Health Law May Hit Midsize Businesses Hardest
January 2, 2014
The new year brings tough new health care decisions for many businesses, especially those that are too small to easily absorb new costs and too big to think about dropping coverage, says USA Today.
These midsize businesses, particularly those with 50 to 200 workers, are having the toughest time affording escalating health care costs, says Nancy Taylor, a health care lawyer with Greenberg Traurig.
- Federal regulators define small businesses for the purposes of the Affordable Care Act as those with 50 or fewer employees, so a midsize company by some definitions could be 51 workers or 1,000 or more workers.
- A mandate for businesses with 50 or more employees to provide insurance to all full-time employees was delayed for a year.
- But businesses are already bracing for 2015.
Three ways midsize employers are feeling it:
- Taxes and fees. Starting this year, businesses that are fully insured -- as opposed to self-insured -- will be hit with an $8 billion tax that is estimated to add 2 percent to 3 percent to premiums for each covered employee. This tax is expected to increase every year for the next several years. By 2018, it's expected to be about 4 percent. A so-called reinsurance fee of $63 for every person covered by a plan also kicks in for the new year.
- Premium increases. A November survey of more than 2,800 employers by consulting firm Mercer showed health cost growth slowed among employers of all sizes. For those with 10-499 employees it rose by about 1 percent, while among very large employers -- those with 5,000 or more employees -- it rose 3.7 percent. Most employers expected costs to go up more in 2014, in part because fewer employees will waive coverage due to the new mandate that everyone have insurance. But some midsize employers saw 20 percent to 30 percent premium increases this year, says Russ Carpentieri, an insurance broker with Opus Advisory Group in Rye Brook, N.Y. He acknowledged many large increases can be negotiated down.
- Challenges getting insurance. It's becoming increasingly hard for some midsize businesses to even find insurance carriers willing to cover them.
Source: Jayne O'Donnell, "Health Law May Hit Midsize Businesses Hardest," USA Today, December 30, 2013.
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