Small-business owners who have increased deductibles or out-of-pocket costs for their employees so they could keep providing health insurance are facing a new challenge.
The federal health care law places new limits on the costs employers pass on to workers. Meeting those new limits could raise expenses for small businesses and price more of them out of the market.
Affordable Health CareWorkers in Idaho already face worse odds of gaining health insurance by securing a job than employees in the country as a whole. Census data show that about 51 percent of Idahoans of all ages obtain insurance coverage through employment-based health plans, compared with 55 percent nationally.
Health care is the second- or third-highest expense for many companies, and the money spent on it can make the difference between a company ending the quarter in the black or the red.
“No other cost is going up like health care,” says Glen Evelyn, Florida-area president of Gallagher Benefits Services. “It is truly about sustainability: How am I going to sustain myself as a company?”
Small employers who have wanted to stay in the health-insurance game have routinely looked to higher deductibles and out-of-pocket costs to control their side of the cost equation, he says.
But come 2014, the Affordable Care Act prohibits small employers from shifting costs to their employees through deductibles of more than $2,000 for an individual plan and $4,000 for a family plan. The law also sets maximum out-of-pocket costs. In 2014, those limits are expected to be roughly $6,250 for an individual plan and $12,500 for a family plan.
The new rules could reverse the trend toward passing costs to employees. Or it could encourage more small employers to drop coverage altogether.
From 2006 to 2012, the percentage of small firms with deductibles of at least $1,000 climbed from 16 percent to 49 percent, according to a recent employer survey by the Kaiser Family Foundation, a health policy analysis group in Washington.
At the same time, small businesses have been bailing out of the insurance market in growing numbers.
The percentage of workers from small firms — fewer than 50 employees — with employer-sponsored health insurance dropped from 62 percent in 2001 to 54 percent in 2012, the survey found.
Under the health care law, employers with fewer than 50 workers can drop health insurance with no penalty. Bigger employers must pay a fine of about $2,000 per employee.
IDAHO INSURANCE AGENCY
Paul King and Charlotte Hildebrandt
1650 Albright Ln #101
Boise, Idaho 83709