Employees, employers will have more options on insurance coverage starting Oct. 1

Quick: What comes to mind when you think of the Silver State Health Insurance Exchange?

If you’re like many business owners, managers and employees, you’re drawing a blank. And that means you’re in the dark about a key part of the Affordable Care Act, or Obamacare, the federal law designed to reform health insurance.

“The exchanges seem to be the centerpiece of the act,” said Bobbette Bond, chief project officer of the Nevada Health CO-OP, a nonprofit insurer launched in 2012 to sell coverage on and off the state system. “Their purpose is to start offering a competitive environment where individuals can choose plans themselves.”

The state exchange isn’t just for individuals, though. Beginning Oct. 1, small companies with fewer than 50 full-time equivalent employees can also buy through it, at www.nevadahealthlink.com. Businesses don’t get the Advanced Premium Tax Credit to cut costs the way consumers do, but companies can write off a share of their health insurance costs. From 2010 to 2013, the maximum tax credit is 35 percent of premiums paid. That write-off jumps to as much as 50 percent after 2014.

You can claim the credit on back returns if you haven’t already, although qualifying for it going forward will require you to buy through the state exchange.

Shopping the system isn’t just about slashing your tax bill, said Jon Hager, the exchange’s executive director.

Through the marketplace, you’ll also be able to look for and buy multiple plans all at once. Say you have two offices on the opposite sides of town. You can buy two different plans that contract with separate regional hospitals on either side of the city, and cut just one check to the exchange, which then distributes your premiums to the insurers. That streamlines your administrative process even as you buy multiple plans.

For some companies, the best thing about the exchange is that it could help them get out of the insurance business altogether, said Frank Nolimal, an employee benefit consultant with Assurance Ltd. and the broker who oversees group plans for the Las Vegas Metro Chamber of Commerce.

Nolimal said he’s been meeting with clients about coverage under Obamacare since summer, and three clients so far have said they plan to drop coverage once the exchange goes live. They’re mostly businesses with low-skill labor forces, including a fire-prevention company and a landscaper. They’re also smaller: If you’re below 50 full-time equivalent workers, you don’t face a penalty for not offering coverage after Jan. 1, 2015.

And those fines will be steep: They start at $2,000 per worker if you don’t offer insurance, and go up to $3,000 if you offer subpar coverage that doesn’t meet federal benefit mandates.

If your operation is too small to pay a penalty, it’s not only a good financial move for you to drop insurance, it can also be a better deal for your employees, especially if they have lower wages, Nolimal said. A worker who makes $10 to $12 an hour will qualify for subsidies on the exchange to defray her premium. She’ll get help with her deductible, too: The federal government will pay for as much as 75 percent of the deductible for a single person making $28,725 or less. On a deductible of $2,000, that’s a $1,500 break. Most small businesses are hard-pressed to pony up that kind of payment assistance.

Plus, consumers buying through the exchange have more options than their employer usually provides, Bond said.

“People will have an individual choice, where in the past, they had to take whatever their employer was offering,” she said. “The employer was really the shopper and the audience. Now, individual employees can choose what’s best for them.”

The catch to moving employees onto the exchange is that you can’t discriminate. If you drop coverage for lower-paid workers, you have to cancel it for managers and executives, too. So Nolimal sees companies opting out of policies altogether, and giving key employees a raise to buy coverage on the exchange.

Some small businesses that don’t already offer coverage are even getting in on the exchange. Consider a convenience store with about 15 employees averaging $20,000 to $24,000 a year. The store doesn’t offer coverage, but its owner might have a broker and an enrollment agent in for a 30-minute meeting to tell employees where they can find affordable coverage, Nolimal said.

Putting employees on the exchange is not as strong a strategy for some companies. A larger operation might owe so much in fines that it’s not worth it. A restaurant chain with 200 workers would be looking at $400,000 to $600,000 in fines — a difficult expense to absorb in an industry with small profit margins.

It’ll be tougher still for professional firms to ditch coverage. Law firms, architecture studios and engineering companies rely on insurance to draw highly paid, white-collar staffers.

“They’re probably going to bite the bullet and keep their plans,” Nolimal said. “But companies with a revolving door of lower-skilled workers will probably just do away with coverage and reward people with extra income.”

Hager said he doesn’t expect many companies to abandon coverage.

“Companies provide health insurance to attract and retain qualified employees. That’s not changing,” Hager said. “Today, there’s no mandate to provide coverage and businesses provide it anyway.”

And although the penalty for not offering insurance might be lower in some cases than premiums themselves, your company’s premiums are a tax write-off. Penalties aren’t, Hager said.

What’s more, business owners who weigh intangibles are likely to stick with company-sponsored plans. Canceling coverage could hurt employee retention, and force higher costs for hiring and training new workers, Hager said. Plus, if uninsured employees fail to buy a plan on the exchange, you could end up with a sicker workforce, because preventive primary care would be out of their reach. That would raise absenteeism costs.

“Every company should do a cost-benefit analysis of their situation, but there’s more to it than just dollars and cents,” Hager said. “A true analysis would look at all of the pros and cons, and it’s going to be pretty close. A lot of companies are finding it’s better to provide coverage.”

In some cases, such as restaurants, health clubs and other businesses with a lot of hourly workers, companies are dodging the issue by holding employees to fewer than 30 hours a week. That lets them avoid the coverage mandate, which exempts part-time employees.

It’s not all bad news for employees: If they work part time, they’re eligible for the premium tax credit.

But the 30-hour rule has caused blowback from big businesses and unions alike. Nolimal said he doesn’t see it surviving. Don’t be surprised if Congress pushes the qualified workweek back up to 40 hours in 2014, he said.

Contact reporter Jennifer Robison at jrobison@reviewjournal.com. Follow @J_Robison1 on Twitter.