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California's Small Business Health Insurance Exchange Off To Slow Start

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In addition to technical improvements, she said the exchange is working with brokers to complete applications that were filed with missing information.

Businesses with fewer than 50 full-time employees are not required to offer insurance under the law. But by purchasing plans through the exchange, they can give their workers a choice of plans – which most have been unable to do in the past.

There are also tax credits available for businesses with fewer than 25 employees who are paid on average less than $50,000. Businesses with 10 or fewer employees are eligible for the highest credits. The tax credit – only available through the exchange – can be received for two years.

Allen Phillips, who owns Del Mar Automotive with his son, said he signed up for the SHOP so he could receive about $4,000 in tax credits. He applied in January but by mid-April, he was still waiting for insurance cards for the staff. “It’s absolutely making me crazy,” he said.

Phillips said that for several years, the company has offered insurance to its employees, a move that has helped it to keep good technicians. He is switching from an Aetna plan and instead giving his employees a choice under Covered California between Kaiser Permanente and Sharp Health Plan.

Covered California is using these expanded choices as a selling point. Last month, it  launched a marketing campaign emphasizing the new options and control that SHOP offers small companies. The exchange is targeting microbusinesses with 10 or fewer employees, and is also relying on brokers to get the word out to small companies.

Insurance agents are key to the program’s success,  but many brokers are wary because of the delays, the sign-up difficulties and the fact that few clients have qualified for the tax credits. If agents don’t find any value in SHOP or think it’s going to be too difficult to enroll, they are not going to refer their clients, said Chase of the Small Business Majority.

Orange County insurance broker Kathy Hope, who is certified by Covered California to offer its plans, said the SHOP is “just a mess” and insurers  are offering comparable products outside of the marketplace, so there is little reason to enroll.

“I certainly didn’t encourage anyone,” she said. “I would much rather go direct.”

The technology and operational problems are depressing enrollment in business exchanges across the nation, said Kevin Lucia, project director at Georgetown University’s Health Policy Institute. Seventeen states have their own business exchanges, and the federal government is running the others.

Despite the start-up challenges, states have made the right policy decisions to make the business exchanges work, including attracting a variety of insurers. “It is going to take some time for the IT to catch up,” Lucia said, referring to information technology.

Mon, May 05 2014

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