Small business health insurance post-Obamacare

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Shireman28
Posts: 189
Joined: Fri Nov 02, 2007 8:49 am

Small business health insurance post-Obamacare

Post by Shireman28 » Wed Jan 29, 2014 2:57 pm

This is a question to small business owners:

I am a partner in a small family business with less than 20 employees.

For years we have paid 50% of employee's health care premiums through our health insurance.

What is everyone doing with their plans that are all being adjusted to the new standards?

Our cost increase isn't much, but it's a good time to re-think our overhead and benefits structure.

Since we are less than 50 employees and may not get there in my lifetime, I suppose we could drop coverage with no penalty, then give everyone a raise to make up for it.

Since preexisting conditions don't count individual workers could theoretically get insurance pretty easily.

Or we could stay as is, or any other plan. What do your business do about spouses and families?

Thanks for any input.

P.S. - Do health savings accounts plans still exist and are they any good?

BruDude
Posts: 2746
Joined: Thu Dec 30, 2010 12:28 am
Location: Las Vegas

Re: Small business insurance post-Obamacare

Post by BruDude » Wed Jan 29, 2014 3:16 pm

Have you received your 2014 renewal yet? Each employee must now be charged individually based on their age, the age of dependents, and smoker status, rather than having a single composite rate for the entire group. Under the new rules, groups that are younger and healthier will see substantially higher costs, especially for the older employees (at least in states where group plans were medically underwritten). For example, one of my groups that recently renewed which is full of healthy people in their 20's and 30's was paying $270/mo for each employee for the equivalent of a platinum plan, and families were paying $760/mo. Now the cheapest employees under age 26 are $325/month and employees age 60-64 are $1,000-1,200/month. The two families that were on the plan went from $760/mo to over $2,000/mo each. This is for a plan with the same benefits they had before.

IMO the small group market will be dead soon. The administrative work for employers is a pain, especially with this new member-level billing, and it will force employers to take age into consideration when deciding who to hire. If you are going to hire someone for a front desk job that makes $30k/year, are you going to hire the 60 year old and pay 50% of a $1,200/mo premium, or hire the 25 year old and pay 50% of a $325/mo premium? Why not just get rid of employee benefits, give everyone a raise, and never have to worry about dealing with health insurance or COBRA again?

cubedbee
Posts: 312
Joined: Tue Aug 04, 2009 11:13 am

Re: Small business insurance post-Obamacare

Post by cubedbee » Wed Jan 29, 2014 3:30 pm

BruDude wrote:Have you received your 2014 renewal yet? Each employee must now be charged individually based on their age, the age of dependents, and smoker status, rather than having a single composite rate for the entire group. Under the new rules, groups that are younger and healthier will see substantially higher costs, especially for the older employees (at least in states where group plans were medically underwritten). For example, one of my groups that recently renewed which is full of healthy people in their 20's and 30's was paying $270/mo for each employee for the equivalent of a platinum plan, and families were paying $760/mo. Now the cheapest employees under age 26 are $325/month and employees age 60-64 are $1,000-1,200/month. The two families that were on the plan went from $760/mo to over $2,000/mo each. This is for a plan with the same benefits they had before.

IMO the small group market will be dead soon. The administrative work for employers is a pain, especially with this new member-level billing, and it will force employers to take age into consideration when deciding who to hire. If you are going to hire someone for a front desk job that makes $30k/year, are you going to hire the 60 year old and pay 50% of a $1,200/mo premium, or hire the 25 year old and pay 50% of a $325/mo premium? Why not just get rid of employee benefits, give everyone a raise, and never have to worry about dealing with health insurance or COBRA again?
Composite billing for the small group market is market of proposed regulations released around Thanksgiving. Rating is still on the member level, but then carriers will be able to compute a composite Individual rate and a composite Family rate for the group's invoice, so that all employees can then be charged the same composite rate, more like it used to be in most states. The composite rates will be fixed at the beginning of the plan years and the demographics of new entrants will not effect them mid-year (but will upon next renewal, but that is true today)

I agree that the small group market is going to shrink a lot. Beyond the hassle of dealing with it, you're transferring inflation risk to the employee. Medical inflation has run higher the general inflation for decades and is likely to continue to do so in the foreseeable future. Much better to give your employees a one time raise to help purchase insurance on the Exchange and then let their total compensation rise by general inflation than to continue to deal with rising medical costs every year and buying down and making benefit changes to control costs.

SeattleCPA
Posts: 456
Joined: Fri Jul 06, 2012 7:06 pm

Re: Small business insurance post-Obamacare

Post by SeattleCPA » Wed Jan 29, 2014 3:33 pm

Shireman28 wrote:This is a question to small business owners:

I am a partner in a small family business with less than 20 employees.

For years we have paid 50% of employee's health care premiums through our health insurance.

What is everyone doing with their plans that are all being adjusted to the new standards?

Our cost increase isn't much, but it's a good time to re-think our overhead and benefits structure.

Since we are less than 50 employees and may not get there in my lifetime, I suppose we could drop coverage with no penalty, then give everyone a raise to make up for it.

Since preexisting conditions don't count individual workers could theoretically get insurance pretty easily.

Or we could stay as is, or any other plan. What do your business do about spouses and families?

Thanks for any input.

P.S. - Do health savings accounts plans still exist and are they any good?
I don't think you can do this anymore. There's a thread that points to an entry at my blog that talked about this. But basically the ACA rules about what insurance needs to look like and the nondiscrimination rules (which apply to even to small businesses not affected by the mandate) mean you need to either cover everyone through an ACA compliant policy (not a reimbursed premiums deal) or you need to not cover anybody.

