Small Businesses Encounter Large Health Care Challenges

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Photo of woman pouring a liquid into a row of candlesFor Marty Smith, co-owner of a small accounting firm in Charlotte, N.C., the Affordable Care Act means less money for training and new technology.

For financial adviser Richard Joyce, it means not hiring any more part-time employees, working longer days and filing more paperwork.

And for Rick Seifert, owner of the Pest Control Authority, it means administrative headaches and group insurance premiums potentially three times higher than last year?s.

None of these small-business owners is subject to the new health law?s ?employer mandate.? That provision, which starts in 2015, will require owners of businesses with 50 or more full-time-equivalent employees to offer workers health insurance or pay a fine.

But like many small-business owners, the health care overhaul already has brought complications and higher premiums ? and a hit to their bottom line.

Small businesses have an outsized effect on the economy. So their
experience with the Affordable Care Act will have a major impact on how
the law plays out.

?It?s been mass chaos and confusion,? Seifert said. ?Everything has changed so fast. I don?t even know how to play the game.?

Small companies that offer health insurance say it helps them attract top talent and encourages employees to stick around longer. But it comes at a price: In general, it?s their second-biggest expense, behind payroll.

Those companies now face a choice: Offer a group medical plan, subsidize employees? plans on the new individual exchange, or stop coverage altogether and risk seeing employees walk away.

And according to many small-business owners, the higher premiums are making the last two options more attractive.

Kelly Wage, marketing director for Blue Cross and Blue Shield of North Carolina, said the new law?s provisions have forced insurance companies to raise premiums.

For one, the government is levying a new set of taxes ? $8 billion in 2014, increasing to $14.3 billion in 2018, according to Blue Cross ? to help pay for the health care overhaul. Those costs get passed to the consumer, Blue Cross says.

Then, starting in 2014, all health insurance policies must be more comprehensive, including 10 mandated benefits, such as maternity care and prescription drugs.

?They?re getting better benefits; it?s just that better benefits and more benefits may result in higher rates,? Wage said.

And then, because of a provision in the ACA that limits how much premiums can vary based on a person?s age or health condition, businesses that previously got discounted insurance for their workforce makeup can?t get that anymore, said Cathy Graham, benefits specialist for Charlotte-based consulting firm The Employers Association.

That means ?younger and/or healthier people will subsidize coverage for older individuals,? Blue Cross says on its website.

The increases come after years of steadily climbing premiums. The average premium for family coverage has increased 80 percent in the past 10 years, according to a 2013 employer health-benefits survey by the Henry J. Kaiser Family Foundation.

And any sort of increase is a big one to a small business.

That explains the ?fear factor? in the discussion, said Kenny Colbert, president of the Employers Association, which has been leading seminars on the health reforms.

?Companies, especially small companies, are scared to death about their renewal rates,? Colbert said. Many owners are reporting their group premiums for next year are anywhere from 5 to 300 percent higher than in 2013, he said.

Brian Flynn, president of Group Benefits Solutions in Davidson, N.C., which helps businesses design and implement benefits, said it?s good that people who have never had access to coverage can now get the care they need under the Affordable Care Act. But the new system and the inevitable premium increases could make for ?some painful decisions? for small businesses, he said.

Advocates of the law acknowledge potentially higher premiums. But they also point out one facet of the Affordable Care Act: an insurance exchange for small-business owners that could save businesses money and broaden their insurance options.

Similar to the individual exchange, the Small Business Health Options Program, known as SHOP, is a site where businesses with 25 or fewer employees can compare providers? group medical plans. Small businesses aren?t required to sign up, but if they meet certain criteria, they can get a tax credit through SHOP.

To be eligible for the tax credit, employees must have an average wage of less than $50,000, and the owner must cover at least 50 percent of the cost of single health care coverage for each employee.

The idea is to encourage small-business owners not currently offering coverage to consider it, and to entice business owners who already offer coverage to continue doing so.

Small-business owners who purchase through SHOP ostensibly have access to better rates because they?re all shopping there together, giving themselves more purchasing power ? and more options.

But in North Carolina, for example, the options are limited. In fact, small-business owners looking to SHOP have only one provider to choose from: Blue Cross Blue Shield.

Moreover, SHOP also has been plagued by technical issues. The site ? reachable by going to HealthCare.gov and clicking on ?small business? ? was supposed to be operational Oct. 1, when the individual exchange opened. But after several delays, SHOP?s online enrollment isn?t expected to be fully functional until later in November.

Small-business owners can visit the website, create a SHOP account, fill out a paper application and mail it in. But they won?t be able to finish their enrollment until the website is fully operational.

Small businesses can also seek help from ?navigators,? who are trained and approved by the federal government to assist individuals and businesses with questions about the new law.

Madison Hardee, a navigator and staff attorney at Legal Services of Southern Piedmont, said navigators can help business owners assess their options. ?It?s important for people to sit down and have their individual questions answered because every individual situation is unique,? she said.

She said that though her schedule has been packed with individuals wanting to get enrolled, she hasn?t met with small-business owners about their employee group insurance plans.

?We have the capacity to see more than 50 (people) a week,? Hardee said. ?But no small-business owners have reached out to us for SHOP assistance.?

She did, however, meet with local small-business owner Caroline Cook-Frers, who owns Charlotte?s The Frock Shop, a boutique featuring a mix of vintage and re-sale apparel and accessories.

Though The Frock Shop doesn?t have any employees, Cook-Frers said the new health care law hit close to home. For five years, she?s worked part time at Trader Joe?s, which offered her a competitive benefits package.

But in September, the grocer announced it would no longer offer benefits to employees working fewer than 30 hours a week.

Knowing she would be uninsured beginning Jan. 1, Cook-Frers ?spent countless hours? researching her options and the individual exchange. Her enrollment was stymied by the ongoing HealthCare.gov issues, and she still has a slew of coverage questions.

Realizing she likely wasn?t the only person confused by the new law, Cook-Frers asked Hardee whether she and her fellow navigators would give a series of presentations at her shop to other confused individuals and small-business owners.

?I don?t think it?s necessarily going to be a rosy outcome for everyone, and certainly people who attend the workshop aren?t going to be thrilled,? Cook-Frers said.

But, she said, it?s the new reality.

?I need to find out more myself,? Cook-Frers said. ?The Affordable Care Act ? it?s here.?

PRIVATE EXCHANGES OFFER BUSINESSES A CHOICE:

Rather than offer a standard set of health benefits, higher costs have prompted many companies to simply give employees cash contributions they can use to purchase the benefits of their choice.

Private exchanges are one way to do that. The North Carolina Chamber has created one that will open next week, said Jim Simpson, the chamber?s chief operating officer. It will be managed by Cielostar, a company that has been operating private exchanges since the 1980s.

With the Chamber?s plan, a North Carolina employer can pick a carrier and medical plan, then put a pre-determined amount of money for the employee in the private exchange.

Employees then use that money to purchase their medical coverage. Any leftover money they can use to shop around for all the various services they?d like ? such as dental insurance, a vision plan, life insurance or more.

Simpson said the chamber has worked out a contract with one carrier, Blue Cross Blue Shield of North Carolina, but that he expects to have more than three.

Source: MCT Information Services