DENVER – Small businesses remain wary of the state’s new health-insurance exchange, with fewer than 300 companies signing up for coverage in the first six months of its operation.
The Small Business Marketplace, as it is called, is part of Connect for Health Colorado, the state exchange. The marketplace caters exclusively to small businesses, with open enrollment available all year. Employers can shop and purchase coverage for their employees there, as well as access a tax credit from the federal government if they meet certain requirements.
But for thousands of companies across the state, the exchange offers little attraction. Even the tax credit meant to attract businesses isn’t enough for some employers.
Nora Hill, owner of Kilwin’s Chocolate and Ice Cream in downtown Fort Collins, considered using the exchange to find insurance for her employees. Instead, she decided to obtain insurance for herself privately and pay her employees enough that they could buy their own, either through the individual exchange or through another avenue, such as a spouse’s coverage or a broker.
Hill would have qualified for the tax credit, she said, but decided against using the exchange, to save herself the headache of dealing with health insurance while trying to run her business.
“The tax credit was not incentive enough to get into the whole mess of finding insurance for them when they can do it themselves,” she said. “I have so much to do running my business already.”
Hill’s business is small enough that when the so-called employer mandate kicks in, Kilwin’s will not be subject to penalties for not insuring employees.
After the open-enrollment period for individuals ended March 31, officials shifted focus to boosting enrollment in the Small Business Marketplace. Enrollment has increased from 199 on March 31 to 256 in early June, but the number is still lower than Jim Sugden, Small Business Marketplace director, would like. No enrollment projections for the Small Business Exchange have ever been made public.
Advancements in technology used by brokers and employers should help boost enrollment further, Sugden said. That technology should be launched this fall, providing process improvements to software already in use to aid in determining eligibility for the tax credit, education and enrollment.
Although businesses are signing up at a faster rate than in the fall and spring, with about 40 businesses coming on board per month compared with 30 per month for the first six months of the exchange’s operation, the marketplace still is combatting a lack of demand because roughly 70 percent of businesses statewide chose to renew their existing plans in late 2013 rather than risk getting hit with the premium rate hikes associated with Affordable Care Act-compliant plans.
Once those businesses again reach their open-enrollment periods, probably in the fall, Sugden said, enrollment should pick up.
Connect for Health Colorado is working with the Colorado branch of the Small Business Majority, a national small business advocate, to help spread the word about the Small Business Exchange and educate small business owners via webinars and other outreach, said Tim Gaudette, outreach manager for the Small Business Majority in Colorado.
The organizations will continue to push for more enrollments, Gaudette said, but signing up businesses is no easy task, even with help from brokers and better technology.
“Businesses are still going to find this daunting,” he said. “They have to spend the time and they have to get educated.”
There has always been an element of complication in selecting the right insurance for a company, but the exchanges add another layer of complexity by adding more choices and the possibility of a tax credit.
The tax credit can be attained by businesses that have 25 or fewer full-time equivalent employees who make an average of $50,000 each. The employer must pay at least 50 percent of the employees’ premium cost. The tax credit then is worth up to 50 percent of the employer’s contribution.
The tax break was meant to serve as an incentive for businesses to use the exchange and about 15 percent of the companies on the exchange are receiving the credit, said Sugden.
Molly Armbrister can be reached at 970-232-3129, 303-630-1969 or email@example.com. Follow her on Twitter at @marmbristerBW.