State Programs to Subsidize or Reduce the Cost of Health Insurance for Small Businesses

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Arkansas's ARHealthNet (formerly Arkansas Safety Net Benefit Program), authorized through a section 1115 waiver, is a group health insurance program for small to medium businesses (two to 500 employees) that have not offered insurance for 12 months. ARHealthNet is a limited benefit plan with premiums subsidized for employees below 200 percent of federal poverty guidelines. The program has employee participation requirements. Spouses who have no insurance are eligible. Click here for more on Arkansas's Medicaid program.

Idaho's Access to Health Insurance is a premium assistance program for adults up to 185 percent of federal poverty guidelines who work for a small business (two to 50 employees) that does not offer health insurance. The employer is responsible for 50 percent of the premium. The state pays $100 per month each for the employee, a spouse and up to three children. The employee is responsible for the remaining premium. The program is limited to 1,000 members.

Kentucky's Insurance Coverage, Affordability and Relief to Small Employers (ICARE) is a pilot program that targets small employers (two to 25 employees) who have been uninsured for at least 12 months and have an average salary that does not exceed 300 percent federal poverty guidelines. The employer must pay at least 50 percent of premiums and the state pays $40 per employee, per month with the incentive reduced each year by $10. Small employers with at least one employee in the group with a high-cost medical condition will receive additional incentive to remain insured—$60 per employee per month—which will be reduced each year by $15. Premium discounts are available for those who meet wellness goals.

Maine's DirigoChoice covers small businesses (two to 50 employees) and self-employed and other individuals. Small business employers and self-employed people must contribute 60 percent of the premium cost to access subsidies. Individuals are subsidized up to 300 percent of federal poverty guidelines on a sliding scale; at publication, however, enrollment is closed to all except small businesses and unsubsidized self-employed people. Click here for more on Maine's comprehensive reform.

Maryland's Working Families and Small Business Health Coverage Act, targets small business (two to nine employees) by offering subsidies for coverage and expanding Medicaid eligibility to some adult populations. In order to be eligible for the subsidy, employers must establish a Section 125 payroll deduction and offer a wellness benefit.

Massachusetts's Insurance Partnership provides premium assistance for small businesses (two to 50 employees) that have not offered insurance in the past six months, will have employer contribution of at least 50 percent and have at least one employee who earns below 300 percent of federal poverty guidelines. The program is supported through a Section 1115 waiver.

Insure Montana helps small businesses (two to nine employees) provide health insurance to their employees. Using tobacco tax funds, the state provides a tax credit for employers that already provide health insurance or subsidizes entry into a purchasing pool with premium assistance for those that want to provide insurance. To be eligible for Insure Montana, a business can have no employees who earn more than $75,000, other than the owner.

New Mexico's State Coverage Insurance provides low-cost basic health insurance for unemployed adults through small employers or non-profits (two to 50 employees) who meet enrollment eligibility standards as well as individually up to 200 percent of federal poverty guidelines. The program draws CHIP funds through a HIFA waiver. Click here for more on New Mexico's Medicaid program.

Insure Oklahoma uses Medicaid funds, through a HIFA waiver, to provide premium assistance for adults employed by a small business (two to 99 employees) up to 200 percent of federal poverty guidelines. Depending on program demand, eligibility for businesses with up to 250 employees will be phased in. Self-employed or unemployed people, and full time college students age 19 through 22, up to 200 percent of federal poverty guidelines can qualify for the individual plan. Pending federal approval, coverage will expand to 250 percent of federal poverty guidelines. Click here for more on Oklahoma's Medicaid program.

Cover Tennessee provides limited benefit coverage for small businesses and individuals. For small business coverage, the employer, employee and state each pay one-third of the premium. Individuals pay two-thirds and the state pays one-third for coverage. Eligible uninsured spouses pay two-thirds of the premium.

Washington's Health Insurance Partnership (HIP) combines contributions from small employers, employees and the state to make small group coverage more affordable for employees. Program implementation is pending due to a budget constraints.

Arizona's Health Insurance Premium Tax Credit program allows small businesses (two to 25 employees) that have been in existence for at least a year and have not offered insurance for at least six months to apply for a tax credit on a first-come, first-served basis. Individuals who have been without insurance for six months, are not eligible for other programs, and have income below 250 percent of federal poverty guidelines also can apply for a tax credit. The credit amount is the lowest option among $1,000 per individual plus $500 per dependent child, $3,000 per family, or 50 percent of the premium. The program is capped at $5 million, and additional applications are added to a wait list.

The Hawaii Prepaid Health Care Act (PHCA) requires that all Hawaii businesses provide insurance to any employee who works at least 20 hours for four consecutive weeks. The Act also sets a cap on employees’ contribution of 1.5% of their salary. The employer mandate is unique in the United States because of the Employment Retirement Income Security Act (ERISA). ERISA pre-empted or superseded all state laws relating to employment benefit plans. In 1977, the federal courts invalidated the Prepaid Health Care Act, but Congress later exempted the PHCA from ERISA. Hawaii is the only state that mandates employers to provide employees health insurance, though other states assess fees upon employers that do not provide coverage. Click here for more on Hawaii's comprehensive reform.

Kansas's Employer Health Insurance Contribution Credit provides a refundable tax credit to qualifying small businesses that begin offering health insurance to their employees; the credit decreases over time.

Massachusetts's Fair Share Contribution requires employers with greater than ten full-time equivalent positions to contribute to the Commonwealth Care Fund if they do not make a sufficient contribution toward their employees health insurance. The Commonwealth Connector includes a pilot program that allows small employers to buy coverage through the Connector for employees using defined contributions. Click here for more on Massachusetts's comprehensive reform.

Healthy NY, a subsidized reinsurance pool, provides lower cost health insurance for those up to 250 percent of federal poverty guidelines and for small businesses that meet specific eligibility criteria regarding low-income employees. The additional burden on the pool from high-cost individuals is offset to achieve the reduced cost.

The Utah Health Exchange is an internet-based state portal, comparing insurance options and providing greater transparency of insurance plan benefits, serving the individual and small group markets. The exchange allows employees to couple defined contributions from one or more employer and pre-tax personal contributions to purchase insurance that is also portable. Part of this reform was the creation of NetCare, a low-cost mandate-free insurance option for insurers to offer to the individual and small-business markets and for those eligible for COBRA, mini-COBRA or conversion coverage.

Vermont's employer assessment requires that employers pay a fee—to support the state's Catamont Health program—for every full-time equivalent (FTE) position that is either not offered health insurance or is not enrolled in offered insurance and is uninsured. The first eight qualifying FTE are exempted from the assessment. Click here for more on Vermont's comprehensive reform.

West Virginia's Small Business Plan allows small businesses to tap into the buying power of the Public Employees Insurance Agency (PEIA) through a public/private partnership between PEIA and insurance companies. PEIA is the largest self-insured plan, providing insurance to public employees, state universities, and colleges. It allows participating carriers to access PEIA's reimbursement rates, enabling the new small business coverage cost to be reduced significantly.