Small businesses that have long struggled to provide health benefits to their employees during years of rapidly rising healthcare costs have just gone through the most dramatic year ever for changes to the benefits landscape.
The small employer insurance marketplace was essentially revamped as many of the Affordable Care Act’s (ACA’s) most important provisions took effect Jan. 1, 2014. Let’s take a quick look at how things have changed and then review some strategies that small businesses may want to consider in the new benefits marketplace in 2015 and beyond.
ACA impact in 2014
Fortunately, employers have more time to think about their strategy without fear of financial penalty. Enforcement of the ACA’s employer mandate has been pushed back to 2016 for small businesses with 50 to 99 full-time/full-time equivalent employees. Small employers with fewer than 50 full-time/full-time equivalent employees are exempt from the mandate.
Here are some other key ACA changes, some of which took effect this year:
Essential health benefits: Non-grandfathered plans — plans not exempt from many of the ACA’s requirements — offered by small and large businesses alike now have to cover, at a minimum, a list of “essential health benefits” that includes 10 categories of benefits.
Preventive services: Non-grandfathered plans also are required to cover specific preventive services without cost sharing. This means the cost of covering preventive services, such as childhood immunizations and cancer screenings, must be borne 100 percent by the insurer.
Waiting periods and appeals: Employers no longer can impose health coverage waiting periods for new employees that exceed 90 days. An internal and external appeals process for members who object to coverage decisions also is required.
Rating: Employers now cannot be charged higher premiums because of their employees’ health status or pre-existing conditions. Changes in how rates are determined allow the cost of insurance to be based only on age, where employees live, family size and whether or not they use tobacco.
Added costs: Another important change under the ACA is that all health plans will cost more to help pay new taxes and fees, such as the Patient-Centered Outcomes Research Institute fee and the Health Insurance Provider fee.
Strategies to help small businesses
There are a number of strategies that may make the most sense for small business owners in the post-ACA era. Transitional relief policies, where available, are one of the most popular options. These non-ACA-compliant plans — also labeled “keep what you have” plans — allow small employers to continue offering more inexpensive plans with limited coverage until 2016. However, the option is available only in states or portions of states where the state has agreed to go along with the extension offered by the U.S. Department of Health and Human Services.
Other options include:
High-deductible plans: High-deductible health plan options have a track record of saving employers money while promoting greater use of preventive and wellness services by employees.
Insurers and brokers: We often hear from small employers that they are confused over what has changed. Insurers and brokers remain a great resource to help make sense of it all.
SHOP: The start of online enrollment in the Small Business Health Options Program (SHOP) — the new online public marketplace or exchange for small business coverage — was delayed until November 2014, although Connecticut started its SHOP exchange earlier. Small businesses have the option to buy SHOP health insurance plans through agents or brokers who are certified. They can assist with filing a paper application.
Private exchanges: Small firms can consider private exchange options, which are growing in number. Private exchanges give employers the ability to offer employees an online shopping experience for health coverage with rates provided automatically. Employers get easier benefits administration, allowing them to focus on running their businesses.
Brian Corbey is Aetna’s national vice president of sales for small business.
