Small Employers and Nonprofits Caught in Healthcare Bind

why-small-businesses-arent-using-the-health-insurance-tax-creditNew Orleans    Talking to small employers about the health care exchange has been a slog, and it doesn’t look like it will get that much easier soon.

The numbers are also somewhat daunting in the aggregate. Businesses with fewer than 50 workers don’t have to provide coverage under the mandate. They employee 34 million people though which is not insignificant. According to the Kaiser Family Foundation, many of them in fact are dropping coverage with only 44% of companies with 3 to 9 workers offering anything for health care compared to 52% a decade ago. Wellpoint, one of the big-boy insurers said they handled 300,000 fewer folks in small-group plans in 2014. Aetna claimed it wasn’t hemorrhaging clients, but is doing a deal with Walmart’s Sam’s Club to offer a private exchange option outside of the marketplace, which seems to indicate otherwise.

Many smaller employers add up the costs and what they can afford to offer and realize with the subsidies their workers can get through the marketplace, keeping a small-group plan actually gives their workers worse coverage at higher costs than they can afford to provide. According to the New York Times there are even insurers trying to exploit potential loopholes that seem against the rules, like Health Care Services Corporation, which is trying to offer a private-exchange where a boss can have a group plan paid with pre-tax dollars and somehow still allow some of the lower paid workers to go to the marketplace for a better deal. This is the kind of stuff that gives all of us migraines.

Furthermore the only real “carrot” here is a tax credit for the small businesses. The tax credit is a come-on for a couple of years and might or might not be continued, which poses a problem. Plus there are lot of workers that are employed by nonprofits. I know and in the old expression, “cuz I are one.” Tax credits are worthless for nonprofits because they can’t be used.

But, it all gets you thinking. I had an organizer the other day with our local union who has worked as part of our team for more than 16 years. He wrote me indicating he was getting to an age where he thought he might be able to get a better deal than our employer-paid, good benefits, Humana plan for both him and for us. In a number of our nonprofits we’re pinched by the gap, where we’re paying almost $1000 per month for older workers and only a couple of hundred for younger workers in their 20s and 30s. It’s also fair to say that we don’t pay extravagantly to say the least. Would they all be better off if they went to the marketplace, and we raised their wages a bit and provided some kind of separate health care benefit? As nonprofits we don’t have the before and after tax problem except when it comes to paying social security and similar requirements. As a matter of principle we have always had health care coverage for our workforce, but we’re now caught in the grips of “mission-and-means” conflicts when suddenly and shockingly our own workers might be more able to get better health care than we can afford and provide by going through the marketplace, and we might have more money to get where we’re going.

Did I mention already that talking to small employers about SHOP and the Affordable Health Care is confusing and a slog already? Yes, I guess I did, and the more conversations we have with some of them, it becomes hard to tell if the marketplace is embracing them as employers or moving them to let their workers do their best with Affordable Care.

Mid-November when the marketplace opens again is going to provide some real headaches and gnashing of teeth for lots of people and employers making decisions about what’s best, even those that want to do right.

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