Special Open Enrollment is Here—Small Employers It’s Time to Provide Coverage for Eligible Employees
From November 15 to December 15 small business employers can take advantage of what is known as Special Open Enrollment period 2020. Special Open Enrollment is ideal for businesses of all sizes throughout Texas. In health insurance circles, it is a participation and contribution holiday that allows employers to take advantage of offering coverage to their employees without overspending or being hit with a mandate. If a plan sponsor is unable to meet material plan provisions such as those relating to employer contribution and participation rules, then this time of year is a special occasion indeed.
If your small business is hoping to avoid the employer health insurance penalties, then it is a good idea to take advantage of this special enrollment period. There are so many different penalties and requirements for small businesses, even in Texas, to abide by. The ACA affects small businesses differently than it does large groups. However, the special open enrollment period gives you significant advantages.
Not sure that you should take advantage of the special open enrollment period 2020? Then consider the following information about how it works and what you can expect if you participate.
What You Need to Know About Individual and Group Market Employer-Sponsored Health Insurance
The Afford Care Act has a section called the Guaranteed issuance of coverage in the individual and group market. In that section, it outlines that health insurance issuers providing health insurance coverage to both the individual or group market must accept every employer and individual who applies for coverage. Interestingly, however, the ACA does allow insurers to set certain limitations on when they offer their coverage. These limitations include:
-Coverage availability ONLY during special enrollment periods, like special open enrollment 2020.
-Plan availability only to those who live inside of their network service area.
-No coverage requirements for insurers who lack the financial reserves to provide additional coverage.
Another important factor to keep in mind is that aside from the very narrow November 15 to December 15 special open enrollment period, employers are required to pay a minimum of 50% for each employee on their fully insured plans. If you are in a group, then you also have to meet participation requirements. With fully insured plans, it is 75% for eligible employees. This is reduced during special open enrollment periods.
Special Open Enrollment—What You Need to Know
Of course, the special open enrollment period does have specific requirements that employers must meet. One of the reasons that special open enrollment is enticing to many employers is that they want to provide coverage for employees but simply cannot because they’ve been denied. Often, this denial is because of a failure to meet participation requirements.
As a part of the ACA, employers are not allowed to mandate coverage for employees unless they pay for 100% of the employees’ premium, and most small business employers simply cannot afford to do that. Unfortunately, even when employers provide generous contributions for plan costs, young and low-income employees often opt out of coverage. This causes small businesses to fail to meet the employer sponsor health care coverage mandates.
The special open enrollment period is designed to ease some of those burdens. If health insurance coverage is offered in the small group market, a health insurance issuer is allowed to limit the availability of coverage to that annual open enrollment period (November 15 to December 15). This provides some flexibility to employers and to employees who are unsure about plan options that benefit them.
In addition to the basics presented here, there are penalties and problems that you can avoid as a small business employer if you push the special open enrollment period for your employees. We have listed some of those in the next section.
Penalties and Problems
Employers with at least 50 full-time employees may be subject to an employer mandate penalty if they fail to provide health coverage for at least 95% of their full-time employees. Small employers who would like to offer a group health plan to their employees but have been denied by carriers because of their minimum participation requirements, can feel at a loss. The minimum participation requirements include:
- Providing at least 50% of the cost of health care coverage for employees.
- At least 25 or equivalent full-time employees.
- Average annual wages at or below $50,000
And since employers cannot require employees to enroll in health care coverage unless they are willing to pay 100% of those premiums, those small employers who have between 50-100 employees really have no way to go except to pay penalties for failing to provide coverage, even though they would if they had not to be declined by insurers.
Again, this is where the special open enrollment period can be so very helpful.
Contribution and Minimum Participation During Special Enrollment
Once again, there are various state laws surrounding the federal SHOP open market period that enable health insurers to refuse coverage to certain employer groups that don’t meet contribution or participation requirements.
Luckily, during this special open enrollment period 2020, your small business is not required to contribute to premiums and you only need one employee to enroll to establish a group plan. What does this mean for you? It means you are not required to spend any money on health care coverage to get your employees enrolled.
Instead of having to have 50 full-time employees or having to provide coverage for at least 95% of their employees, small businesses can simply encourage employees to investigate their coverage options during special enrollment. It is an exciting and generous opportunity for small businesses.
Top 4 Benefits of the Special Enrollment Period for Small Businesses
- An opportunity for small employers who don’t meet the minimum participation requirements.
Perhaps the most enticing part of special open enrollment period 2020 is the fact that small employers who aren’t meeting the minimum participation requirements can still provide coverage to their employees. An employer-sponsored plan is also a major benefit for potential employees who are looking to join a company that provides insurance coverage. This is a competitive advantage.
- Ideal for small business employers who want to participate but employees do not.
If the majority of a company’s employees simply do not want to participate in employer-based health care plans, whether full-time or seasonal, the special open enrollment period 2020 provides a great middle ground.
- Could be used to avoid the employer mandate penalty.
Small employers looking to get out of the employer mandate penalty can use this special open enrollment period to alleviate their shared responsibility.
- Provides employees with group health insurance and greater coverage.
Employees also benefit, as they are given access to larger hospital and doctor networks than is typical with group coverage. All the while, the employer is using pre-tax payroll deductions to pay for those premiums.
Need Help During Special Enrollment?
If you are thinking about providing your employees with special open enrollment period coverage, then it is time to reach out to the experts. At Healthcare Consultants Inc., we can help you navigate the plan options available to you and your employees during this special period. Navigate the ins and outs of eligibility and requirements for this period with the help of our experienced and seasoned health insurance brokers.
For more information or to set up an appointment to discuss your questions, please reach out to us by phone or via our contact page.