How to assess the best health plans for your employees

Colorado consistently ranks as one of the best places in the country to start, build and grow a new small business, according to national business magazines. If you are starting a new small business, or own an existing one, health insurance is an issue you’ll face, whether or not you hire employees.

So, what do you need to know before entering the health insurance marketplace?

For health insurance, Colorado law defines a small business as having between two and 50 employees. It also includes self-employed individuals, but they are treated a bit differently and are known as Business Groups of One (BG-1). Both small businesses and BG-1s are eligible to purchase health insurance in the “small group market.”

In the small group market, health insurance is “guaranteed issue.” This means a health plan carrier cannot deny an application based on the health status of anyone in the group, whether it’s an employee or a member of the employee’s family, if the insurance covers dependents. That’s a big difference from a plan in the individual market, where the carrier can deny an application based on health status.

The rules are a little different for BG-1s. A BG-1 with a current or recent health condition qualifies for the guaranteed issue of one of the state’s mandated health plans, which are discussed below. A BG-1 without current or recent health issues typically can choose from any of the small group plans offered by the carrier.

Generally, small group carriers must offer at least two state mandated plans to a small business: a basic plan, which approximates the lowest level of coverage offered in the small group market; and a standard plan, which approximates the average level of coverage offered in the small group market. Small group carriers may offer additional small group plans. Upon your request, they must tell you all of the plans for which you are eligible and disclose the rates for those plans.

If you decide to stop offering health insurance to your employees, the employees and their dependents have the right to convert their health insurance to an individual conversion plan at their own expense. The conversion plan must be either a basic or standard plan as described above.

Federal tax credits are available to help cover the cost of health insurance for some small businesses. Under the Affordable Care Act, a small business with 25 or fewer employees, and an average annual wage of $50,000 or less per year, may qualify for a tax credit up to 35 percent of the employer contribution. The credit goes up to 50 percent in 2014. Check with your tax advisor on other tax benefits that may be available.

When shopping for health insurance, the state encourages small employers to follow the tips listed below:

• If you plan to use an agent or broker, interview several for whom small businesses are their specialty. You want to make sure you hire someone who can meet your expectations. Read more about selecting and working with a broker on the Division’s website at askdora.colorado.gov and click on “Division of Insurance.”

• Make sure the insurance agent, broker and company are all licensed and in good standing with the state of Colorado. You can check license status at the Division of Insurance website: go to askdora.colorado.gov, click on “Division of Insurance” and then on “consumer information.”

• If you’re planning to offer health insurance to your employees, ask them what coverage they think is important and incorporate the information into your analysis.

• Compare the costs of equivalent coverage with multiple carriers and ask how premiums have changed over the past five years.

If you adjust co-pays and deductibles, you can affect your final premium. Look at different benefit packages and cost sharing scenarios to see what premium and benefit levels best fit you and your employees.

Read your policy thoroughly. Be sure you fully understand what you are purchasing and how much it will cost. Key questions to ask include:

• What is the name of the company writing the policy, not just the marketing name that is used in advertising?

• What is the list of items and services for which the policy will pay?

•What is the list of items and services for which the policy will not pay? (known as exclusions and limitations)

• Are there any situations where the policy may not pay for all of your medical care?( known as exceptions, reductions and limitations)

• Are there any special rules, such as referrals or pre-approval for procedures, that may affect whether the policy pays?

• Are you required to use certain medical providers, doctors or facilities, and is there a list of the local providers that can be used or are “in-network?”

• How long may you have to wait before the policy covers recent health problems?

• How may the policy be canceled or terminated, either by you or by the insurer?

• What specific steps may you take if you are denied a benefit or coverage to which you believe you are entitled under the policy?

Health insurers in Colorado also are required to have a Health Plan Benefit Description Form available to prospective employers. The Health Plan Benefit Description Form may help you compare benefits between different insurers and among different products, such as health maintenance organizations (HMOs), preferred provider or managed care (PPO) policies, indemnity plans, or high deductible health plans (HDHP) used with a health savings account (HSA).

Selecting the right plan for you and your employees can be a challenge. However, providing health coverage may help you recruit and retain high-quality employees, reduce absenteeism, and increase employee loyalty and productivity.

Jim Riesberg is Colorado’s Commissioner of Insurance.

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