Audio Transcript: The Health Plan Edge 002, Why Buy Health Insurance?

Steve:  Welcome to the Health Plan Edge. The podcast that makes it easier for small businesses to navigate health insurance. I'm your host, Steve Strauss, USA Today small business columnist and author of "The Small Business Bible." In each episode we share real small business stories and strategies that make health plan decisions easier for you.

[00:00:30] Our topic today is, as a small business owner, do I have to offer health insurance? To help me answer that question I have two excellent guests. Hector De La Torre is the Executive Director of the Transamerica Center for Health Studies. It's a non-profit focused on helping consumers and businesses navigate the healthcare landscape. Also, Toby Williams, who runs Clean Corners. It's a commercial cleaning business out of Milwaukee. Toby worked for the company for 21 [00:01:00] years and then became the owner four years ago. He began offering health insurance when he took over.

Hector, let me start with you and ask you the question. Do small business owners have to provide health insurance for their employees?

Hector:  It depends on the size of the business. The answer is yes, if you have 50 or more full-time employees, defined as 30 hours or more. You're legally obligated to offer health insurance [00:01:30] under the Affordable Care Act, under those circumstances. We've heard over the last couple of years, there's been a lot of talk of changing or dropping some of the ACA requirements, but as of right now, that si still the law. If you have more than 50 employees, you have to provide them with health insurance.

Now, if you have less than 50 employees, 49 or less, you are not legally obligated to buy health insurance for your employees. Most [00:02:00] small businesses, over 90% of businesses in America have less than 50 employees and therefore do not have to provide health insurance, legally.

Steve:  I also think it's a matter of what you want to do versus what you have to do. As you said, if you have 50 or more employees, you legally have to provide health care insurance. In the ideal world, what you want to do is even if you have fewer than 50 employees, [00:02:30] is provide health care insurance, because it provides all sorts of business to you as a small business owner. It helps your brand. It helps morale. It helps you have a healthier workplace. There's lots of benefits, but as we also know, it's not inexpensive, so a lot of small business owners, while they might want to provide health care insurance for their team, they can't always do that.

In fact, let me turn to you Toby. Toby, you have Clean Corners commercial cleaning. Can you tell us a little bit about your business? How you came [00:03:00] to work there and then what I love is how you then became the owner.

Toby:  Sure, like I said, actually I've worked for the company for 21 years. The company actually has been I operation for 45 years, so 21 out of that 45 years, I've worked for it. I worked with my boss, I should say at the time, he's a good friend of mine. It was a family run business, so after I took it over he actually said to me, before that, he says, "I'm going to be [00:03:30] retiring. I need you to take over." For four years of that time he was training me as far as the management side of everything. The books, the bookworks, and such. He retired. I bought the business from him at a discounted price, almost pretty much free. That's pretty much where we started there. Four years ago is when I took over the helm. From there, we provide that cleaning services for corporations in the greater Milwaukee area, as well as Chicago area.

Steve:  Nice. [00:04:00] I know when you bought the business four years ago, you started offering a healthcare plan to your team. Can you tell us about that experience and process a little bit?

Toby:  Definitely. We didn't have insurance offered to us at the time prior, because there was not regulatory requirement for it. However, after I took over the business and I became the owner, the main reason I wanted to do that was to have employee retention. See, most of my employees are [00:04:30] regular part-time workers who don't have insurance through any other means. Most of my longtime employees that have been with the company for many years, had no need for it. However, many of the new hires though were looking for healthcare coverage, and to keep good workers, I try to offer them the option.

That definitely is the key there, but you know what? There's a caveat there, because I also didn't have insurance. My family did not have insurance, except for my daughter. Unfortunately, I had to stop offering [00:05:00] it, just because number one, it just wasn't fiscally advantageous for us as a company, and it was just confusing trying to figure out how to explain this and explain that. It just didn't make any sense anymore.

Steve:  Hector, maybe you can help us. What you would suggest that a small business owner like Toby do with regard to costs, and retention, and things like that in healthcare?

Hector:  First of all, Steve, I think Toby's [00:05:30] rationale, which is his personal health insurance is a very common reason why despite not needing to provide health insurance, many small business owners do, because they want health insurance for themselves and many times it works out better for them if the company pays for part of the premium for themselves and their family members, if they want to do that, and their employees [00:06:00] as well. It's very important to note though, under the Affordable Care Act, employers do not have to provide insurance to either part-time workers or dependents. The only obligation is to the employees themselves, which I know is kind of the glass is half full kind of situation, but from a fiscal perspective, it may make a big difference [00:06:30] to the employer, to just cover the employees.

Steve:  Let me give a couple of suggestions to you as well Toby. Here at the Health Plan Edge, we've spoken with a lot of small business owners and heard many different suggestions on ways that they have provided health insurance for their team. It maybe that you shop around. You go to healthcare.gov, and see what's available there. Also, on healthcare.gov is a portion of the site that is specifically [00:07:00] designed for small businesses. It's called the SHOP, the Small Business Health Options Program, so you might want to look at the SHOP within healthcare.gov.

