Your Source for Health Reform

Case Study 3: Dublin’s

Case Study 3: Dublin’s

Restaurant explores SHOP options

Patrick Morrison, the assistant manager of Dublin’s Restaurant and Bar is in charge of Dublin’s decision making regarding health insurance given new rules from the Affordable Care Act. Dublin’s never offered health insurance benefits and is unclear of if they should, or must, moving forward.

Patrick was searching on the Internet for information and came across the Small Business page at Illinois Health Matters. He found out that, although each individual has a personal responsibility to carry health insurance, employers with fewer than 50 full-time employees are not mandated to offer an employee benefit program.

Because Dublin’s has fewer employees than that, they are eligible to purchase and enroll in the SHOP marketplace as an employer. Patrick heard that there are tax credits available to help employers purchase coverage for their employees. Patrick decided to connect with a broker to explore what health plan options and tax credits are available for Dublin’s.

With the help of a broker, Patrick’s steps are to:

  1. Determine if his business is eligible for the Employer Tax Credit to offset up to half of the employer’s premium contributions.
  2. Compare plans and pricing and select a plan for the group.

  3. Establish a premium contribution. Patrick will need to pay at least 50% of the premium to qualify for the tax credit.
  4. Inform and educate employees about their new health insurance options and assist them in the enrollment process.

Step 1: Is Dublin’s Eligible for the Employer Tax Credit?

Patrick looks at his employee characteristics. He lists the positions on his team, the number of staff in each, and their annual income.

Positions Payroll
12 Servers $24,000 each
6 Bartenders $30,000 each
6 Cooks $30,000 each
3 Hosts $18,000 each
3 Managers $45,000 each
Average Salary $27,900 each
All employees work a minimum of 30 hours

There are four core eligibility requirements for the employer tax credit. To be eligible a small business must have fewer than 25 full-time equivalent employees, an average salary of less than $50,000, an employer premium contribution of at least 50%, and the chosen health plan must be a SHOP plan. Patrick checked these requirements using a tax credit calculator.

Requirement Eligibility Dublin’s Requirement Met?
Number of FTEs Less than 25 30 No!
Average Salary Less than $50,000 $27,900 Yes!

Although Dublin’s does not meet the employee number requirements for the tax credit, Patrick can still use the SHOP Marketplace as a valuable tool to help compare pricing and options for employee health insurance options.

Step 2: Compare Plans Options and Choose a Plan

Patrick decided to meet with a broker. Together they looked through all available options and decided that a Silver HMO plan through the SHOP marketplace could be the best option for Patrick and his employees. Silver plans pay for 70% of all covered medical expenses after the plan holder reaches his/her deductible. Like all plans on the marketplace, this plan covers many preventive care services at 100% and the 10 categories of essential health benefits.

Step 3: Establish an Employer Contribution Strategy

Employers that use the SHOP marketplace must contribute a portion of their employees’ premium costs. Patrick chose to see what it would cost if Dublin’s contributed 50% of employee premiums.

Age Premium Number of
Employees
Total Premium Employer Contribution (50%) Employer Total Contribution
About 25 $150.00 20 $3,000.00 $75.00 $1,500.00
About 35 $200.00 5 $1,000.00 $100.00 $500.00
About 45 $275.00 5 $1,375.00 $137.50 $687.50
Total 30 5,375.00 $2,687.50

Upon looking at prices, Dublin’s finds that without a tax credit the pricing does not fit in with their current budget allotments for personnel benefits. They will not begin offering a group health insurance program at this time, but would still like to provide their employees with useful information so that they can obtain individual health insurance should they choose.

Step 4: Educate Employees on New Health Coverage Options

Even though Dublin’s decides not to purchase a plan on the SHOP, Patrick knows that it is important and necessary to let employees know about their options for health coverage, and that they have to have health coverage under the law.

Patrick tells his employees that if an employee does not have access to affordable and minimum value health insurance through their employer, they could potentially receive a premium tax credit through the individual marketplace.

Individual requirements to qualify for a premium tax credit:

  • Not eligible for government healthcare coverage (Medicaid or Medicare)
  • No access to an employer sponsored healthcare program
  • Income between 100% and 400% of the Federal Poverty Level
  • Purchase of a qualified health plan on the individual marketplace

Patrick directs his employees to the consumer decision maker tool at Get Covered Illinois, which navigates people either to the health insurance marketplace or ABE, depending on their eligibility factors. Many of his employees didn’t realize that they could get affordable health insurance through the marketplace or through expanded Medicaid, and were pleasantly surprised to learn about new options from Patrick.

Conclusion

As a result of exploring plan options and learning about the Affordable Care Act, most of Patrick’s uninsured employees enrolled in a plan. Despite Dublin’s Restaurant and Bar not offering a group plan, Patrick provided such valuable information that employees were able to make informed decisions about their health benefits.

 

Is This Similar to Your Business?
Contact a certified broker or navigator to help you through the process of comparing plans and prices for you and your employees. They can help you in working through the steps to determine your best course of action. And if your particular small business’ health insurance challenge does not resemble this one, take a look at our other case studies.