Utter the two small words “health insurance” and you’ll likely hear a collective groan echo across the entire nation.
It’s a landscape that’s constantly shifting and changing. And, with the upcoming election and ever-evolving policies and regulations, it’s an area that’s only getting more complex for businesses and individuals alike.
Most of those changes are rooted in the Affordable Care Act (ACA), which was initially introduced to offer health care to millions of Americans — but also brought along stacks of complicated rules and regulations for business owners in the process.
Increasing rates is an oft-repeated pain point amongst both businesses and individuals, and premiums will likely only continue to rise for both parties.
“Individual market rates are going up double digits and beyond,” explains Chris Hanson of Hanson Benefits, Inc. in Appleton, who works mostly with small businesses and individuals to select the best insurance plans for them. “Choices are decreasing, and the complexity is only increasing.”
Fortunately, rate increases for businesses are a little less severe. A Gallagher survey reported that of 3,000 employers in multiple industries, geographic regions, and workforce sizes, 54 percent are seeing increases of 5 percent and 25 percent are seeing increases of 10 percent or more.
“These increases are due to significant increases in pharmacy spending and the essential health benefit mandates required by the ACA, as well as the inflation rates for health services hovering around 8 percent and prescription drug costs running 12 to 15 percent,” says Pamela Branshaw, CPA, CEBS and partner at Wipfli LLP.
While employers — particularly large companies with 50 or more full-time employees — are dealing with new regulatory and filing requirements as well as new taxes, they haven’t been hit quite as hard by major changes related to the ACA. This is largely due to transition relief, a government-established program that was implemented in order to better ease employers into the employer shared responsibility of the ACA.
“Transition relief has been one of the biggest saving grace for small businesses right now,” Hanson says. “I probably have 80 percent of my small business clients on all pre-ACA plans due to transition relief.”
“Many employers are still taking advantage of that, and will have the option to do so until Jan. 1, 2018,” says Matt Kolling, executive vice president at Ansay & Associates.
But, when transition relief does come to an end, that’s when there will likely be a tremendous amount of upheaval for businesses.
“When looking to the horizon, those small employers can see what a non-transition relief plan looks like and for many, many employers it is not pretty,” Kolling says. He says many of his transition relief clients would see a 20 to 40 percent rate increase if not for that program continuing to be extended.
However, it’s important to recognize that this program is really only kicking the can down the road and delaying the inevitable, Branshaw says. “The transition relief allowing delays is just spreading the pain out over a longer period of time and trying to avoid catastrophic losses to the insurers who are trying to get the marketplace coverages profitable.”
Even with transition relief in place, most employers are still experiencing rate increases to some degree. “Large employers are seeing less of an increase, and the small employer market is having the biggest premium increases,” Branshaw says.
Many businesses are attempting to find ways to cope with these constantly growing costs. These efforts include narrowing the health care networks of their plans in order to limit the number of providers or self-insuring to personalize pharmacy and medical coverages to their employee group and avoid some of the ACA mandates.
While there was an initial scare that employers would drop health benefits altogether, that buzz has seemed to die down.
“Health care spending is a big focus for employers since it is their most costly benefit,” Branshaw says, “They still feel it is a necessary part of their benefits package to attract and retain employees, so larger employers will continue to offer it.”
The number of small employers that offer health coverage has continued to drop since 2009. Still, many small businesses recognize the importance of offering that benefit in order to stay competitive when hiring.
“Many small businesses are still competing with the big guys,” Hanson says. “So they have to think about if they don’t have health insurance, what’s going to incentivize someone to leave a big company and come work for me?”
As a result, small employers have become more savvy in illustrating that cost to their employees — so they realize that their compensation extends well beyond the number that’s printed on their paychecks.
For employers looking for help in wading through the constant changes of the health insurance landscape, Kolling says, “This is not the time to panic, nor is it the time to go it alone.” Competent advice from a trusted insurance consultant or broker will be both helpful and reassuring, he says.
After all, when navigating your way through the complicated maze of health insurance, that insight from a trusted source will save you an abundance of headaches.
“It’s the same philosophy as those people who pay to have someone do their taxes,” Hanson says. “Many people who try to go it alone eventually realize that wealth of knowledge from a professional is really worth something.”