A lot of other small business owners have gone to a high deductible plan, meaning that it is what it sounds like. It's a high deductible plan, but the good news about a high deductible plan is they tend to be more affordable. One other thing you might want to think about doing is, while not being able to cover your employee's 100% with their coverage, [00:07:30] you share it with them. You provide 50% of the premium, they provide 50%, something like that. I guess Hector, it leads me to a question for you. Where do you think that a small business should start when seeking to bring in a healthcare plan?

Hector:  Well, you touched on the SHOP. There are basically only two options for small businesses looking for health insurance. One is to go to a broker or [00:08:00] directly to the insurance company. That's one option going through the insurance company or brokers who handle a number of different health insurance companies and getting a quote from them. The second possibility, the SHOP, which you already mentioned is another options. There are SHOP's in every state, whether they're run by the federal government, healthcare.gov, or by the state itself. I'm not sure, I don't have [00:08:30] it in front of me, but Wisconsin is probably a federal program run through healthcare.gov.

Another important thing to note about the SHOP, besides the fact that you can go in there and see usually multiple insurers are in the SHOP, so you can compare them on price side by side. It's very important feature of the SHOP is they've done the shopping for you, no pun intended. [00:09:00] They have all of the different insurers, what the cost is, and then you can just compare there. Very important to note that in the SHOP the coverage and the benefits are exactly the same, only the cost is different, so you're comparing apples to apples and are able to see what is best for you.

The other component of the SHOP that is very important and can make a big difference to Toby and other small businesses is, [00:09:30] if you have less than 25 full-time equivalent employees, and they earn on average less than 50 thousand dollars each, and you pay over 50% of the premium, and you offer the insurance to everyone that works for you. That's the four requirements. You can qualify for the small business health tax credit, which can over up to 50% of the cost to the employer of providing [00:10:00] that insurance. If you're a small business with under 25 employees, they make less than 50 thousand a year on average across all of them, you pay more than 50% of the premium, and you offer it to every one of your full-time employees, you can qualify for this tax credit.

Steve:  That's huge. Toby, did you know about that?

Toby:  I did not know about that.

Hector:  Could've made a big difference in your decision at the time. If you have less than 25 employees and those other characteristics, [00:10:30] it can really make a big difference. The only place you can get that tax credit however, is through a policy that you purchase through SHOP.

Steve:  This is why you listen to the Health Plan Edge. Hector, does that tax credit work for both full-time and part-time employees?

Hector:  You are providing insurance. The cost of the insurance doesn't change regardless of what the characteristic is of the employee. The important number there is 25, not the full-time equivalent.

Steve:  You know, Hector, there's one other thing Toby mentioned that I think we should just drill [00:11:00] down on a little bit and that is health insurance is confusing. I think this is where bringing in expert help can make a difference, namely a broker or some kind of advisor. Can you tell us a little bit about how a small business might go about finding some expert help to help them demystify the process and see what various options are available to them?

Hector:  Well, we at the Transamerica Center for Health Studies, not to put in a plug, we have a 50 state SHOP guide, [00:11:30] I don't know that there's any other entity that has that, even healthcare.gov only covers the federal exchanges. They don't cover the states that they don't run. We have all 50. We have fact sheets for each one. Where do I get coverage? Where can they get help? Are there any state specific rules for purchasing a SHOP plan in that state? Who can purchase plans through SHOP? What are the rules regarding dependent [00:12:00] coverage? How much will it cost? What are the plan basics? And additional resources for that state. It's on our website and it's absolutely free. Www.transsamericacenterforhealthstudies.org.

Steve:  Excellent.

Hector:  In terms of brokers, you can just Google some local brokers in your city that do health insurance. Most brokers deal in multiple health insurance policies and [00:12:30] health insurance plans, so you can see if they have some options for you, but again, anything that you get outside of the Small Business Health Options Program, the SHOP, does not qualify for the tax break.

Steve:  Toby, I hope we helped you a little bit today. Did you learn something new, I hope?

Toby:  Yes, I did actually. It was very refreshing to hear from the expert, because I definitely did not know [00:13:00] half of what you're telling me today. I definitely will take this information with me and use it.

Steve:  Keep up the great work. Unfortunately, we are out of time, but I think we've had a lively discussion and a really informative discussion. Toby Williams of Clean Corners, thank you so much for being with us tody.

Toby:  Appreciate it. Thank you.

Steve:  And Hector De La Torre of the Transamerica Center for Health Studies, thank you for your expert advice.

Hector:  Thank you, Steve.

Steve:  From all of us here at the Health Plan Edge, thank you for listening. Thank [00:13:30] you to UnitedHealthcare for making this recording possible. If you enjoyed today's show or if you have any questions about health insurance and your business, head over to uhc.com/employer to check out their free resources for small businesses, to listen to another episode, or to continue the conversation. We look forward to hearing from you.