Affordable Care Act vexes small firms

Companies may decide on coverage without all details

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On Oct. 1, small business owners have to let their employees know whether they will provide health insurance for their staff in the coming year.

The problem? Details about the plans that insurers intend to offer probably won't be available until Oct. 1.

"In other words, we have to make a decision without having all the information," said one exasperated business owner at a Tuesday seminar hosted by the U.S. Small Business Association and the Duquesne University Small Business Development Center at the university.

About 50 small business owners, and at least one insurance agent, came to hear about the impending Affordable Care Act requirements from a panel that included Roseanne Egan, the Centers for Medicare and Medicaid Services' deputy regional administrator for Pennsylvania and five other states.

The coming changes are of particular concern to small businesses -- those with 50 or fewer employees -- as they typically shop for insurance through a broker while larger companies are more likely to self-insure.

Ms. Egan said the Small Business Health Options Program Marketplace is meant to provide small business owners, who otherwise might not be able to afford it, the means to offer health insurance to their employees. By signing on with the marketplace, she said, small businesses join a larger risk pool, which should keep premium costs down.

But, without knowing the details of the offered plans, keeping premiums down -- even if that actually happens -- doesn't necessarily make them affordable.

Said Ms. Egan: "We understand the frustration."

Employers who already provide health insurance coverage don't need to do or change anything, said Carl Knoblock, SBA's Western Pennsylvania district manager. He added that some have suggested small business owners wait three years to see how the program shakes out before deciding on a long-term strategy.

Ms. Egan said the program is "really meant as a benefit." In addition to giving small businesses the ability to provide health coverage to employees, the marketplace approach is designed to smooth out year-to-year rate hikes. The health insurance marketplace also will end the practice of applying higher rates for groups that include women, older workers or workers with chronic or pre-existing conditions -- although insurers can still adjust rates based on age and tobacco use.

Meanwhile, questions on details surrounding participation in the health insurance marketplace keep popping up: Should employers reduce some workers' hours or contract some work out to keep their costs manageable? What do you do if you have employees in multiple states?

Even something seemingly as simple as determining how many full-time equivalent employees they have is not a simple calculation under the regulations, said Mr. Knoblock.

One panelist, Peter Fleming of Wilke & Associates, recommended business owners consult a certified public accountant about the various taxes and tax credits, and strategies for avoiding penalties.

Despite all the uncertainties, Mr. Knoblock, a former small business owner himself, also knows how worrisome and erratic the employee health benefit issue has been for small firms over the years. Only one thing seemed certain: Rates were going to go up every renewal period.

"If you had a good year, it was 8 percent and if you had a bad year, it would have been over 20 percent," he said. "Business owners want to provide for employees, but at that point they have to stay in business."

businessnews - health

Steve Twedt: stwedt@post-gazette.com or 412-263-1963.


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