Adjusting to Affordable Care Act

Small businesses facing new world of health care options, and costs that go with them

  • Debra Strickland says her company had an unexpected decrease this year in health care costs, perhaps due to the Affordable Care Act
  • Debra Strickland says her company had an unexpected decrease this year in health care costs, perhaps due to the Affordable Care Act

The problems that individuals have had signing up for insurance under the new Affordable Care Act have drawn widespread attention. But with all the coverage of website glitches, how much plans will actually cost and how many people are enrolling, the impact of the ACA on small businesses has been somewhat overlooked.

The act provides a number of incentives to encourage small businesses to offer health insurance coverage, most notably larger tax credits than in the past and the new Small Business Health Options Program, or SHOP, an exchange intended to offer lower rates to small businesses because they can pool their risk. But the act has also opened the door for companies to explore whether or not to continue to offer heath insurance.

“We are bursting at the seams with activity,” says Ken Woods of Dublin Health and Benefit Group, an insurance broker who works with a number of small businesses. “Businesses with under 50 employees are not required to offer health insurance. So many are evaluating whether they’ll keep a plan in place.”

Woods said many small businesses find their employees will qualify for tax credits under the ACA, but the only way people can access those credits is through the individual marketplace.

“If your average wage is $20,000, or you have only five employees, why offer a group plan?” Woods says. “I predict the 75 to 85 percent of the small group market will go away in the next five years. Small employers may absolve themselves from offering group benefits.”

Brian Donnelly of IPG, an employee benefits company in Keene, is also finding clients are having a difficult time adjusting.

“A few companies have had to abandon health care altogether,” Donnelly, a Jaffrey resident, said. “They feel it’s better for the employees to go to the individual exchange, but the feedback they’re getting is that it’s hard to sign up.”

Donnelly said some companies have offered health reimbursement accounts, where the company contributes a certain amount that employees can draw on to pay for qualified health care expenses. But under the Affordable Care Act, the guidelines for using such accounts are complicated.

“Some employers are actually saying they’ll just give people additional money each quarter, to lessen the cost of health care,” Donnelly said. “It’s not tax deferred, but it’s better than nothing. It’s nice that some are doing that.”

One local business that had to adjust is Sequoya Technologies Group. The Peterborough company, which provides information technology support to small businesses, currently has seven employees, not all full-time.

“We’ve offered health coverage to both full- and part-time people for several years,” says Debra Strickland, the company’s co-owner. “We were big supporters of the Affordable Care Act. I expected our rates might drop.”

They have dropped, Strickland says, by about 8 percent. But the company is not using the SHOP exchange. Instead, Sequoya continued with a group plan it already had through Anthem Blue Cross Blue Shield.

“It’s essentially the same plan we had,” Strickland says. “Everyone was happy that we decided to stay.”

Unlike the individual plans that Anthem is offering under the Affordable Care Act, the group plan that Sequoya has includes Monadnock Community Hospital as a provider, meaning that workers don’t have to worry about changing doctors.

Sequoya never considered dropping its insurance coverage benefit.

“It would really have been a hardship to tell people, ‘You just go sign up,’” Strickland says. “I’ve found that some people are surprised that we offer coverage. I believe we’re somewhat unusual.”

She said the premium reductions were quite a surprise.

“I think [Anthem] reconfigured their costs,” she said. “I expect that with so many new people getting coverage, rates are going to continue to drop.”

Sequoya chose to stay with their existing Anthem plan rather that switching to the SHOP product offered under the Affordable Care Act. That’s the decision most small businesses are making, according to Woods.

“For 90 percent of our clients, we kind of kicked the problem down the road,” Woods says of the decision whether or not to switch. “Harvard and Anthem both extended their offering of last year’s model for small businesses for one more year. They permitted them to change the effective date. The idea was to give businesses a little time to digest what’s happening.”

The SHOP program does offer a small business health care tax credit. Since 2010, businesses with fewer than 25 full-time employees that pay average annual wages below $50,000, and that contribute 50 percent or more toward a worker’s individual health insurance premiums can get a small business tax credit of up to 35 percent of the contribution. In 2014, this tax credit goes up to 50 percent, but it’s only available through the SHOP exchange.

That’s not an option many companies are taking, perhaps because Anthem is the only insurer offering a plan in New Hampshire.

“We’ve had very few switch to the SHOP product,” Woods says. “It’s only the Anthem plan with the same limited network.”

Donnelly says none of the companies he works with are using the SHOP exchange.

“Anytime you go into something and it’s year one, there’s a little apprehension,” he says.

Donnelly’s talked to employers who are frustrated with the complexities of the Affordable Care Act.

“A lot of our employers think it’s good legislation and they understand why it’s put in place,” he says. “The smaller businesses are the ones feeling the pinch. It’s frustrating when they can’t find ways to help people.”

Dave Anderson can be reached at 924-7172, ext. 233 or danderson@ledgertranscript.com.

He’s on Twitter at @DaveAndersonMLT.

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