BEYOND THE NUMBERS
Open Enrollment for Small Businesses Eases Path to Covering Workers
While the next open enrollment period for individuals and families to buy marketplace coverage for 2016 will get significant focus, health reform has another open enrollment period that also deserves attention: the one for small employers that want to provide health coverage to their workers.
Between November 15 and December 15, small businesses (which most states define as those with up to 50 workers) can sign up to offer coverage to their workers for next year — without having to meet requirements that insurance companies can otherwise impose on how many workers must enroll or how much the employer must contribute. These are known as minimum participation requirements and contribution requirements, respectively.
State insurance rules have long permitted these requirements in the small-group market to reduce the risk of adverse selection — in other words, the separation of healthier and less-healthy people into different insurance arrangements. They often require that at least 70 to 75 percent of a firm's workers enroll in the employer’s plan and that the employer pay at least half of the cost of workers’ premiums. The requirements help ensure that a broad array of workers at each firm participate in an employer’s plan, not just those who expect to have higher medical costs. But these requirements can pose a major hurdle for small firms that want to offer coverage.
To expand access to health coverage, health reform created an open enrollment period for small employers that can’t meet these requirements. It applies in every state and Washington, D.C., both inside and outside the small-group insurance marketplaces known as SHOPs.
Small employers can also purchase coverage at any point during the year, under what’s called “rolling enrollment,” but minimum participation and contribution requirements often apply in the small-group market outside the open enrollment period.
Open enrollment was available for small businesses in 2014 and 2015 but wasn’t widely understood among small employers or well publicized.
Small firms are less likely than their larger counterparts to offer coverage to their workers, and most cite cost as the main reason. However, greater awareness of the upcoming small-group open enrollment period could allow more small firms to offer (or continue offering) coverage to their workers.