HEALTH INSURANCE – Uncharted Territory – Small businesses contemplate impact of Affordable Care Act on open enrollment

Posted on Oct 2, 2012 :: Staff Insights
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Posted by , Insight on Business Staff Writer

The Affordable Care Act (ACA) deadlines are going to catch a number of businesses by surprise, according to insurance agents and consultants.

Although the main provisions don’t kick in until 2014, counting hours to determine who is a full-time employee starts Jan. 1.

“The typical small business owner won’t have the expertise to navigate this,” says Monica Vomastic, owner of Landmark Staffing in Appleton.

Business owners with more than 50 employees — the cutoff for the new health insurance rules — should talk to their insurance agent or broker, and their accountant soon, if they haven’t already.

To demonstrate her point about complexity, Vomastic sent along a summary of one section of the regulation as explained by the American Staffing Association:

“The act imposes tax penalties on employers with 50 or more employees if they don’t offer affordable health insurance coverage to their full-time employees and dependents and if they have even one full-time employee who receives a tax subsidy to help the employee buy coverage through a state-run health benefit exchange. In such cases, employers would owe a tax of $166.67 per month for every full-time employee (over 30 employees). (The first 30 full-time employees are exempt.) Employers that do offer health insurance coverage to their employees would pay a penalty of $250 per month, but only on those full-time employees who receive tax subsidies.”

Employer response has been mixed.

“Ninety-eight percent of companies are trying to decide their strategy for the future,” says Patrick Georgia, practice leader for health and benefits at Aon. The brokerage and consulting firm, which works with all the major health insurers, expects most companies will offer plans that hold down cost hikesfor employees who participate effectively in wellness programs.

Those who won’t lose weight, stop smoking or control high blood pressure or cholesterol will be moved into plans with higher deductibles and higher costs.

The key to evaluating health will be a blood draw that can be tested for factors ranging from cholesterol and nicotine to propensity for diabetes.

Georgia recounts his own experience 15 years ago when he was feeling fine, played sports, got a blood test and found his cholesterol was 350.

“That could have cost my health plan half a million dollars.” He started eating better, taking Lipitor and has been at 180 ever since, avoiding costs to his health plan.

Aon doesn’t see any alternative to wellness programs despite the pushback from union bargaining groups.

“The costs are too high not to do something concrete,” Georgia adds.

Jerry Morris, Aon senior health and benefits consultant, agrees. “There’s too much money involved and there’s only so much you can do (to slow costs) with plan design. You have to be on the cutting edge looking at wellness.”

Chris Hanson, whose Hanson Benefits agency in Appleton deals in small group insurance for several hundred small businesses, sees some hope in innovative policies like the wellness program offered by Network Health Plan. It rewards employers for staff who improve their health. Hanson says one of her clients, a company in Greenville with 56 staff, received a rebate for $17,000.

“Some of the best things that could come out of health care reform is people becoming more engaged, asking providers what are you doing, how much will it cost,” Hanson says. “It will make us become better customers.”

Apart from the Network reward program, not all the changes Hanson has seen in the last 12 to 24 months look good for Wisconsin health.

“More and more small employers are saying they can’t afford the premiums and are discontinuing their coverage,” she says. “Some are deciding to discontinue their health coverage but compensate employees by giving them a certain sum to buy their own insurance.”

Healthy young people who don’t need maternity coverage can often get cheaper coverage on their own than through a group plan, she says. One landscaping client dropped its group coverage, which was costing $25,000 for 12 employees. Three got good inexpensive coverage but others couldn’t get private coverage so they went into Wisconsin’s high-risk pool.

They will have more choices under the ACA, which allows employees to move out of employer plans and buy through an exchange.

Since January, all Aon employees have had to buy their insurance through a private exchange the company set up to see how the concept works. Aon might offer its private exchange to clients in competition with public exchanges.

“We expected a lot of confusion, but it was fairly simple,” says Morris. “Aon created some tools to help people make good decisions – a short list of questions and the tool helped guide us to reducing the number of choices.”