Employers with more than 50 workers were given a one year reprieve a few months ago when the Obama administration announced a one year delay in the implementation requirements under the Affordable Care Act. It is important to note that for the vast majority of small business owners (those who employ less than 50 workers), the marching orders remain. And so do the concerns.
In April of this year, we spoke of issues Massachusetts small business owners with fewer than 50 employees were facing. In Storm Clouds Gather For Massachusetts Businesses as Federal Health Care Moves Forward. Is There a Silver Lining?, we addressed the concerns that the small business community in the Commonwealth faced then. White collar businesses could see larger than anticipated increases due to certain underwriting factors going away in January. These companies were getting a credit on their health insurance rates because their employees work in a safer environment. This credit is going away, and is just one example of rating factor changes affecting health insurance rates.
Small business employers in other states face similar challenges as evidenced by an article that appeared recently in the Cleveland Plain Dealer (Small-business insurers warn that Obamacare requires higher premiums in 2014) that spoke directly to the issue to be expected by small business owners in Ohio.
In Massachusetts, as well as other states, small business owners are scurrying to renew their plans before the year expires to avoid the steep health insurance increases. USA Today (Small businesses race to renew health plans early) reports that in some states as many as 60%-80% of employers of the under 50 group will seek to renew early. While it might be a wise short-term strategy, it does little to relieve long term rate pressures. Ultimately, a business that renews its policy on December 1, 2013, will face the inevitable market pressures a year later.
While potential penalties have been delayed by a year (for now), business owners should expect major changes in their health insurance costs next year. It will be more important than ever to partner with a health insurance provider who will be consultative, and look at all potential options. In many cases employers will need to be creative and look at newer options.
If you have questions or would like to learn more about health insurance options for your business please reach out to Genesis HR Solutions at AskUs@genesishrsolutions.com or 800-367-8367.
Genesis HR Solutions is the premier PEO provider for Massachusetts based businesses.