Thursday, August 14, 2014

ACA/Obamacare: And About That Association You Joined to Obtain Health Insurance -Or- For Whom the Boot Tolls, It Tolls for Thee

Long standing insurance legislation requires that one can't create an association merely to buy insurance. But one can create an association for other reasons then offer ancillary benefits to one's members e.g. buying club membership, travel discounts, insurance, etc.

For example, James and Jane Goodfellow own the firm XYZ Builders with three employees. They join the local builders association that also offers health insurance as an ancillary benefit of membership. James and Jane purchase health insurance for themselves and their employees. Meanwhile, John Q. Carpenter, a sole proprietor, joins the local builders association as well. John purchases health insurance for himself through the association.

The local builders association, with many members, of which a portion purchase health insurance, is then a "group". Hence the group of associated people, with the main association for reasons other than buying insurance, comprise the group, consequently group insurance coverage.

Enter ACA/Obamacare:

‘Businesses with fewer than 50 workers are exempt from the most stringent requirements for larger employers under the federal health-care law. But that doesn't mean they're off the hook entirely.

Smaller employers aren't required under the Affordable Care Act to offer coverage for their full-time workers—as larger firms must by 2016 or face penalties, for instance. But many owners of small ventures and startup entrepreneurs are nonetheless facing big changes to how they obtain their own health coverage, as well as to the benefits they're able to offer employees.

"It's a myth that smaller firms aren't being hit" by the health law, albeit in less obvious ways, says James Schutzer, president of the New York State Association of Health Underwriters, referring to employers with fewer than 50 workers.

Several thousand of the nation's smallest business owners—sole proprietors and the self-employed—were kicked off their small-business plans by carriers earlier this year. That is because new guidelines define "employers" as having at least two full-time employees, not including a spouse, in order to be eligible for group plans.

In all, more than 78% of the estimated 28 million small businesses in the U.S. have no employees, according to the Small Business Administration. These business owners must now seek coverage as individuals, or face fines.

Many consumers and small-business owners are finding affordable plans on the individual market, according to government health officials and insurance brokers. But at least some of the business owners who were excluded from group plans as a result of the health law are struggling with higher premiums, less robust benefits or uncertainty within a new, unfamiliar network, says Scott Lyon, vice president of the Small Business Association of Michigan.

In December, the association's own group plan, which currently has 4,000 small-business members and covers about 40,000 workers and their families, was forced to kick out 700 sole proprietors, he says.- Small Firms Hit by Big Changes in Health Coverage, WSJ, 08/06/2014

Link to the entire article appears below:


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