Alternatives to Offering Group Coverage

Once you’ve learned about health insurance basics for small businesses, you may decide that purchasing group coverage is simply not an option for your business right now. If so, it’s important to understand there are several alternatives for you to explore that may protect your employees at little or no expense to your business. The sections below offer an overview.

Individual Coverage

Even if your business doesn’t offer a group plan, your employees might be able to obtain coverage on their own, as individuals.

With individual coverage, insurers typically require a detailed medical history and sometimes a medical exam of the individual and any family members applying for coverage. The individual’s rates will depend on his or her medical condition; in some cases, the insurer may exclude coverage for preexisting conditions for up to 12 months. In 2014, when the Patient Protection and Affordable Care Act is fully implemented, waiting periods will be limited to 90 days. Currently, individuals in less than perfect health may be denied coverage altogether. However, when fully implemented in 2014, the Affordable Care Act will bring important changes to the individual market, including eliminating the ability of insurers to deny coverage based on preexisting conditions.

Full implementation of the ACA will have a significant impact on individuals who do not get insurance through their employer. All such individuals will be required by law to obtain health insurance by 2014 or pay a penalty.

In 2014, a small business employer who does not offer coverage can direct employees to their state’s individual health insurance exchange market. Individuals will be able to research a host of plans and purchase one for themselves through these online marketplaces. Small businesses with fewer than 50 employees are not required to provide insurance to their employees under the ACA, but it is important you understand the act’s Shared Responsibility Requirement.

To learn more about what the Affordable Care Act requires of small business and to find out more about how penalties are calculated see “Shared Responsibility Requirement.”

Other Ways to Obtain Group Coverage

Being an employee isn’t the only way to be part of a group for insurance purposes. Some associations, professional groups and other organizations offer group health insurance options for their members. If you can’t afford a group plan for your business, you might encourage your employees to explore this possibility. Be aware, however, that fewer groups are offering this option these days, and premiums may be quite high. Still, employees who experience difficulty obtaining individual insurance may find it worth looking into.

Finding a group with the right membership criteria—and that actually offers group coverage—simply takes some research. Brokers aren’t usually much help in finding these types of opportunities. One reason for this is that each association is likely to have an established relationship with a broker or benefits consultant, so independent brokers may not have an incentive to seek out these arrangements.

See “Selected Trade/Professional Associations” in the tool box for contact information.

Discount Medical Programs

Some healthcare providers and insurance carriers offer discount programs instead of or as a complement to insurance coverage.

  • For individuals who are uninsured, a discount program may help offset the costs of basic and specialty care that is obtained through a limited set of providers or facilities. To participate in such a program, individuals must pay a monthly or annual fee in order to obtain a discount card.
  • For individuals with insurance, discount programs can complement existing coverage by lowering costs for out-of-network or uncovered services, such as laser vision correction, in-vitro fertilization, or alternative/complementary medicine. Often this type of discount program is available through a health plan at no additional charge to the employer or employee.

An important limitation of these programs is the difficulty in assessing their value. Because “list” prices vary considerably and are not always readily available, it can be hard to tell how much savings discounts really offer. Also, the providers that accept discounts may change. As a result, enrollees may find that by the time they use services, some providers are no longer available at the discounted price.

Public or Subsidized Health Insurance

State and federal programs such as Medicaid provide coverage for many low-income children, some parents and aged, blind or disabled individuals. These programs provide comprehensive benefits at low or no cost for those who qualify. There are sometimes extensive, complicated rules about who qualifies.

In the tool box, see “Public and Subsidized Insurance Programs” for contact information and details about program eligibility guidelines.

Programs for Low/Modest-Income Individuals and Families

Medicaid. Medicaid provides comprehensive publicly funded health insurance coverage to low-income residents who meet specific eligibility criteria. Individuals may qualify for fully subsidized Medicaid if they meet income guidelines and fall into one of the following categories:

  • Aged, blind, or disabled according to Social Security rules.

  • Children and pregnant women.

  • Individuals with specific healthcare needs including dialysis, tuberculosis services, intravenous nutrition services and short-term nursing home stays.

Individuals who exceed income limits may still be eligible for Medicaid, but are required to pay a share of the cost of their health services. Undocumented immigrants do not qualify for Medicaid, except for emergency and pregnancy-related services and some nursing home care. Medicaid is jointly funded by the state and federal governments.

For those receiving Supplemental Security Income/State Supplemental Payments (SSI/SSP), Medicaid coverage is automatic. Others may apply for Medicaid at their local county welfare office or at one of the many hospitals and clinics where county eligibility workers are outstationed.

Healthy Families. The Healthy Families Program is a state and federally funded health insurance program for children with family incomes above the level eligible for no-cost Medi-Cal and below 250 percent of the federal income guidelines (in 2011, $46,332 for a family of three, according to the Department of Health Care Services).

Children’s Health Insurance Program. CHIP is part of the country’s efforts to increase medical coverage of pregnant women and their infants. CHIP provides low-cost insurance to women and newborns whose family is not eligible for Medicaid.

Health Insurance Premium Payment (HIPP) Program. Under HIPP, your state pays private health coverage premiums for some Medicaid beneficiaries. By purchasing health coverage premiums, the program defers the cost for medical care to private health insurance carriers or private health plans. To enroll in this program, employees must meet all of the following criteria:

  1. Be eligible for Medicaid

  2. Have a high-cost medical condition (pregnancy, HIV/AIDS, organ transplant and so on).

  3. Currently have private medical coverage or be covered under an employer-sponsored medical plan (including COBRA).

  4. Have filed an application in a timely manner allowing sufficient time to process the application and start payment of premium.

Programs for Low-Income Children

Kaiser Permanente Cares for Kids. Kaiser Permanente offers the Child Health Plan for uninsured children from families with incomes between 250 and 300 percent of the federal income guidelines, and who do not qualify for government-sponsored programs..

Programs for “Medically Uninsurable”

The Pre-Existing Condition Insurance Plan, is still in effect for those already enrolled, but cut off new enrollees in February until further notice.

Programs for Seniors

Medicare. Individuals over 65, regardless of income, qualify for coverage under the federal Medicare program. Medicare also covers some disabled people under 65 years of age.

Obtaining Care Without Insurance

No question—if you or your employees are uninsured, there’s good evidence that you’ll have a tougher time finding and paying for care than if you had coverage. But if you’ve ruled out the possibility of obtaining health insurance right now, you should know that some health care providers, such as community clinics and public hospitals, provide services to uninsured and underserved populations as part of their mission. These organizations, sometimes referred to as the healthcare “safety net,” receive government funding and often charge on a sliding scale basis depending on income.

See “Health Care Services for the Uninsured” in the tool box.