6 Points for Small Businesses to Consider before dropping their Group Health Plan and having employees instead purchase coverage via the individual 'marketplaces' created by the Affordable Care Act (also known as the individual 'exchanges'):

·      Loss of Business Expense Deductions: Employer contributions to a group health plan are deductible business expenses.

·      Added Salary Expenses: If employers drop coverage, employees are likely to request a pay raise to recapture the amount the employer contributed to the cost of group health insurance.

·      Increased Tax Liability: Increased wages raise employer tax liability; FICA and unemployment costs go up when employee wages are increased.

·      Higher Costs: Premiums paid for coverage through the individual marketplace must be paid with post-tax income; this means paying an extra 25%-30%; by contrast, group health insurance premiums can be paid pre-tax which means employee-paid portions of group premiums provide a 25%-30% savings for an employee (and the employer pays lower taxes/FICA/Unemployment as a result paying all on a lower salary).While some employees may qualify for premium subsidies through the individual marketplace, those subsidies will not cover the full cost of coverage. In addition, subsidies are based on total household income resulting in less of a chance for an employee to qualify (and an even lesser chance if they get a raise from the employer to pay premiums!)

·      Decreased Ability to Attract and Retain Employees: Studies show that health insurance is listed as employees’ #1 concern. Employee retention rates might be impacted by employers not offering group coverage--an employee with less income and higher expenses can result in an unhappy employee. 

·      Employers Are Affected Too: A business owner without a group health plan must also purchase individual coverage, often without a subsidy, using post-tax income, and must select a plan option (where there is less choice and plan flexbility, and oftentimes smaller networks) via the marketplace.

The Health Insurance Marketplaces Are Open: What Does It All Mean?

8 things to know about the Health Insurance Marketplaces, which opened today in every state:

• There are 2 Marketplaces in each state: an Individual and Small Employer (called “SHOP”) Marketplace.
• 34 states have Federally-Facilitated Marketplaces (called FFM and FF-SHOP); the remaining states and the District of Columbia are running their own Marketplaces
• The Individual Marketplaces are for individuals wish to purchase health coverage starting January 1st, 2014; the FF-SHOP Marketplaces are open to view plans/rates only, but small employers are not able to purchase a plan online for a 1/1/14 start date until 11/1/13 due to system delays . Further, employers who purchase coverage in the FF-SHOP can only offer 1 plan to all employees vs. offering multiple plans if they purchase coverage outside of the FF-SHOP
• Individual health insurance options purchased via the Marketplace start 1/1/14 so while individuals may wish to view rates and plans today, they may want to wait until late November or early December before finalizing a plan option for 1/1/14, as employment may change or options for coverage may change by that time. Individuals should only be sure to purchase coverage by 12/14/13 if needed for 1/1/14
• Plans and rates in the Marketplace MUST be the same as those available outside of the marketplace; further, plans and rates do not change if you list an agent on your policy or if you don’t list an agent
• If you currently have health insurance through your employer, your spouse’s employer, your parent’s employer, TRICARE, Medicare, or a Veterans’ Health plan, then there’s nothing you need to do. You are covered with ‘minimal essential’ coverage as required by the Affordable Care Act and you will not be assessed a penalty in 2014.
• If you do not have access to affordable, minimal coverage, then you should go to www.healthcare.gov to shop plan options for 1/1/14, as the requirement to have health insurance by 1/1/14 under the Affordable Care Act  likely applies to you. Further, you may be able to qualify for a premium tax credit if your income meets certain standards (meaning the plan may cost you less than the rate you see online) and you may qualify for a cost-share reduction in benefits (meaning you may have better coverage than what the plan you select shows). 
• Individuals and small employers purchasing through the FFM or FF-SHOP who wish to have an agent listed on their policy, which does not cost anything nor does it change the coverage in any way, can list “Lisa Keith of Princeton HR Solutions LLC", as “agent” using NPN 7547222  under the ‘Get Help’ section.