Small business owners and industry professionals alike know that 2019 is the year that their businesses need to offer health insurance to their employees. Between cost and participation requirements most small businesses struggle to offer group health insurance to their workers. 50 percent of small business in America do not offer benefits according to the Kaiser Family Foundation.
On June 19, 2018, the U.S. Department of Labor expanded access to affordable health coverage options for small businesses and their employees through Association Health Plans. AHP's work by allowing a group of people, small business owners, self-employed individuals, etc., who are geographically similar, to band together to obtain health care as if they were one, single larger employer. And while there is a buzz surrounding the Association Health Plans or AHPs, no one is talking about the Small Business Special Enrollment Period (SEP) that is available to employers with 1-50 waged employees, which may be an even better option for individuals and small business owners.
As a small-business owner myself, my company, The Health Insurance Shoppe, could not afford to offer an employer plan of coverage to my employees. Even if I could afford to offer coverage, it was less expensive for my employees to go get individual coverage in the marketplace. In 2016, things changed locally. Costs shifted, and employer plans became lower in premium than individual plans, between 30 and 40 percent lower, and employer plans provided access to major Chicago hospital systems and offered the ability to use medical providers of choice. With the new shift in the market it finally made sense to enroll my employees into a group health insurance plan, and was able to take advantage of the Small Business SEP.
Here is how it works.
The small businesses SEP occurs every year from Nov. 15 through Dec. 15 for a plan effective date of January 1 in the coming year. During the SEP employer contribution is not required and there are No participation requirements, which means that as few as 1 employee can enroll. Although employer contribution is not required, any amount that is contributed is a tax-deductible expense to the employer, and the premium portion paid by the employee is paid pretax through payroll deduction.
Benefactors of this SEP are those that are self-employed with at least one waged part-time or full-time employee, or a Partnership with no employees, or a full-time employee who works for a company that is so small it cannot afford to provide coverage for its employees. Those that may not benefit from this SEP are those who qualify for Advanced Premium Tax Credits (APTC) that make coverage affordable under the Affordable Care Act's individual marketplace.
Those that are not eligible for APTC's will be the ones that fall victim to the significant premium increases being forecast for 2019 and will continue with the inability to use medical providers of their choice. Higher premiums and reduced provider access does not address their needs. However, if the Small Business SEP is utilized, many will pay less in monthly premiums and now have access to plans that are worth the premium being paid.