There have been big changes to small group coverage benefits as of January 1st, 2016 in New York. Under the new rules as part of the Affordable Care Act, small businesses with 1 to 100 employees must sign up for health care coverage under the community rated plan exchange. These businesses will not be permitted to sign up for health care coverage outside of a community rated plan.
With this new rule taking place as of the first of the year, you would think that small businesses in New York would be well informed. Instead what seems to be happening is small business owners being caught unawares until their large group coverage is denied renewal under the expansion of New York’s community rated plan requirements. Both confusion and frustration abound with this news. We don’t want you to be another one of them.
Under the old rule until this year, any business with between 1 to 50 employees was only allowed to seek coverage through a small group plan AKA a community rated plan. The purpose of this rule was to provide a way for employees having a hard time getting adequate coverage in the past due to medical issues, age or tobacco use to get the same coverage that their coworkers would get.
The rule is noble in its goal; help everyone get the same coverage at the same rate, regardless of health status or age. With a community rated plan, everyone gets coverage and everyone pays the same rate. In fact, it is the inclusion of young and healthy members in the community rated plan that absorb the rising costs of those who use and maximize their benefits more often. Having members in the community rated plan that do not use their benefits often is essential to the plan’s survival.
If you are a person who does not mind paying a little more for someone else to have what you have then these kinds of plans are welcome changes to you. Not everyone feels the same way. Many businesses were glad to be rid of the community rate plan rule when they accumulated more than 50 employees. With this new rule however, they are now forced to participate in a community rated plan once more.
The new rules have expanded the small group plan requirements from 1 to 50 employees to 1 to 100 employees. What this means is, any company that grew out of the community rated plan requirements is now subjected to the new plan requirements effective immediately.
Those who purchased large group coverage as of 2015 not will be allowed to renew. Notices to those employers regarding their non-renewal status should have already gone out. These employers will be required to go right back into the community rated plan coverage they grew out of. According to the New York State website on the matter, there is no grace period or extension. Companies from 51 to 100 employees must find small group plan coverage before their policies renew.
If you are an employer who fits this criteria, this may be an alarming thing to be informed of, particularly if you or your employees did not enjoy their benefits under a community rated plan. There are options though.
For those who are not interested in getting involved in small group plan coverage again or even for the first time, PEOs are an easy and creative way to circumvent the new changes under the NY rules.
Because a PEO co-employs your employees, they are able to offer them coverage as part of a large group of co-employees. This group of people often numbers in the thousands, thus fitting the criteria to partake of large group coverage. Better yet, even with the PEO service fees that you would pay as co-employer, they often price under what a small business would normally pay for small group coverage. Not to mention, PEOs can offer the kinds of employee perks and benefits that a small business could only dream of offering their employees.
If you have considered a PEO in the past but stopped pursuing one for some reason, this may be a great time to revisit a relationship with a PEO. The new ACA rules in NY is not going away, waiting will not do anything but put off the inevitable. Talking to a PEO broker today can help you understand what the PEO enrollment process is, find out which PEOs would best meet your needs, and help you with the negotiation process so you are assured of selecting the right one.
If you’d like to find out more about how PEOs can help you provide great benefits and payroll management at less than you are paying now, contact us today for a free consultation.
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