Provisions in the Affordable Care Act prompted Tucson business owner Dot Kret to reconsider the health insurance she provides to her employees.
Kret, owner of DK Advocates, doesn’t need the insurance coverage for herself or her two sons — they are all covered by the city of Tucson, which is her husband’s employer. As a small business owner, she’s not required to provide her workers with health insurance.
But Kret does provide health coverage to eight of her 25 employees at an annual cost of $55,000. Under the new health law, it appears she will save the most money by sending those employees to buy their own individual plans via Arizona’s health insurance marketplace.
She could then set up accounts to ensure employees don’t pay more than the $30.17 they now pay each month for health insurance.
That change will save her more than $30,000 per year, according to an analysis of her business completed as part of a case study by the Pima County Workforce Investment Board. Kret is a member of the board.
As a small business owner, she could buy a group plan through the small business health insurance marketplace, which is called the Small Business Health Options Program, or SHOP. But she also has the option of sending her employees to buy their own insurance on the marketplace and then giving them money to subsidize their premiums.
“If I decide not to provide coverage at all, I will save money. However, that is where the values question comes in,” Kret said. “I want to take care of them, and of course, I will. If I want to be competitive and hire the best people, I need to take care of my folks.”
Insurance plans on the marketplaces are created on a “metal tier” from bronze to platinum. A typical plan is silver, which pays for 70 percent of providing all covered benefits to members.
On the marketplace, individual premiums for a silver plan are estimated at about $150 per person per month, compared with the $603 per month it’s costing per employee right now, Kret found out.
She noted the individual marketplace may be an advantage to employees who want to select plans tailored to their needs. Some plans on the individual marketplace will have coverage for less traditional benefits like gym memberships, for example.
Other small business owners might find it easier and more cost effective to purchase insurance as a group through the small business exchange where they could be eligible for a tax credit, says Jean Tkachyk, the chief operations officer of Meritus, an Arizona nonprofit insurance company that will offer coverage through the marketplace.
“If you are a small employer, you kind of have to dig in a little bit and figure out what is best for you,” Tkachyk said.
One reason the individual marketplace looks favorable to Kret’s company is because the case study assumes her employees are eligible for a sizable federal subsidy due to their household income levels, Tkachyk said.
Since she wants to cover most of her workers’ health costs, Kret would have to take the complicated step of setting up a way to compensate her employees for their premiums.
“It’s not the easiest thing to do that. Some employers might just say forget it,” Tkachyk said.
Kret says understanding the Affordable Care Act has been a big learning curve, and she hasn’t made up her mind whether she’ll use the SHOP or send her employees to the individual marketplace.
She is certain of one thing, though — the new law is going to save her money while still providing health insurance to her workers who aren’t covered elsewhere, without costing them more than they are paying now.
“There’s no way we won’t save money (under the health law),” she said. “I definitely like Obamacare. But whether you like the ACA or not, the fact is that it’s here.”