The Choice between Stipends or Insurance: Audience Questions and Answers
February 2014Affordability Test
Is it considered "affordable" if the employee makes between those amounts? Whatever happened to employees having to pay no more than 9.5% of the gross income?
The Affordability Test has been delayed until 2015, for employers with less than 100 FTE’s. However, once implemented, the Affordability Test applies to employers with more than 50 benefit eligible full time equivalent employees. The Affordability Test applies a $3000 per employee penalty if the
employee is required to pay more than 9.5% of the previous year’s W-2 earnings for “Employee Only ” coverage for the employer’s lowest-cost, qualifying plan.
SHOP Exchange
For example the employer offers all employees $500 to go out and select on the exchange. If the employee chooses a plan for $400, is the additional $100 still going to the employee as compensation?
If the employee does not spend his/her entire benefit dollar allowance, the employer can add the unspent dollars to the employee’s paycheck as taxable income, if they choose too. This is not a requirement.
Does the SHOP exchange replace the need for a broker?
An employer doesn’t need to use a broker, however broker commissions are automatically built into the SHOP Exchange premiums. There are numerous ways a broker can assist an employer utilizing the SHOP Exchange for employer based coverage
What does S.H.O.P. stand for? I must have missed it. Small Business Health Options Program
Can we offer both the S.H.O.P. plan and our current plan at the same time?
No. However, depending on what your current plan is, an employer should be able to find a similar plan on the SHOP Exchange.
While this would be interpreted as a group plan, realistically a school could end up with its employees having a number of different providers/plans. Correct? Accordingly, will there be a standard open enrollment period for everyone?
Yes. All SHOP Exchange plans would renew on the same date and there would be a single, standard open enrollment period.
On the SHOP exchange, can a single employer have multiple carrier options?
Yes, however employers have only four options for selecting plans to offer employees: • A single plan (1 Plan, 1 Carrier)
• All plans from a single carrier (1 Carrier)
• All plans within one metal tier level such as Bronze, Silver or Gold (1 Metal Tier, All Carriers) • All plans within two adjacent metal tier levels (2 Adjacent Metal Tiers, All Carriers)
There are six carriers who are offering a total of 92 plans on the SHOP Marketplace. Those carriers are as follows:
• Anthem Blue Cross and Blue Shield/HMO Colorado • Colorado Choice Health Plans
• Colorado HealthOP • Kaiser Permanente
• Rocky Mountain Health Plans • SeeChange Health
So this S.H.O.P. Exchange program includes dental and vision coverage separate from medical coverage?
Yes. Dental and vision plans are available on the SHOP Exchange.
When I try to go to the SHOP exchange on healthcare.gov it redirects me as an employer to
www.connectforhealthcolorado.com. Is that the correct place to view the SHOP exchange as an employer in Colorado?
Yes, Connect for Health Colorado is the official name of the exchange for the state of Colorado.
You just mentioned the broker is still involved.... how is the broker still involved in the exchange? Would HUB (as our broker) still be available to work with employees?
Your broker would serve in their current role. The only thing that changes is the employer is using SHOP Plans instead of going directly through an insurance carrier. HUB would still work with employees.
Do we have to have all employees who work 30 hours a week covered with the SHOP Exchange?
The mandate applies to an employer with more than 50 full-time equivalent employees. It states that they must offer coverage to any employee working more than 30 yours per week on
average. Employers with less than 50 FTE employees do not have to comply with this provision. Keep in mind that this mandate was delayed for employers who have 50 – 99 FTE’s until their first plan year in 2015.
What is the website we go to, that I can assume we can check out without purchase?
www.connectforhealthcolorado.com
Does the employer determine which plans the employee sees on the exchange?
Yes. There are guidelines regarding which plans can be offered alongside one another but the employer makes the selection of the benefit options.
If your enrollment is in July, can they change the premium in Jan? Or is the premiums based on your planned year?
Annual premium increases occur at your plan renewal date.
Is there a cap on premium change % year-to-year?
There is no official premium increase limit. However, the Colorado Division of Insurance reviews all proposed rate increases that are submitted by the insurance company for both SHOP plans and plans offered by insurance companies directly. Increases must be actuarially justified and complaints against premium increases can be filed.
But if there are issues (with SHOP plans) - now I have to help employees who have plans in multiple places - and I am expected to understand the benefits of each one?
Yes. If your culture is one in which you provide assistance with health plans, you would still serve as a resource.
Will we have to pay multiple different places? if the different employees are getting plans from different places?
The employer receives a consolidated bill from the SHOP or Private Exchange that includes the varying premium levels for the employee selections.
