Brian Murphy Partner View Bio

healthcare consortium changes may change employee benefits due to affordable care act changes

Beginning January 1, 2016, the next set of changes mandated by the Affordable Care Act (ACA) will impact the way you buy coverage — potentially significantly raising your premiums.

Currently, the ACA defines a small employer as those with 50 or fewer employees. For policies that renew in 2016, the definition will expand to include companies with up to 100 employees. From their first renewal in 2016, mid-sized employers must abide by the regulations governing the small group market for healthcare benefits. Around 150,000 establishments and over 3 million workers will be affected, according to the American Academy of Actuaries. With the PACE Act now becoming law, states have the choice of keeping their current definition of small business at 50 employees or increasing it to 100 full-time equivalents (FTEs). It appears New York State will maintain their current definition of small business at 50 employees.

Health Insurance Premiums May Rise

Mid-sized employers should brace themselves for some potentially costly changes. Healthcare premiums are expected to increase — on average by 18 percent, according to an Oliver Wyman study, cited by the U.S. Chamber of Commerce.

Currently, issuers have broad flexibility in setting premiums for a mid-sized healthcare consortium. Once mid-sized employers are encompassed in the small group market, issuers will no longer be permitted to set rates according to the health status, historical claims experience, industry or gender of the group. Restrictive rules will also operate around age. These changes could spell a sharp premium hike for employers with a young and healthy average composition.

In addition, mid-sized companies will, for the first time, be subject to the Essential Health Benefits requirement that already applies to companies of 50 or fewer employees. This defines the set of healthcare service categories your plan must cover. Expanding the plan benefits to cover EHBs may push up premiums for some employers.

Limited Choice

A U.S. Chamber of Commerce letter to Congress cites that national insurers are present in virtually every state’s large group market but make up only a small portion of the small group markets, meaning many mid-sized businesses will be forced to change their insurer for 2016. Employee benefits typically must be selected from a group of plans the carrier offers, so you may lose some of the benefits currently offered to employees — with potentially devastating consequences for staff motivation and retention.

What’s the Healthcare Consortium Solution?

Employers facing higher-cost or less attractive benefit plans may get better value from a private benefits exchange.

A private exchange, such as Lawley Marketplace, offers defined contribution so you have better control over what you are paying for your employees’ healthcare. Typically, employers and employees have much wider coverage choices than they have enjoyed in the past at prices they can afford.

The clock is ticking until the ACA changes kick in. Talk with our employee benefits team and find out how a private exchange can not only help you avoid a premium increase in 2016 but also save money on your current rates.

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