The Affordable Care Act has brought many things to small business owners in Massachusetts. Starting in 2014 small business owners will begin to feel the real impact; in their wallets. The news will be good for some but bad
for others. Will you be a winner or a loser? Here is some helpful info that may give you a look into your future, and help you plan accordingly.
According to an Actuarial Analysis by Wakely Consulting Group, buyers in the individual and small business market will see an average increase of 3.7%, with a range of a 20% decrease to a 26% increase. This increase or decrease is IN ADDITION to any normal trend (which is often times an increase). So, should you expect to be seeing an increase or a decrease? Here are the important factors to consider.
SIC Code
If you haven’t worried too much about your SIC Code in the past, you certainly will now. As part of the Affordable Care Act, Massachusetts health insurance carriers can no longer use SIC Code as a rating factor when determining rates. Up until now, many businesses have been receiving a significant increase or decrease to their rate based on the work they perform. These rate increases or decreases will be phased out over the next couple years, and the impact will begin to be felt in 2014 upon renewal. White collar companies will see the largest increases. These businesses were getting a break, because of the safer working environment. Some blue collar companies (think, construction) could see significant decreases in their rates since they were penalized before the ACA.
Group Size
Health insurance providers in MA had typically given slight increases to the smallest group (1-5 employees) while larger employers in the small group market could have seen a decrease in rate. This factor is also being eliminated under the ACA. Good news for those employers with 1-5 employees; you could benefit with a slight reduction of your rates.
Participation
Under the ACA, participation percentage can no longer be used as a rating factor. Some health insurance providers were increasing rates for small businesses with low participation. In this case, employers with low participation could be rewarded and those with high participation might be penalized.
Plan Design
There are certain benefits that the ACA requires that you might not have in your current plan. Small business owners should take a close look at the “essential health benefits” that are included and excluded in their plans. Your 2014 health plan (and rate) will include a long list of essential benefits. If your current is lacking many, you could see a larger increase.
Taxes and Fees
The ACA has introduced some new taxes and fees that will be charged to the health insurance providers. The cost, of course, will ultimately be passed on the businesses and employees purchasing the insurance. These fees are for all businesses, so we can all share in this increase to our rates.
Every small business offering health insurance in Massachusetts will be affected by the ACA. The big question is; based on the factors listed above, should I expect to see an increase, or am I one of the lucky ones who will see a decrease? Hopefully this article can help you gauge what to expect next year so you can plan accordingly.
If you have questions or would like to learn more about the Impact of the ACA 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.
