Small Business and Grandfathered Health Care Plans under the Affordable Care Act

Small Business and Grandfathered Health Care Plans under the Affordable Care Act

The Obama administration announced last week that the promised small business health care exchanges, Small  Business Health Options Program or SHOP,  would not go into effect on Jan. 1, 2014 with the rest of the Affordable Care Act, but be delayed until 2015.

SHOP, was designed in the law to be a separate health care exchange for small businesses to allow them to offer employees multiple choices when it came to picking a plan.

The move, reported by the New York Times, has drawn criticism from the small business community that supported passage of the health care reform bill in 2010 where the SHOP program was key to their support.

Now the delay in implementing the program is adding to the confusion and frustration of business owners who are trying to plan for the future of mandated health care. Some, if they already offer employees a health insurance program might consider the possibility of “grandfathering” it in after Jan. 1 of next year.


Grandfathered Health Care Plans

If you had a health insurance plan in place for your employees on March 23, 2010, then under the new regulation you will get to keep that plan.

Your older plan will not be subject to the new requirements for health care plans in the Affordable Care Act such as:

  • cover preventive services without cost sharing;
  • cover Essential Health Benefits (discussed below);
  • provide for an internal and external appeals process for contesting coverage decisions; or
  • allow direct access to an OB/GYN without referral



Benefits for Business

So what is the benefit to keeping your current health care plan?

According to the Kaiser Family Foundation, in  2011 approximately 72 percent of small businesses had at least one plan grandfathered under the Affordable Care Act.

For those businesses, that means being able to anticipate more costs and plan better going forward without having to jump through hoops to stay in compliance with new regulations.

While keeping your current plan has a benefit for future planning, if you choose to keep it you give up the possibility of shopping around for a cheaper plan on the marketplace, which could offer better long term and preventive care to your employees.

Offering a more comprehensive health plan may not only score your brownie points with employees, but could also translate to fewer sick days and more productivity in the workplace.

Also something to be aware of is that by choosing to grandfather in your plan, you’re still subject to the insurance provider raising your rates.



About the Author

Michael Cahill head shotThis article was contributed by Michael Cahill, Editor of the Vista Health Solutions blog. Michael has a degree in Journalism from SUNY New Paltz. Previously he worked as a reporter for the Poughkeepsie Journal and as an editor for the Rockland County Times.




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