Highmark ends plans for sole proprietor companies

Owners must get individual coverage

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Highmark is ending its group coverage plans for sole proprietor business owners, citing regulations under the federal Patient Protection and Affordable Care Act.

The Pittsburgh insurer says it sent letters Oct. 3 to about 1,000 local business owners who have no employees other than family members, informing them they will have to convert to individual coverage or shop for coverage in the new federal insurance marketplace.

The change is effective Jan. 1 or at the business's next renewal period.

In the letters, Highmark noted that one Affordable Care Act regulation "requires insurers to treat coverage provided through an association, but not related to employment ... as individual coverage."

For many -- but not all -- sole proprietors, this historically would have meant they faced higher premiums and possibly less coverage because they would no longer be part of a larger risk pool. It is not clear yet, however, if the same will hold true under the Affordable Care Act.

"For many years, Highmark has allowed sole proprietors to be covered under their small group association plans such as the Pittsburgh High Tech Council, SMC Business Councils and the Chamber of Commerce," said Mt. Lebanon insurance broker John Seltzer.

"Highmark was the only carrier that offered these plans, and they have consistently said they lost money on them. Now with the new health care marketplaces offering guaranteed issue coverage, there isn't a need to offer these plans any longer."

Highmark spokeswoman Kristin Ash said not all business owners will see higher premiums. Under the Affordable Care Act, insurers can only consider the insured's age and smoking status when setting rates, without considering pre-existing medical conditions.

That is a change from past practice that has allowed insurers to raise rates if, for example, some in the group had chronic or life-threatening medical conditions. So in theory, a business owner could now see lower premiums by switching to individual coverage.

Also, once technical problems with the federal insurance marketplace website are resolved, business owners may find plans that are both cheaper and better tailored to their needs and they may be eligible for subsidies, Ms. Ash said.

Although the federal regulation was finalized in February, Ms. Ash said letters were not sent out before Oct. 3 because Highmark needed to find out which businesses planned to renew their coverage before Dec. 1. Those that renew by that date can retain their current coverage for another year.

Highmark originally asked the business owners for a decision, as well as documentation, that they qualified for group coverage if they chose that option, by Oct. 8, but that deadline was extended to Oct. 17.

Ms. Ash said she did not know yet how many businesses are affected.

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Steve Twedt: stwedt@post-gazette.com or 412-263-1963. First Published October 18, 2013 8:00 PM


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