Small Firms at Risk of Health-Plan Cancellations, Too

Companies with 50 to 99 workers don't necessarily have reason to hope insurers will let them keep their noncompliant plans, despite Obama announcement.

Individuals whose health plans have been canceled or not renewed because they wouldn’t have complied with the Affordable Care Act come Jan. 1 have been big news. Hardly any talk has been heard about the impact on small companies with noncompliant plans.

Some of those companies stand to have their plans canceled or not renewed as well. Those with plan years starting on Jan. 1 are likely to already have either a new, compliant health-insurance contract in place or a grandfathered plan, or have decided to stop offering group coverage to employees. But following President Obama’s announcement Thursday that health insurers will be allowed to continue offering noncompliant plans for another year, employers with plan years scheduled to start at later dates, and that don’t yet have new insurance contracts nailed down, may be hopeful that their policies will be renewed.

That hope may not be well-founded.

Simultaneously with President Obama’s  announcement, the Department of Health & Human Services sent a letter to state insurance commissioners detailing the new policy.

The temporary rule change applies to “health insurance coverage in the individual or small group market that is renewed” for plan years starting from January 1, 2014 through October 1, 2014, the letter said.

The letter did not define “small group market,” although for most purposes of the Affordable Care Act (ACA) the term applies to plan-sponsoring employers with fewer than 100 full-time and full-time-equivalent (FTE) employees (although states are allowed to lower that number to 50). Employers with fewer than 50 such workers do not have to offer health care under the ACA, so the rule change likely applies to those with noncompliant plans and from 50 to 99 full-timers and FTEs.

Will insurers actually cancel the small group plans? After all, they willingly offered those plans before Obama’s announcement; why should they cancel them now that they’re allowed to keep them?

It’s not yet known if they will, but the insurance industry’s early reaction to Obama’s announcement was skeptical with regard to the individual market.

“Changing the rules after health plans have already met the requirements of the law could destabilize the market and result in higher premiums for consumers,” Karen Ignagni, president and CEO of America’s Health Insurance Plans, the industry’s trade group, said in a statement Thursday. “Premiums have already been set for next year based on an assumption of when consumers will be transitioning to the new marketplace.”

At this point, notes Drew Crouch, head of government relations at Buck Consultants, insurers are already looking at 2015 rates for small groups. “This is an awfully quick change the government is trying to implement,” he says. “What is the right lead time for that? Two or three months isn’t enough.”

So what are small employers with health-plan years that begin a few months from now, and haven’t yet secured an insurance contract for that plan year, supposed to do? “They’ll have to wait,” says Crouch. “What they should do depends on what the insurance commissioners in each state do and whether insurers are actually willing to renew these policies.”

10 thoughts on “Small Firms at Risk of Health-Plan Cancellations, Too

  1. It’s already too late for many small businesses. Our company happens to have a health insurance plan with an August anniversary date. Since our plan year for the most recent plan renewal cycle would extend into August 2014, it had to be Obamacare compliant. Thus, we lost our old plan as our insurer could not offer it again since it was not compliant. We reviewed our options and replaced it with a new Obamacare compliant insurance plan. The premiums are somewhat higher. But the real kicker is that the in network employee deductible went up almost 500%. We offset some of this for our employees with a company HSA contribution but from a health insurance coverage point of view it’s a big step down in my view and I think most (if not all) of our employees would agree.

    I do not think there is any way we could get our old health insurance back and frankly I consider the recent statements by the president to be somewhat irritating as this is already a done deal for us. I suspect many others are in the same situation.

    After what has happened recently in the political arena I do not expect inspiring leadership from either party. Unfortunately, even my low expectations are not being met.

    • Let’s remember Obamacare has nothing to do with healthcare or healthcare reform – it’s all about government control using health insurance as the tool to0 collect personal information – a permanent data base to be utilized whatever government purpose later on. Nobody taks about one insane feature of Obamacare – buying the insurance after-the-fact. It is like getting the car insurance after totalling your vehicle or life insurance the day after the death, and still be covered. What a Country!!!

  2. We just received our small group (less than 20 employees) renewal rates from United Healthcare. They are not offering the plan we currently have due to non-compliance with ACA. Instead they have offered 30 plans of which we can choose 3 to offer to our employees. All these plans are 61% more than the current plan with the same deductible/out-of-pocket expense for “single” coverage at $6,150.oo. Monthly premiums are as follows: single premium $575.oo, employee & child 1089.00 and family coverage at $1,720.83. Single coverage is doable for most of our employee’s because the company pays 90%, of their premium but those with dependents will be hard pressed to continue their coverage, even with the company paying 20% of the dependent.

  3. With high deductibles and co-pays we have turned the health insurance into catastrophic coverage policies – so why pay any premiums until you actually have a catastrophic event, since you can buy the policy after-the-fact. Omabacare is changing the healthcare (actually sickcare) delivery into a two-tier system: concierge services for those with means and the rest of us (take a number and wait for your turn in the line).

  4. When the insurance companies got behind the President’s plan before the ACA bill was passed, did people really think their reasons were only to get additional people covered (with the help of subsidies and expanded Medicaid programs)? Did it not occur to anyone that the requirements of this bill provided a great opportunity to increase rates and blame it on the government? The question is how many businesses will opt to stop offering coverage, pay the fine and maybe offer employees a fixed amount (of taxable compensation) to help them purchase individual healthcare policies.

    • Why would you NOT blame it on the government. The so called affordable healthcare act was totally unnecessary and part of obama’s overall agenda to further intrude on the lives of private citizens.

  5. This is the “hope and change” that many of you voted for. Twice. Hope you’re enjoying the ride. I, for one, am taking great pleasure in watching this sorry excuse for a president implode.

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