Question: I currently offer my three employees full medical coverage. Can they buy it themselves thru the exchange? Will this save money for each of them? Will it save money for me? Can I buy coverage thru the exchange?

- James

Answer: You should consider buying a group policy for yourself and your employees through an exchange. There is a good chance it will offer a better deal than you currently have because exchanges will combine the buying power of many small businesses and individuals. More importantly, as a small business, you would be eligible for a subsidy of up to 50% of the cost of the premiums.

You could, if you want, also drop coverage and let your employees shop for individual policies on an exchange on their own. Since you have fewer than 50 of them, you would not face a penalty for failing to offer insurance. You could also buy an individual policy on an exchange for yourself. If any of you earn less than 400% of the federal poverty level ($45,960 for an individual in 2013), a subsidy would be available to help with the cost.

However, there are some disadvantages to choosing this approach. Your employees would not receive an employer contribution toward the cost, nor would that cost qualify for a tax deduction, as it does under many employer plans. You might also find that the rates for individual policies on the exchange are higher than those for small groups.

Whether you purchase small group coverage or individual policies, you and your employees will be guaranteed access to insurance regardless of health status.


Robert I. Field, Ph.D., J.D., M.P.H. is a professor of law at the Earle Mack School of Law and professor of health management and policy at the School of Public Health at Drexel University. He also writes for The Field Clinic blog.