Many FAQ's in health insurance

MANCHESTER - With a little more than six weeks to go before the start of the "open enrollment" period" when small businesses and individuals can start to sign up for health insurance coverage under Vermont's soon-to-be operational health exchange, there is still widespread uncertainty and confusion about what the options are and how the new system will work.

But it's getting better. The other side of the coin is that health insurance experts - from insurance carriers like Blue Cross/Blue Shield and MVP, the two carriers who will be offering plans on the exchange, as well as officials from Vermont Health Connect, as the health exchange is known - have been criss-crossing the state in recent weeks. They have been attempting to clarify and explain how self-employed Vermonters, or small business owners with fewer than 50 employees will obtain their insurance come Jan. 1, 2014, when the new system formally kicks into operation.

One such presentation took place at the Equinox Resort Friday morning, when Catherine Hamilton, a Vice President of Planning for Blue Cross, and Derek Obrey, one of the insurance carrier's exchange specialists, conducted an information sharing session and answered questions from a group of about 25 small business owners.

At its heart, Vermont Health Connect will be a place for individuals and business owners to shop for various insurance plans on four basic levels, known as gold, silver, platinum and bronze. The packages of insurance vary, with the main difference being how much a buyer wants to spend on their premium or accept as a deductible. For example, "bronze" level products will have the lowest premium costs and the highest deductibles and out-of-pocket costs. Platinum products will have the highest premiums and lowest consumer cost sharing requirements.

"The main change for small business owners is that they're going to have to change products and the way they buy those products," Hamilton said after her presentation.

One issue many small business owners are grappling with is whether to continue to provide an insurance policy for employees if they do so presently, or drop that benefit and allow their employees to shop on the exchange for their own coverage. The answer to that question, Hamilton said, will depend on the circumstances of each business.

For many small businesses and individuals, the answer to that will hinge on the tax implications.

Small businesses with 25 or fewer employees who currently offer health coverage may already qualify for a federal tax credit. That credit will be increasing from 15 percent to 20 percent on Jan. 1, 2014. The other factor will be how much their current employees are being paid. According to Hamilton, the available subsidies will be much higher for individuals earning less than 250 percent of the federal poverty level (about $28,725 per year) than for those earning more than that.

"As we've looked at this, and what we've heard from businesses, is that most employers are going to keep their insurance," she said. "One of the reasons is that there are some tax implications for having an employer-sponsored plan; companies get a corporate tax deduction, and individuals get a deduction."

While small business owners could simply stop offering insurance and tell their employees to go out and shop for themselves on the exchange, that might not always be the most financially savvy move for those businesses, she said.

Both Blue Cross and Vermont Health Connect have created online "calculators" to assist individuals and small businesses who are trying to determine which way makes the most financial sense in view of the subsidies, tax credits and income levels in play.

Vermont is a state with many small businesses and sole proprietorships. For very small businesses with four or fewer full-time equivalent employees, there won't be a penalty or an obligation to offer insurance under the new system coming into place.

Whether small businesses should offer health insurance depends largely on who the full-time workers are, said Lindsey Tucker, the deputy commissioner of Vermont Health Connect. A full-time employee is someone working at least 30 hours a week and who is not hired seasonally, she said.

"Higher income earners would not be eligible for a subsidy if they came in through the exchange ... it may make more sense for an employer to continue to offer coverage," she said earlier this week in a phone interview. "If employees are lower income and can take advantage of federal subsidies it probably makes sense to drop coverage."

The tipping point may come at whether an individual or a family of four is at, below or above 400 percent of the federal poverty level - which would be about $46,000 per year for an individual or about $95,000 for the family of four, she said.

Vermont Health Connect plans to employ several experts or "navigators" to help individuals and small businesses through the thicket of information. The Bennington Area Chamber of Commerce will be one serving the southern Vermont region.

The open enrollment period on the health exchange begins on Oct. 1, 2013 and runs until March 31, 2014.

Still, for many local small business owners, especially those who hover around the four full time equivalent employee level, the new system is one that requires more review.

Most of the early interest about the health exchange and the system coming into existence through which small business owners and employees would acquire insurance centered around the big picture issues of how would the overall structure remain financially stable and be affordable, said Berta Maginniss, the Manchester and the Mountain's Chamber of Commerce executive director. Now, that is starting to be replaced by a more specific view of the costs and how it will affect their strategies for getting health insurance coverage, she said.

One of the area small businesses owners who attended last Friday's information session offered by Blue Cross was Robert Gasperetti, a furniture maker from Mt. Tabor, who has one employee. He was in search of answers for both his family and business, he said.

"It continues to be very confusing - it's going to take quite a bit of focused study to figure out what the best is for myself and for my employee," he said afterwards in a phone interview. "I think if people work it through there are enough options in there so they can find something that is palatable." However one of his concerns was the apparently high "out-of-pocket" costs the new coverage plans were offering, that in the event of a chronic illness or serious medical emergency could prove quite expensive to shoulder, he said.

"I'm going to look into it closely and carefully, but it's really time consuming," he said. "I think there are going to be a lot people who are really confused - I hope the 'navigators' are well-trained and are not going to be crunched for time."

Vermont Health Connect's website can be found at


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