A recent standoff in Washington over enhanced Affordable Care Act premium tax credits triggered a government shutdown and put millions of Americans on notice that federal financial help for individual marketplace plans may end. For many employees who buy coverage through Healthcare.gov, monthly premiums could jump dramatically next year. Small business owners who currently offer stipends or other help for marketplace coverage are now asking whether it is time to switch to a traditional group health plan. At Staffscapes we help small employers evaluate that choice.

During the pandemic Congress temporarily expanded the ACA premium tax credits to lower out-of-pocket premiums and extend eligibility to more people. Those enhanced credits were later extended through the end of 2025 but are not permanent.

Analysts warn that, if the enhanced premium tax credits expire, average out-of-pocket marketplace premiums could rise sharply. Some analyses project that average premium payments could more than double without the enhanced credits.

Middle income people who became newly eligible under the expansion and older adults in the 50 to 64 age range are among those likely to see the biggest absolute increases. Rural enrollees may face particularly large increases.

Many small employers today offer a monthly stipend or a flat contribution that employees can use to buy a plan on Healthcare.gov. or state sponsored marketplaces. Those stipends were set when marketplace premiums were lower because of enhanced credits. If premiums rise substantially employees could see their total monthly costs increase sharply.

Small employers tend to respond in predictable ways:

• Increase stipends
• Encourage enrollment in spouse or family plans
• Shop for a small group plan
• Maintain current stipend levels

From our experience employer-sponsored small group plans can be competitive with marketplace plans on both price and coverage and often offer richer benefits and more predictable employer contributions.

Checklist for small business owners:

1. Run the numbers
2. Talk to your broker or PEO
3. Evaluate SHOP options
4. Consider timing
5. Communicate clearly to employees

Group plans can deliver more predictable costs for employers and employees most likely offer better coverage and improve recruitment and retention.

Staffscapes can produce side-by-side comparisons obtain group plan proposals and help design contribution strategies that support your business and your employees.

Policy in Washington may still change but prudent employers should plan now.

Endnotes

1. Associated Press reporting on government shutdown and ACA subsidy negotiations.
2. KFF analyses on premium increases without enhanced ACA tax credits.
3. Medicare Rights and similar analyses on impacts to older adults and rural enrollees.
4. HealthSystemTracker comparison of employer sponsored and marketplace plan cost structures.
5. Healthcare.gov SHOP marketplace overview.