Smart Benefits: Obamacare Brings Big Changes to Small Employers
Monday, January 27, 2014
By 2016, employers with 51-100 employees will need to adhere to small group laws under healthcare reform. And that means they should expect to give up the ability to negotiate with insurance carriers, lose plan designs, and face higher premiums.
Age-Rating Will Drive Up Premiums
Currently, these employers can negotiate rates with insurance carriers just like larger employers. But after 2016, they will have to accept the rates given to them. And, since small group is now age-rated, that will mean higher premiums for many employees.
Small Groups Will Pay for Low Exchange Enrollment
The first open enrollment since small group reform revealed that the number of young adults enrolling in health exchanges is well below what was projected (10% versus 40%). And that means groups with 51-100 employees will be used to expand the actuarial base and absorb the losses.
And there's talk of merging small group with the individual market, another indicator of higher rates to come.
Fewer Plan Designs on the Horizon
Being switched into small group status means employers with 51-100 employees will be forced into plan designs that limit deductibles to $2,000 for individual plans and $4,000 family ones. Employers offering higher deductibles should plan for higher premiums as a result of moving to richer plan designs.
Self-Funding Could be the Answer
Employers concerned about these changes should consider the new self-funded products available to them. Insurers are quickly rolling out self-funded products that include various stop-loss options designed specifically for smaller businesses.
And, by opting for self-insurance, employers may also be able to save on administrative costs and eliminate premium taxes, as well as some of the taxes stemming from the Affordable Care Act.
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13 Doctors Behaving Badly
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12 Staying Healthy + Fit
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Summer fitness never goes out of style. Click here for tips you can use every year to maintain that beach body!
11 Well-Being Index
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10 Retail Insurance
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8 RI’s Sexual Health
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6 Non-Profit Hospital CEO
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The American healthcare system may be quite deathly ill. But the paychecks CEOs of Rhode Island non-profit hospitals are quite healthy.
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4 Health Exchange Rebrand
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2 Health Exchange Launch
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The exchange launched on October 1st with no shortage of hiccups, but the launch was relatively smooth by comparison to those in states whose exchanges were facilitated federally. By November, the exchange had processed over 4500 applicants. And by December the New York Times noted that the RI exchange was the second-best performing in the country with enrollment exceeding target rates by a sizeable margin.
1 Patients Rank Hospitals
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