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Qualified Health Plans and Employer Contributions

Beginning in 2014, employers will decide on a QHP to offer their employees, what percentage of the cost of the QHP to contribute towards employee premiums, and how employees will pay a share of the premium.

Employers in most states will have a choice about how employees will contribute toward health insurance.

Employers can choose to vary each employee's premium by age (referred to as “list billing”), or use the traditional method of charging the same amount for all employees for the same coverage.

  • One advantage of list billing is that younger employees are able to afford coverage because both the premium and the employee’s percentage contribution toward that premium are lower than they would have been if all employees contribute the same amount for the reference plan. This inducement to encourage participation by younger employees will make it easier for employers to meet SHOP’s minimum participation requirement. Of course, list billing also means that older employees will contribute a larger amount for their coverage.
  • An employer can also decide that all employees will contribute the same amount toward the cost of a reference plan. This is a variation on composite premiums, referred to as “calculated composite premium". The FF-SHOP website will automatically calculate an average premium for employees. Each employee pays a uniform amount of those average premiums. Premiums for adult dependents and children will always reflect a per-member calculated rate and will not be averaged.

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