Thomas Scull, a member of the Green Mountain Care Board Advisory Committee, and a Richards Group partner, directed a presentation for a group of local small and large business owners seeking answers about what the exchange means to them. “There have been some great seminars the state has put on, but what we want do to today is focus on the business owner,” Scull said. “It’s important to make sure those making decisions about their business’ health care options are educated. We can consider ourselves students of this.”
Scull explained that the election season provided stability to health care. The re-election of President Obama, as well as Gov. Shumlin, guaranteed that the legislation will not change before it can be implemented. But Scull reported that polls conducted in local communities in Vermont concluded that 73% of the people in Vermont do not understand the new health care reforms. “This reform is the last attempt we have to really change,” explained Scull. “In a do-nothing era, we could have 61 million Americans uninsured by 2019.” Scull said Vermont health care costs equal 19% of state spending.
Scull refers to the ACA as a landmark civil rights bill that some are critical of for its framework. But Scull believes the framework lets businesses innovate how they provide for their employees, and allows states to do what they see fit in order to implement mandates. For Vermont, the health care exchange will be an online exchange, one that everyone from business to state and local levels refers to as an Orbitz or Expedia of insurance. Individuals who are not covered under an employer’s insurance plan can purchase their insurance on the exchange, choosing from four categories of coverage, defined by their co-pays, premiums, and coverage. These plans will be called platinum, gold, silver, and bronze, and insurance companies will be required to include state-defined essential health care packages in each. Scull says 50% of the employers in Vermont offer insurance at the silver or bronze level of coverage. There will also be income-dependant subsidies and tax credits available to help individuals and families pay for plans if they do not purchase insurance through an employer.
Businesses with fewer than 50 employees are considered small businesses, and will face no tax penalty for not providing insurance to their employees. Businesses with 50-plus employees will be required to provide an insurance plan or pay a tax penalty of $2,000 per employee. This is what Scull referred to as the “pay or play” system, meaning businesses can either join the new system or pay the price. If it costs less for a business to take the tax penalty instead of insuring employees, Scull says it’s up to each business owner to make that decision. Businesses will be allowed to set up their own exchanges. Employers with 50 to 100 employees may enter into the state exchange in 2016, and employers with 100-plus employees in 2017. Currently, small businesses with fewer than 25 employees that also average annual wages less than $50,000 qualify for small business tax credits, if they offer a group health plan and pay at least 50% of the employee’s premium.
Scull explained that if a business does not insure, then it is up to the individual to acquire insurance on their own or face a tax penalty. This penalty is phased over three years beginning at 1% of the individual’s taxable income, increasing to 2.5% in 2014, and 2.5% in 2016.
Scull also presented the Vermont Chamber of Commerce’s preferred interactive model of an exchange that asks questions, makes recommendations, and bundles all associated fees for the individuals. “Times have, and will, change,” said Scull. “It is now our challenge as business owners, human resource personnel, and industry experts to enable our employees to take control for themselves.”