Employees of Small Businesses
There will be two sides to the Covered California health insurance marketplace, one for individuals who buy their own health insurance - and one for employees of small businesses (less than 50 employees) called the Small Business Health Options Program or SHOP Exchange. Employees of California small-businesses may get their health insurance benefits in either the Covered California individual exchange or the SHOP, depending on a variety of circumstances.
The Covered California SHOP will provide for an employee choice model that allows each worker to select their own carrier and benefit plan. Employees will have the freedom to select the plan that is right for them, a benefit that workers of many large businesses and government agencies are already offered. Covered California will simplify the employee’s enrollment task, showing only qualified options to a given employee. Employees will use an online calculator to display the actual remaining employee responsibility by plan.
Employees will choose from many qualified health plans that fit into four standardized coverage tiers — bronze, silver, gold, platinum — plus catastrophic coverage available for people younger than 30.
- Bronze: Lowest premium cost. Covers 60 percent of benefit costs.
- Silver: Covers 70 percent of benefit costs.
- Gold: Covers 80 percent of benefit costs.
- Platinum: Highest premium cost. Covers 90 percent of benefit costs.
- Catastrophic: High deductible and low premium cost, available in the individual market only for people younger than 30.
Eases Employer’s Burden
Small business employers will be relieved from the administrative burden of finding one plan, or even one set of plans, that meets the needs of every worker. The SHOP Exchange platform will have the ability to attach participants to a given employer within Covered California. This is accomplished by first setting up an employer profile within the Shop Exchange. The employer profile captures billing and contribution information and assigns a unique group ID to the employer. Employees are then provided with the group ID and an initial password to use for their enrollment. As employees enroll, the employer verifies they are attached to the group. All enrollment and eligibility information is maintained by Covered California and forwarded electronically to the carriers. Covered California also manages all member adds, changes and terminations.
Enhances Portability of Coverage
Covered California will to be able to track each employee at the individual level as well as at the employer level. For example, John Doe might be attached to an employer for a period of time, then become a self-employed individual who would be billed directly, then might be hired by another employer. None of these events will have an effect on the portability of coverage through Covered California.
Why Many Employees Will Opt for Individual Plans.
An estimated 3.5 million Californians will be eligible for federal subsidies to purchase health insurance in 2014. Covered California is the exclusive source for these individual and family tax credits The subsidies that help pay insurance costs will go directly to insurers. In California, working families stand to gain most from the tax credits - 94% of those who qualify would come from families that have at least one employed person. Employees with incomes between 133% and 400% of the Federal Poverty Level will receive refundable tax credits in order to purchase private health insurance and will pay affordable sliding-scale premiums capped at 2% to 9.5% of their income.
Since small business employers (less than 50 full-time employees) are not required to maintain group health coverage for their employees (now or under ACA), we expect many employers to send their employees to the individual Exchange where that can shop for an individual health plan and take advantage of the tax credits. If they want to help with a contribution to their employees’ health care costs, they can choose to make a monthly payment directly to the employee to fund a portion of their health care costs.