It looks like one of the more innocuous provisions of the federal Affordable Care Act: Beginning Jan. 1, businesses with 51-100 employees will be grouped with smaller businesses for health coverage purposes.
Turns out, the implications may be more wide-ranging than those employers, or their workers, realize. A whole new layer of administrative and premium costs may be landing in their laps with the new year.
Among the possibilities and, in some cases, certainties: New regulatory requirements, less flexibility in designing health plans, more forms to fill out and — particularly for those who’ve filed few claims in the past — premium hikes in excess of 50 percent.
“It’s a big deal,” said Sam Denisco, vice president of government affairs for the Pennsylvania Chamber of Business and Industry.
“I think it’s going to capture a large segment of the business community.”
As it stands now, small-group requirements such as covering a list of minimum “essential health benefits” applies only to businesses with 50 or fewer employees.
The change will bring larger companies under the requirements, with the goal of increasing the number of businesses subject to the stepped-up insurance requirements.
Once the 51-100 employee firms are moved into the small-group category, the estimated 160,000 or so employers with more than 3 million workers will be required to offer one of the metal plans — platinum, gold, silver or bronze.
That means they offer the ACA’s designated 10 essential health benefits such as emergency services, hospitalization, mental health and substance abuse treatment, maternity and newborn care, and prescription drugs.
Highmark spokesman Aaron Billger said the Pittsburgh insurer has 225 client companies that fall into that 51-100 employee bracket, providing coverage for 29,500 individuals. Highmark is encouraging those clients to renew policies by Oct. 1, giving them another year to hold off the small-group regulations.
Pittsburgh-area broker John Seltzer said most of his half-dozen or so clients in that category are taking that route after he found that their premiums were going to jump 35 percent to 72.9 percent to comply with Affordable Care Act requirements.
The small-group designation “can have a dramatic impact,” Seltzer said, “and if they are not aware of it, or they haven’t discussed it with their broker and taken conscious steps to deal with it, I think they’re really in for a shock.”
Major groups have lined up to ask Congress to delay or rescind the definition change, including America’s Health Insurance Plans, the National Association of Manufacturers, the U.S. Chamber of Commerce and the National Federation of Independent Business.
Earlier this month, groups including the National Association of Insurance Commissioners spoke at hearings in Washington, urging legislators to give states the option of defining “small group” for health insurance purposes.
An American Academy of Actuaries brief speculates that more employers will self-insure if faced with substantially higher premiums, freeing them from the small-group requirements but facing “potentially greater financial risk” from unexpectedly high numbers of claims.
Denisco said the net effect may be that employees ultimately are offered “a scaled-down version” of their current plan coverage while paying a larger share of the costs.
Employers, meanwhile, could be bracing for another set of Affordable Care Act requirements that make providing health coverage for their employees less affordable.
“They’re at a point where if they see a 30 percent increase, they’re not shocked anymore.”