If charter schools have group plans, then employees can opt out of the group plan and go to the state exchange for coverage?
Yes. However, since the employer is providing group coverage, the employee accessing the individual exchange will not be eligible for Federal subsidy assistance.
If the premiums are similar and we are still paying a business manager to process the payments, we are wondering about the benefit of SHOP?
The SHOP Exchange, at this time, isn’t a solution for lower health plan premiums. Rather, it provides an opportunity to offer an online enrollment platform that provides employees with access to various insurance companies and health plans. Generally, individual employers aren’t able to do this directly with an insurance company.
General premium contributions
So it is okay to pay different amounts to different employees for insurance? Based on age in this case?
The discrimination guidelines, although delayed until the final regulations can be written, forbid employers from offering higher premium contributions to, for example, managers. You should consult your advisor in this instance. Since older employees are a protected class, they can’t be discriminated against. However, they can receive a higher premium contribution since their respective premium is higher. An employer can achieve this by requiring a single employee contribution, by enrollment tier, from each employee regardless of age.
I am sorry, I missed the difference between large and small employer, what is the threshold again?
Currently in the state of Colorado, large employers are defined as any employer with more than 50 FTE employees in the last quarter. Small employers are defined as having less than 51 FTE employees. Due to Healthcare reform in 2016, the definition changes to large employers having more than 100 FTE employees and small employers having 100 or less FTE employees.
Maybe a silly question, but I'm surprised that isn't considered discrimination against older employees for charging higher rates.
Insurance guidelines allow insurance companies to charge a higher premium for older employees because available data supports the fact that older employees, on average, incur more health
claims. The new Healthcare reform rules limit the differential between younger individuals and older individuals to a 1:3 ratio.
Besides flexibility for the employee, is there any other reason a school would give a stipend and let their employees get insurance versus the 'old' way of just the school purchasing a group plan from the insurance carrier?
Yes. Through the SHOP Exchange and Private Exchange, employers can provide an online enrollment platform and health plan selection guidance.
ok - so more (premium contribution) for the 40+ is legal - just not for the 40 and under
The 40 year old mark isn’t significant in this regard. The differentiation in premium contribution stems from the fact that premiums charged by an insurance company can be higher for older employees. In order for an employer to require a consistent employee contribution from each employee, regardless of age, a higher contribution for older employees is necessary.
if you are near PERA retirement, do you have to go pre-tax dollars?
An employee is not required to pay the employee share of premium on a pre-tax basis. The employer contribution toward premium is made on a tax advantaged basis.
Would the school then pay the premiums for each employee? Or are they responsible for paying with the money provided by the school?
The employer still makes the premium payment for the employee through the invoice received from the SHOP or Private exchange. If the employee elects coverage with premium that exceeds the employer contribution, the employee pays the difference out of his/her paycheck.
Private exchange
A large groups' option at this time, would only be the Private exchange. Is that correct? Then are you saying the rates would be small group rates? Are the small groups rates, in general, higher than large group rates? Or is that not true anymore.
Currently, large employers can’t utilize the SHOP exchange. If a large employer elects to use a Private exchange to provide coverage, large group rates would apply. Large group rates can be higher than small group rates based on the employer industry, demographics and ongoing health
conditions. Generally, large group rates are expected to be lower than small group rates.
So difference between SHOP and Private Exchange is basically less plans offered to employees?
Currently, we don’t see a huge difference in premium levels between SHOP and Private exchanges. It is true that, currently, the SHOP exchange offers more carrier options than most Private exchanges.
Providing stipends
Of large interest to our school is the topic mentioned briefly by Sybil in the discussion relating to giving some employees stipends when they have coverage through a spouses plan. Most employees would remain on the School's plan. What are pros and cons of this? We are a large group.
An employer can offer taxed income in lieu of an employer contribution to health insurance. However, this income must be combined with the employee’s standard income and can’t be identified as a stipend, benefit dollars, etc. In effect, it looks like a salary increase. The primary cons of this practice is the necessity for the employer to monitor that the employee keeps the coverage in place, the potential for abuse of this structure and the need for an employer to take the additional income away if the employee does enroll in the employer group coverage. Primary pro?? of this practice is that employees that have coverage elsewhere can receive additional income in lieu of employer premium contribution.
Gary Clark
Senior Account Executive Vice President, HUB Southwest HUB International Insurance Services
1125 17th St., Suite 900 Denver, CO. 80202
Main Phone: 303-893-0300 Direct Phone: 720-207-2360
Cell Phone: 303-808-2942 Fax: 866-243-0727
Local Fax: 303-861-8147
Please visit our website for up-to-date Healthcare Reform Bulletins www.hubhealthreform.com
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