Maryland Announces Big Benefits for Small Business

Under the Health Insurance Partnership which starts this September, a small business that has 2-9 full-time employees could be eligible to receive a subsidy of up to 50 percent of the premium.  The employer collects the employee’s share of the subsidized premium through payroll deduction, and pays the subsidized employer and employee share of the premiums to the insurance company.  The insurance company will bill the State for the subsidy and will only bill the employer for the premium, less the subsidy.  Small business owners will not be burdened with additional paperwork trying to recover money from the state.  The health insurance company will perform that function.

Governor O’Malley proposed and signed into law this Health Insurance Partnership for small employers not currently offering health insurance to their employees.  This is a great opportunity for small businesses to start a group health insurance plan at potentially significantly reduced premiums.  The full Maximum Subsidy Table is available at http://mhcc.maryland.gov/partnership. Furthermore, the eligibility requirements seem both explicit and simple.  At the time of initial application, the business must meet the following requirements:

• The business has at least 2 and no more than 9 full-time employees (30 hours/week), and this does not include temporary, seasonal, or substitute employees.
• The business has not offered insurance to its employees in the most recent 12 months.
• The average wage of the full-time employees is below $50,000

The small business owner also needs to establish a Section 125 plan within 60 days of enrollment in the Partnership, which can usually be done with the health insurance company through your broker/agent at a very reasonable annual cost.  The simplest way is to establish a Premium-Only-Plan (POP).  A small business owner should not consider this a burden.  Actually, a POP works to the advantage of both the employee and the small business owner.  First of all, it allows employees to pay their premiums with pre-tax dollars, which further reduces their out-of-pocket cost for their share of the health insurance premium by reducing income and social security taxes.   And secondly, it reduces social security taxes for the small business owner.

While this is a brand new Partnership offered by Maryland, it appears to be very well planned.  Please be aware that this information is based on proposed May 2008 regulations and after final regulations are adopted, more detailed information will be published.  As it now appears, substantial consideration has been given to the company’s potential growth above 9 employees, as well as to what happens if there are changes in the average wage of the company.

Each business qualifies based on its size at the time of application.  Any new full-time employees are eligible for the subsidy during the policy year (For example: October 2008 – October 2009.  The business pays the same premium per new employee and receives the same subsidy per new employee as the other currently enrolled employees.  If the business’s average wage increases during the policy year, nothing changes; at renewal (October 2009) the subsidy will be recalculated.  Furthermore, the Partnership is still available for businesses that grow to between 10-19 employees; but the subsidy is reduced.

The Governor and General Assembly intend for this to be an ongoing program.  However, there appears to be a limit in its “capacity.”   It remains unclear what this “capacity” is, but I would imagine it represents some fixed upper limit in terms of Maryland’s budget.  However, if the Health Insurance Partnership reaches its “capacity,” no new applications will be accepted. 

So, if you are interested in this plan and work for a company who fits these parameters and does not yet offer health insurance, please bring this article to your employer’s immediate attention. If you are a small business owner, fit these parameters, would like to offer your employees a group health insurance plan, but its simply been too expensive to start, now is the time to start planning.

For more information or questions, please contact me ASAP.  I’ll be happy to fill you in on the latest updates.

Richard (Rick) Samara

RMS Financial Services

Office Direct: 301-638-5097

e-Mail: rsamara@rmsfinancialservices.com

Governor O'Malley Unveils Health Insurance Partnership for Small Business

ANNAPOLIS, MD (June 23, 2008)(excerpt) – Governor Martin O’Malley today announced important steps that Maryland is taking to expand health insurance coverage for more working families and small businesses.  In coordination with the Maryland Department of Health and Mental Hygiene (DHMH), Maryland Health Care Commission (MHCC) participating insurance carriers, and advocates, the State of Maryland will be working to enroll members in the Health Insurance Partnership, a premium subsidy program for small businesses. 

“In many cases, health insurance is too expensive and out of reach for many of Maryland’s small businesses,” said Governor O’Malley.  “This partnership will make health benefits more affordable, thus expanding access to quality healthcare for businesses and their employees.”

Related Information: Underwriting

Major insurance carriers like AETNA, Care First Blue Cross Blue Shield, Coventry Health Care, and United Healthcare will all offer plans.  Qualifying businesses must prove that they are in business, and not simply a group of individuals taking advantage of group health insurance.

Therefore, normal underwriting guidelines will exist.  A qualifying businesses will be expected to submit a copy of their most recent Maryland Quarterly Unemployment Statement, which must contain the names, salaries, etc. of all employees of the group.