We find ourselves in the middle of one of the greatest wealth transfer periods of all time. Those with wealth must decide whether they want to make transfers, and if they do, they must decide how much, to whom, when and in what structure?
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The new Colorado health exchange is expected to have as many as 75,000 to 150,000 enrollees as customers within the first six months. It’s being built with help from $61 million in federal grants. The state Legislature approved a health-exchange bill in 2011 after the federal Affordable Care Act was signed into law in 2010.
The idea is to make it easier for small businesses and individuals to buy policies that cover their needs. People who don’t buy health insurance are expected to pay penalties when they file income tax returns, starting in 2014, according to rules in the Affordable Care Act.
About 800,000 Coloradans are uninsured, according to state estimates. Across the nation, about half of the people who are uninsured are believed to be small business owners, according to Jim Sugden, manager of the Small Business Health Plan for the Colorado exchange.
So, how will it work? Some common questions from small-business owners were answered by Sugden at a recent event in Lafayette sponsored by the Lafayette, Louisville and Superior chambers of commerce:
What is the Colorado health exchange?
The exchange will be a website that offers health insurance policy plans. Small businesses and individuals who sign up for health insurance through the exchange will be eligible for government tax subsidies. If employers offer “affordable” coverage at work through their health-insurance plans, employees will not be able to receive individual federal subsidies. Details about how the subsidies are expected to work are online at http://www.kff.org/healthreform/7962.cfm.
Who must use the exchange?
No one is required to use the exchange. However, small businesses and individuals can only receive federal tax subsidies if they sign up for insurance through the exchange, Sugden said.
How much is the tax subsidy for health insurance coverage for small businesses?
Employers with 25 or fewer employees who make an average of $50,000 or less per employee can receive up to a 50 percent tax subsidy for their contributions to an employee health plan.
Employers with the fewest employees and the lowest average salaries will benefit the most from the federal tax subsidies. A Small Business Tax Credit Calculator to help you get a better idea of how it will work is online at http://www.getcoveredco.org/Resources/Small-Businesses.
How much is the tax subsidy for health-insurance coverage for individuals?
Tax subsidies will be set based on a person’s income level, his or her location and age. Subsidies will be greater for older Coloradans. A single person making from 133 percent to 400 percent of the federal poverty level will be eligible for a tax subsidy, Sugden said. A person making less than 133 percent of the federal poverty level will be covered by Medicaid, he said. The 133 percent-of federal-poverty-level amount is about $13,000 for a single person.
An example from the U.S. Treasury Department: A family of four with an income of $50,000 would be expected to pay no more than $3,570 toward health insurance, under new rules. If a health insurance plan on the exchange turns out to cost $9,000, then the family’s subsidy would be $5,430 ($9,000 – $3,570).
Will the exchange fix prices?
No. Health-insurance plans available inside and outside the exchange will cost the same. The exchange is the only place where you can receive tax subsidies, however, Sugden said. Health-insurance carriers in Colorado will contribute to a pool so that those who take on more risk with less healthy people will be able to receive subsidy amounts from carriers who have a more healthy customer population.
What if you don’t understand how to use the online exchange?
Online “navigators” will be available to help by phone. There will be a new customer service center, licensed brokers will be trained by the exchange and “health coverage guides” will be designated by the exchange at assistance sites around the state.
How do you receive the tax subsidies?
The tax subsidy on health-insurance premiums bought through the exchange can be received every month starting Jan. 1, 2014. Subsidies also can be received through tax returns filed at the end of the year. Business tax credits related to health insurance coverage already went into effect in 2010, Sugden said. Business owners apply for those tax credits when they file their annual tax returns.
What health-insurance plans will qualify for the exchange?
The Colorado Division of Insurance has set guidelines for qualified health-insurance plans that will be placed on the exchange. About 10 insurance carriers — including major carriers such as Blue Cross Blue Shield — are expected to submit plans, although no specific plans have been submitted, yet. Plans can include special pediatric care, dental coverage, eye exams, rehabilitative care and other special coverages.