Under Obamacare Small Firms May Face Changes

obamacareMany small firms may face health insurance rate changes under Obamacare

Small firms to face Obamacare changes

When e-commerce company ZipfWorks switched last year to a policy that complied with Obamacare, the firm?s insurance premiums for its 18 full-time employees rose nearly 30%, says CEO Michael Quoc. But he’s not deterred. Health benefits are key to attracting top-notch workers, he says.

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An estimated 70% of California’s small firms offering worker health coverage haven’t faced Obamacare rates yet

Small businesses with older-than-average workers or those in poorer health may see rates drop under Obamacare

In recent years, as millions of individual consumers coped with new and different kinds of health insurance, small businesses got some breathing room.

Millions of small businesses nationwide ? and an estimated 70% of California’s small firms that offer employee health insurance ? haven’t yet faced all the sweeping changes that resulted from the Affordable Care Act.

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The government gave them extra time to sign onto Obamacare, and instead they took advantage of provisions that allowed them to stay put with their old policies. “Most of the small group plans that had larger-than-average rate increases by switching to ACA plans [instead] grandmothered their plans” to avoid a rate increase, says Patrick Burns, president of the California Assn. of Health Insurance Underwriters.

Grandmothered health plans are older policies that were in place before 2014 but must ultimately be phased out.

In California, “that grandmothering ends December 2015, so a lot of the companies that have avoided the rate changes due to the legislation will be facing that this year,” Burns says.

What kind of rate increases small businesses will face is hard to estimate. Rates vary from region to region, and the Affordable Care Act mandates more healthcare services that some older insurance policies did not.

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The law also prohibits insurers from charging higher premiums based on the health status of employees, and places limits on how much they can charge for older workers. As a result, firms with older-than-average employees or those in poorer health may see their rates drop.

Read more at L.A. TIMES