DHI staff interviewed Jim Rodriguez, President and CEO of TexHealth Central Texas. We learned how his nonprofit helps employees afford small business health insurance, how its Premium Assistance Program evolved, and what the future holds. (Questions and answers have been edited for clarity and length.)
Q1: When was TexHealth Central Texas established?
A: TexHealth Central Texas was established as a nonprofit in 2009, after a similar program was started the year before in Galveston by the University of Texas Medical Branch (UTMB) based on a model from Michigan. It launched in Austin in 2010 as a limited-benefit health plan where the insurance premiums were split between TexHealth, the employer, and the employee (called “3-share”). In 2013, TexHealth Central Texas switched to the current model of subsidizing the employee premiums for small business health insurance due to the Affordable Care Act (ACA) changing the rules for limited benefit plans.
There were originally four other TexHealth locations around the state, but those folded due to lack of funding. Only TexHealth Central Texas and the UTMB program in Galveston County remain. To do this, we will need more funding as well as state legislative changes, which we will be working on in the next legislative session.
Q2: What services does TexHealth Central Texas offer?
A: TexHealth Central Texas offers a Premium Assistance Program that provides subsidies to eligible employees of small businesses to help them afford their health insurance premiums. It pays one-third of the monthly premium, up to $110 per month. This is a 3-share program since the employer pays for part of the premiums and employees are required to contribute part as well (at least $3 per month).
TexHealth partners with insurance agents to help businesses locate small-group health insurance on or off the exchange (though there are currently no insurance companies in Texas offering small-group insurance on the exchange, also known as the SHOP marketplace). We work with all insurance carriers licensed in the state of Texas.
For people who are self-employed or whose employers don’t offer coverage, TexHealth’s agent partners can also help individuals and families obtain individual health insurance on or off the exchange/marketplace (Healthcare.gov). However, individual health plans are currently not eligible for premium assistance from TexHealth. Only small business health insurance offered by an employer is eligible for the 3-share premium assistance program.
We are exploring ways of extending our premium assistance program to companies with Individual Coverage Health Reimbursement Arrangements (ICHRA). ICHRAs, which started in 2020, allow businesses to reimburse employees who buy individual health insurance. This means in the future we may be able to subsidize small-business employees who buy their own non-group insurance.
Q3: How exactly does your Premium Assistance Program work?
A: Businesses must be a group of between 2 and 50 employees and be in the eight-county service area of Bastrop, Burnet, Harris, Hays, Milam, Travis, Williamson, or McLennan Counties. Employers must pay at least 50% of the monthly health insurance premium for employees.
Employees whose annual gross earnings are $54,360 or less are eligible for the program—this is 400% of the federal poverty level for a single person. (The income threshold changes each year due to federal poverty level guidelines.) We verify all employee insurance and income documentation monthly and provide employers with up to $110 per eligible employee. Additionally, we try to make the deposits into employer accounts before the premiums are due to avoid any financial hardships for the employers.
We help with premiums for the employee only. Unfortunately, we cannot provide funding for dependents/family members who may also be on the same insurance policy.
The premium assistance program does not provide any funding for the employer’s portion of employees’ premiums. However, small businesses benefit because they can offer affordable benefits to employees that they might not be able to otherwise. This can help with recruitment, retention, and employee wellness.
Q4: What funding sources do you have that allow you to offer these insurance premium subsidies to employees?
A: Since 2013, our main funding has come from the Texas Department of Insurance fines and penalties account. Health plans must pay into this account when they violate insurance rules. This account collects about $8-10 million a year in fines and penalties, and the state gives a portion to TexHealth. So in effect, mistakes by health insurance companies are allowing more people to be able to afford insurance. The amount in the fines and penalties account can vary, but it has never caused us to modify our budget.
We have also received grants in the past from companies and charitable foundations, and we would like to apply for more. None of our funding is from tax dollars.
Q5: Do you know if other states have similar small business premium assistance programs?
A: I don’t know of any other states currently helping small businesses in the same way we are (though a few have other types of 3-share programs). However, our premium assistance program has proven effective and can be replicated in any state. Our program is small and efficient—about 17% of our funding goes to administration, and the rest goes directly to helping employees with their health insurance premiums.
Our type of employee premium assistance program is authorized in Texas by Texas Health & Safety Code Section 75.102. It allows regional programs to facilitate the purchase of health plans for employees of small businesses.
Q6: How many small businesses do you currently help, and do you have room for more?
A: There are about 35 small groups that we are the agent for to connect them to insurance, and about 120 small businesses in the premium assistance program.
We normally spend about 95% of our budget, but due to the “great resignation”, labor shortages, and other factors our spending has dropped a little recently. Therefore, so we have funding left to help more customers. We assist many restaurants, landscapers, medical offices, and other types of small businesses.
This article is by Lauren Jahnke, MPAff, author of Decoding Health Insurance and the Alternatives: Options, Issues, and Tips for Saving Money.