By Robb Murray
MANKATO — Starting Jan. 1, every American, with limited exceptions, will either have health insurance or a fine. One year later, that requirement extends to businesses with more than 50 employees.
If only it were truly that simple.
On Friday, Greater Mankato Growth assembled a top-tier group of Minnesota experts to explain to its members how they need to get ready for the Affordable Care Act, better known as Obamacare.
One key, the business owners were told, lies in the state’s “exchange,” which is basically a website to buy health insurance, called MNsure.
Unless you’re applying for a government-funded insurance such as MinnesotaCare, no one is required to use MNsure. But there’s a sweet incentive for individuals, small nonprofits and small-business owners to learn about it.
That’s because business owners and nonprofits with fewer than 25 employees will be able to get a discount worth as much as 50 percent of their health care bill, starting Jan. 1. (The nonprofit limit will be 35 percent.) There are two more requirements: The business must pay an average wage of less than $50,000 a year, and it must pay at least half of its employees’ health insurance premiums.
It’s important to note that these small businesses — every business with fewer than 50 employees, actually - are not required to provide health insurance. Health care reforms require only individuals to get insurance and large employers to offer it.
At first, only businesses with fewer than 50 employees can use the exchange. Starting in 2016, that increases to 100 employees or fewer, and the state may decide to let in even larger companies in 2017.
Large business owners, though, face their own decision.
One man who said he was a large employer told the panel that his company has a major decision to make: Pay the penalty of $2,000 per employee or provide insurance.
He suggested that many of his employees would themselves choose to pay penalties rather than get insurance.
Scott Keefer, an executive with Blue Cross and Blue Shield of Minnesota, acknowledged that he accepted the requirement for individuals to buy insurance “somewhat reluctantly.”
But he said the penalties and the incentives will persuade most people to buy insurance.
“The hope is, behaviorally, it sends a signal that you should have insurance,” he said.
Though that penalty starts out at only $95 per adult or 1 percent of taxable income, it balloons to $695 per adult or 2.5 percent of taxable income by 2016. That means someone making $35,000 would pay $875 a year by 2016 if they don’t get health insurance.
Individuals, likewise, won’t have to use the exchange, but they may save a lot of money by using it.
That’s because people making less than 400 percent of the federal poverty level, which is $45,960 per person or $94,200 for a family of four, get socalled “tax credits.” There are basically government vouchers to spend on health insurance.
A calculator on MNsure’s website estimates how much individuals or families will need to pay, based on their income, family size and age. A family of four making the state’s median income, or $58,476, would pay an estimated $389 a month, and the government would chip in $680.
The exchange has not come cheap. It has received federal grants worth $110 million and has asked for $55 million more.
April Todd Malmlov, executive director of MNsure, said she’s heard questions in the media about how a website could cost that much money.
“But it’s a very complex system, behind the scenes, that to the consumer should look very simple,” she said.
The exchange starts taking customers Oct. 1. A hotline to help people understand MNsure is expected to go live Sept. 3, though the number hasn’t been released.
It will take between 10 minutes and an hour to enroll for insurance on MNsure, she said. It’s so much faster than existingenrollments in part because there are no questions about pre-existing conditions. In fact, there are only five questions that will determine the amount of your premium: tobacco use, age, where you live and how large your family is.
Of course, despite all the talk about mandates and tax credits, no one yet knows how much more Minnesotans will pay for their health insurance premiums after the Affordable Care Act takes effect.
Keefer, the insurance executive, said Minnesotans shouldn’t worry about estimates from other states. In Ohio, for example, residents will pay an estimated 41 percent more in their state’s version of MNsure.
But Keefer said Minnesota’s experience will depend on lots of other factors. And he added that the beforeand- after comparison isn’t fair because the new plans will offer more required benefits, such as hospital stays.