deductible) to you.

Best of all, this type of plan is available to businesses with as few as two employees — even if only one employee decides to get the insurance. So if the owner has Medicare, for example, the other full-time employee(s) can sign up for this full-benefit group plan, with almost no paperwork involved.

Why don’t you know about this opportunity? Because no one has an incentive to sell this plan! It’s a little noticed feature of the Affordable Care Act designed to encourage small businesses to provide health insurance. But because the insurance industry is focused on large companies (with big profits to be made), no one is reaching out to small businesses and their employees.""

The Full Article is here: Small Biz Health Insurance Deal - Terry Savage

QUESTION: Is anyone familiar with this ACA provision, and have used it to write a small group plan with only 1 person insured, who pays his/her own premium?

The two spouses who contacted me after seeing this article are officially paid by their husband's sole proprietor business. (Self-Employed Construction and Dental Tech)

Also, the section of the article stating that the EMPLOYEE can use pre-tax dollars to pay his/her premium, is something I haven't heard of.

Any insight into what type of provision and plan-setup configuration Terry Savage is talking about, is appreciated. Thanks in advance!

-Allen in Chicago

I have several of these groups. In an interesting approach, this article is referring to the employee petitioning the employer to set up a small group plan that benefits the employee in this case. Not bad, compared to employer needing to pay at least 50% of employee premium under most small group rules, as well as minimum participation rules.
Re: employee with pre-tax premiums. If the employee covered isn't the owner, what they are referring to is that that under the ACA rules for this small group exception, the employer is not required to contribute to the employee's premium. The employer can set up payroll deduction (since the insurance carrier's bill to the employer for employee coverage must be paid by the employer as the plan sponsor) and it's a stretch on pre--tax, because it's probably referring to IRS rules for cafeteria plans, a "Premium Only Plan" specifically. That adds a bit of administrative burden to the employer to avoid violating the IRS rules and of course, ERISA is involved too. They would need a summary plan description, and follow all employer benefit plan laws applicable to their size. There are payroll services who have value added programs to administer cafeteria plans and some FMO's, like the one I use for most groups, have a program to offer small employers these compliance services for reasonable fees.
The employer usually can't pre-tax their own insurance premiums if they are insured on the plan, but that's a question for their tax professional to confirm.