By Tommy Eden
As a consequence of the Affordable Healthcare Act (ACA) 2014 will bring many difficult healthcare challenges for businesses too small to absorb new costs and too big to think about dropping coverage. The ACA pay or play penalty for businesses with 50 or more employees to provide insurance to all full-time employees was delayed until 2015, but multiple ACA headwinds are already blowing strong in 2014 - - such as:
•New Healthcare Taxes. Starting in January 2014, businesses that are fully insured -- as opposed to self-insured -- will be hit with an $8 billion tax. This alone will add 2%-3% to premiums for each covered employee; and increases every year for the next several years. By 2018 will be about 4%. The ACA this year adds a $63 reinsurance fee for every person covered by a plan.
•Premium increases have already hit many.
Small employers, as well as those with individual policies, saw 20%-30% premium increases for their 2014 policies with a doubling of deductibles.
•Challenging for small business to even keep insurance. As insurance premiums and deductibles rise, many lower-paid employees will opt out of insurance, or go onto the public exchanges. Add to that the fact that in 2014 premiums paid by employers for major medical coverage will be included in employee W-2 income which will drive many employees to say no thanks. Insurers typically require a minimum level of employee participation.
Common Sense Counsel:
How can a small Alabama business mitigate the cost impact of the Affordable Care Act? It will require innovation on multiple levels to enable small employers to help employees and their families in this time of uncertainty. Warnings are that these headwinds will cause small and midsize employers to drop group health coverage causing 100 million employees to lose their employer provided group coverage by the end of 2014. Predictions are that 2014 will result in a mass migration of employees off their traditional employer provided group heath plans.
One of the bright spots in Alabama is the emergence of the private health insurance exchanges which may be accessed through a sponsoring local Chamber of Commerce or Alabama employer Association. Health Insurers in these exchanges offer health insurance policies approved by the U.S. Department of Health and Human Services as well a variety of other policy options. Employers can fund these individual polices through a defined contribution plan, as well as Health Saving Accounts (HSA) to pay deductibles. Employees are allowed to shop for plans that best fit their family needs and lifestyle. Now is the time to plan strategically. So who you gonna call?
Click here to view my Affordable Care Act Small Alabama Employer Survival Guidance webinar.
Examples of some chambers and associations offering private exchange option to their members:
Want to learn how a private exchange operates? Click here
Tommy Eden is a partner working out of the Constangy, Brooks & Smith, LLP offices in Opelika, AL and West Point, GA and a member of the ABA Section of Labor and Employment Law and serves on the Board of Directors for the East Alabama SHRM Chapter. He can be contacted at firstname.lastname@example.org or 334-246-2901.