SteveKL
Posts: 498
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Re: Small business insurance post-Obamacare

Post by SteveKL » Wed Jan 29, 2014 3:34 pm

Our small business offered a company plan to our (mostly young) employees for many years. Even though the rates were, at the time, much cheaper than an individual plan, or participation rate was always abysmal with most eligible employees choosing not to participate. When the quote for an ACA-compatible plan came in at nearly double what we'd been paying (which was already very high), for the first time in more than 15 years our company decided not to offer health insurance. Our employees who did not have coverage options through a spouse or parent went to the exchange to purchase their own policies.

Yes, HSAs absolutely do still exist as do the high-deductible plans that go with them. As a responsible medical consumer who leads a healthy lifestyle, for me the HSA/HDP makes good sense.

BruDude
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Joined: Thu Dec 30, 2010 12:28 am
Location: Las Vegas

Re: Small business insurance post-Obamacare

Post by BruDude » Wed Jan 29, 2014 3:53 pm

cubedbee wrote:
BruDude wrote:Composite billing for the small group market is market of proposed regulations released around Thanksgiving. Rating is still on the member level, but then carriers will be able to compute a composite Individual rate and a composite Family rate for the group's invoice, so that all employees can then be charged the same composite rate, more like it used to be in most states. The composite rates will be fixed at the beginning of the plan years and the demographics of new entrants will not effect them mid-year (but will upon next renewal, but that is true today).
Have a link? I was told by both my general agency and the insurance company that offering employees a composite rate is a gray area, and this was not offered as an option by the insurance company. How do they calculate a family composite premium if there is only one or two families in a group of 20 employees? How do they calculate a employee + spouse composite rate if there is nobody enrolled as employee + spouse?

cubedbee
Posts: 312
Joined: Tue Aug 04, 2009 11:13 am

Re: Small business insurance post-Obamacare

Post by cubedbee » Wed Jan 29, 2014 4:18 pm

BruDude wrote:
cubedbee wrote:
BruDude wrote:Composite billing for the small group market is market of proposed regulations released around Thanksgiving. Rating is still on the member level, but then carriers will be able to compute a composite Individual rate and a composite Family rate for the group's invoice, so that all employees can then be charged the same composite rate, more like it used to be in most states. The composite rates will be fixed at the beginning of the plan years and the demographics of new entrants will not effect them mid-year (but will upon next renewal, but that is true today).
Have a link? I was told by both my general agency and the insurance company that offering employees a composite rate is a gray area, and this was not offered as an option by the insurance company. How do they calculate a family composite premium if there is only one or two families in a group of 20 employees? How do they calculate a employee + spouse composite rate if there is nobody enrolled as employee + spouse?
It was a gray area when carriers were implementing for 2014....the regs I'm referring to were released in late November, so even if the final rules come out soon, carriers aren't going to be able to operationalize this until late 2014 or 2015.

http://www.gpo.gov/fdsys/pkg/FR-2013-12 ... -28610.pdf

The description of composite billing starts on page 8 of the PDF.

It doesn't work exactly like composite rating does today. The two tier structure they propose is to compute one composite rate for adults and one composite rate for children, base on the total adult/children demographics of the group on renewal. From there, any multiparty rate can be created by adding together all the members (presumably still capping the # of children at 3 like in the main rating regs). So even if no employee+spouses exist at enrollment, if somebody gets married mid-year they'll get an employee & spouse rate that is double the employee-only rate.

bluemarlin08
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Joined: Wed Aug 29, 2007 12:18 pm

Re: Small business health insurance post-Obamacare

Post by bluemarlin08 » Wed Jan 29, 2014 4:56 pm

In addition, some employees could put their family on a subsidized plan, but if family coverage is offered on the group they can't. Plans without family coverage might be a consideration.

Jack
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Joined: Tue Feb 27, 2007 2:24 am

Re: Small business health insurance post-Obamacare

Post by Jack » Wed Jan 29, 2014 11:09 pm

If you have fewer than 25 employees, you may be eligible for the Small Business Healthcare Tax Credit.

To be eligible for the credit, you must pay at least 50% of employees' insurance premiums and employees must earn less than $50,000. You must purchase your small group plan from the SHOP exchange (which might have been delayed in some states).

You may be eligible for a credit up to 50% of your contribution to the plan.

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Hayden
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Re: Small business health insurance post-Obamacare

Post by Hayden » Thu Jan 30, 2014 9:55 am

My company has always offered health insurance. This has always chewed up a huge amount of my time. I am at a point in life where time is a bigger consideration than money.
For 2014, I stopped offering company health insurance. I am giving all my employes taxable wages in lieu. They are all happy with this.

I personally bought a HSA/HDHP for myself.

SteveKL
Posts: 498
Joined: Mon Sep 03, 2012 8:13 pm

Re: Small business health insurance post-Obamacare

Post by SteveKL » Thu Jan 30, 2014 3:49 pm

Hayden wrote:My company has always offered health insurance. This has always chewed up a huge amount of my time. I am at a point in life where time is a bigger consideration than money. For 2014, I stopped offering company health insurance. I am giving all my employes taxable wages in lieu. They are all happy with this. I personally bought a HSA/HDHP for myself.
^^^ My sentiments exactly!! As an employer, I have no involvement with my employees' car insurance, or homeowner's/renter's insurance... why should I have to "manage" the health insurance needs of the adults who work for me? ACA provided the perfect excuse/opportunity for me to sever that remnant of paternalism.

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