This article applies to my readers here in the United States.
I’m going to preface this by saying I am NOT, repeat NOT, a healthcare professional nor an insurance professional. I am writing this after having a meeting with someone who IS an insurance professional who explained what the Affordable Health Care Act, aka “ObamaCare,” really means for both a small company like mine and for independents (freelancers). There is so much mis-information about the Act that I wanted to share the basics of what I’ve learned. From what I’m seeing, the Affordable Health Care Act could be a huge win for small business like mine and for freelancers out there if you understand how it all works.
If you want more information or clarification about anything, please reach out to a qualified health insurance agent in your local area. You can also visit: https://www.healthcare.gov/
Who MUST Cover Employees. All companies with 50 or more employees must provide health insurance to their employees as part of the provisions of the Act. My company, as with most likely the majority of companies in the US, has less than 50. In my case, far less than 50. BUT I see this Act as an opportunity level the playing field for our small business and it’s also an incredible opportunity for independent freelancers to provide piece of mind.
What happens January 1, 2014. As of January 1st, restrictions on healthcare coverage will be removed. “Pre-existing conditions” and other factors that healthcare insurance providers used to deny coverage to individual Americans will be illegal.
Inflated rate increases for elderly and women will be illegal. Right now it is common practice to charge 5 times the standard monthly premium once you reach age 50 or if you’re a women. So if you’re paying $100/month at age 49 you could be paying $500/month when you hit age 50. That will now be limited to 3 times.
Payment caps are illegal. For instance it’s somewhat standard practice to cap all insurance payments either for one year or maybe for the life of the plan to $1 million. So if you or a family has a catastrophic illness or medical situation and your medical bills exceed $1 million, you are on your own financially at that point. The Act removes that cap.
The Medical Plans. The same healthcare insurance providers you know today will continue to provide the same health care coverage, just without the same restrictions from the past. Companies such as Aetna, Humana and so on with the same plans, same doctors, etc…. The government is NOT offering healthcare plans, the Act merely ensures that all Americans who want health insurance, cannot be denied.
The Marketplace. Where you will be able to price out healthcare plan payment options for you and your family. In general the payment options are similar to what you might see from an employee group plan. 90/10, 80/20, 70/30 and 60/40 payment splits. The Marketplace is part of https://www.healthcare.gov/
The Payments. This is where a well qualified insurance agent is very important as I discovered today. Depending on your income level or family income level, the government may subsidize your monthly payments. The example I was given today was that depending on the employee’s income, a $900/month insurance premium would be knocked down to $200/month with the government paying the $700 balance. So the employee would have a $900/month healthcare plan for just $200/month.
As a small business, I can offer to pay some or all of the employee’s remaining balance and I get a tax deduction on the payment. BUT there’s a caveat to this. In order for my company to receive the tax deduction, the employee has to sign up through an agent and not directly through the government website. If you simply go through the website and start the plan through the website, there will not be a tax deduction available to the employer. This is how it was explained to me today.
Why I See an Advantage for Small Biz. Quite simply, a small company like mine now has the opportunity to offer healthcare plans to my employees on par with much larger companies at a price we can afford.
I have less than 10 employees and have looked into group health coverage in the past. Mainly because it’s something I really want to do for my team and secondly, it’s a competitive advantage to land good talent to be able to offer health care. The problem with the standard “group rate plans” is you either have to spend a whole lot of money to get something worthwhile or you get something cheap just for the sake of saying “look at us, we offer healthcare!” In addition, everyone’s rates are dictated by the entire group, not just for your own health or age. So if someone in the group has a “pre-existing condition” the rest of the group is paying to offset the extra fees incurred. It just wasn’t feasible for the size of my business to offer the group healthcare plan.
With the Affordable Health Care Act, we do not have to join into any group insurance plan whatsoever. Starting October 1st, each employee can research and sign up for the plan that meets their own individual needs. Let’s use that same example as before where the employee gets $900/month coverage for $200/month out of pocket. $200/month per employee for healthcare is something that’s very reasonable, even for a business the size of mine. While I’m not required to pay anything towards the employee’s healthcare, if I pick up all or even just half of the monthly payment, I’m now offering healthcare to my employee that is on par with a much larger company for a fraction of the cost. That’s a competitive advantage when recruiting new talent to not only offer healthcare, but “good” healthcare. It’s also just good business to take care of my employees.
It’s also good business period since my payment to the healthcare plan would be pre-tax giving my company another tax deduction.
For the independent freelancer, the Affordable Health Care Act should open up many more options for healthcare coverage that you simply don’t have now and could possible save you money over any existing plan you are a part of.
It was an eye-opening discussion for me today and it was refreshing to simply talk to someone knowledgeable about the basic facts and how they apply to small company like mine that truly make up the majority of the businesses in this country. This can be a huge turning point for our company and I know I’ll sleep much better at night if my employees are well cared for in the event of an emergency.
These are just the basic facts as explained to me today and there was much more in the discussion that I won’t go into here. Again, I strongly encourage you to find a well qualified health insurance agent if you want to learn more information about the Act and how it might affect you.
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