As small businesses are faced with the decision of whether or not to stay with their current health insurance plans, the Hawaii Insurance Division wants to make sure business owners and managers have enough information to make the right choice.

We have worked hard over the past few years to minimize premium increases for small groups in order to ensure that Hawaii’s businesses are able to survive in this tough economic climate, and want to make sure business owners have the information they need to take advantage of these changes.

Through 2016, Hawaii’s small businesses have options when it comes to health insurance for their employees, which may lead to some confusion about the benefits and disadvantages each plan has to offer.

Obama health care reform/ greets doctors

President Obama welcomes doctors to the White House.

Official White House Photo by Chuck Kennedy

Businesses with 50 or fewer employees have the option of either keeping “transitional” plans or moving to an Affordable Care Act (ACA) plan. If they choose an ACA plan, businesses can either sign up directly with an insurer or use the Small Business Health Insurance Options Program (SHOP) run by the Hawaii Health Connector.

“Transitional” plans, also known as “grandmothered” plans, are policies that existed on or before Oct. 1, 2013.

Earlier this year, the federal government gave states the option of extending those plans into 2016. We have decided to allow insurers to continue offering these plans in order to maximize the insurance options for small businesses.

Businesses thinking about keeping their old policies should shop around and compare the quality of coverage and cost with an ACA plan.

The major differences in coverage between an ACA plan and “transitional” plan are the 10 Essential Health Benefits. ACA plans must cover the following in order to be considered a Qualified Health Plan: ambulatory patient services, hospitalization, emergency services, maternity and newborn care, mental health, prescription drugs, rehabilitative and habilitative services, laboratory services, preventative and wellness services and pediatric services.

In addition to coverage differences, ACA plans also use different rating factors, which emphasize age instead of health status and loss experience. This will be more favorable for some people than others and should be taken into consideration when determining the cost of switching plans.

Ultimately, we want small businesses to understand these important factors when making their decision — once they switch to an ACA plan or move to another insurer, they won’t be able to go back to their “transitional” plan.

Also, small businesses that would like to take advantage of tax credits are only able to do so when they purchase their ACA plan through the Hawaii Health Connector.

Regardless of the insurance plan selected, we urge employers to help us continue our efforts in bending the health care cost curve so premiums do not continue to rise year over year.

Encouraging employees to be healthy and active are two simple acts that will help control health care costs. Consumers need to realize that choices we make regarding our health affect everyone, including Hawaii’s businesses.

We will answer questions from business owners, managers and human resource personnel about small business health insurance options at our upcoming “Let’s Talk SHOP” forum on June 6 from 12-1 p.m. Join us at the Department of Commerce and Consumers Affairs, located at 335 Merchant Street, or watch it live online at www.ustream.tv/channel/hawaiiidcca.

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About the Author

  • Gordon Ito
    Gordon Ito has been Insurance Commissioner since 2010, after graduating up from the chief deputy commissioner's role he held since 2000. He has a bachelor’s degree in business administration from the University of Hawaii and a law degree from the University of Hawaii’s William S. Richardson School of Law.