Posts Tagged ‘ACA’

11 Million People Will See Increasing Small Group Health Insurance Premiums

Wednesday, February 26th, 2014

Do you have health insurance coverage through your small business employer?  Are you a small business that offers health insurance to its employees?  If so, your premiums may be increasing because of the Affordable Care Act.  ABC 17 News’ Parija Kaviland posted an article saying that the “ACA will raise premiums for 65% of small firms.”  The main reason for this change is that small business health insurance premiums were figured based on employees’ health status and gender.  So groups filled with women of child bearing age would pay more than groups filled with young, healthy men.  Under the new law though, pricing for small group health insurance can no longer be based on health status, gender, or how often the health insurance is used.  This levels the playing field for businesses that employed older or less healthy workers, but also will raise the costs for those small businesses who had healthy workers that didn’t use many health insurance services.

Overall, the Centers for Medicare and Medicaid Services estimates that 11 million people will see increasing costs as part of that 65% of small firms.  This does mean that 35% of small businesses will likely see premium decreases, however.  Many of the lower premiums will be offered because those particular small businesses employed older and sicker individuals on average.  The younger, healthier workers will not be able to take advantage of lower premiums anymore.  But the CMS report noted that small businesses are eligible for tax credits just like individuals are under the Affordable Care Act.  Credits are based on how many people are employed, their average salaries, and how much they contribute to their insurance plans.  Tax credits will help some small businesses counter the effect of increasing premiums.

The CMS report did not estimate how much premiums would increase for the 11 million people expected to see their payments go up.  They also didn’t say how much payments might go down for the other 6 million people enrolled in a small group health insurance plan.  The only certain thing is that no one will be able to take advantage of offering lower than average premiums because they have young and healthy workers anymore.  One downside of that was that even if one person got seriously ill, rates could increase dramatically for everyone in the plan.  This new system seeks to make premium costs fair across the board.  They shouldn’t be as affected by one illness or a few women getting pregnant and incurring high health care costs.  Some plans have been grandfathered in and will not be affected by these changes just yet.  If you are looking to compare health insurance in an individual or small group plan, we’d be happy to help you receive quotes from multiple insurance companies.