Yesterday afternoon we received word that the Obama administration has delayed the employer mandate of the Affordable Care Act to January 1, 2015. This means that companies with 50 or more full-time equivalents will not be required to provide health insurance coverage to all full-time employees (30 or more hours per week) beginning in 2014. Although this is good news to many of you, there are other provisions of the law which are still set to go into effect on January 1, 2014 and which may still have a significant financial impact your business. I have highlighted a few of these below:
- Small Group Rates – beginning in 2014, small groups will no longer be rated on a sliding scale based on health and claims history. Small groups in the Twin Cities will all pay the same regardless of their health or claims history. Small groups include those with more than 50 eligible employees but fewer than 50 enrolled. For most small groups this will mean a significant increase at their 2014 renewal; only groups with the very worst ratings will see a slight decrease. A group with the very best rating can expect a 50% increase and a group with an average rating can expect an increase of about 25% over 2013.
- Minimum Benefit Set – beginning in 2014, most plans will be required to provide a minimum essential benefit set as defined by the Department of Health and Human Services. The minimum essential benefit set will allow a maximum individual deductible of $2,000 and a maximum family deductible of $4,000.
- Employer Contributions – beginning in 2014, employers will be required to contribute 60% to employee only coverage, a 10% increase over the 50% contribution required today.
- Health Insurance Premium Taxes – Several taxes went into effect this year or will in the coming years, including the ACA tax, the federal reinsurance tax, the Exchange tax, and the PCORI tax, in addition to the taxes to continue MNCare and MCHA and the Minnesota premium tax. Most of these taxes are imposed at the carrier level and passed on to groups in the form of premium increases. These taxes disproportionately impact small businesses and will account for at least 10% of your premium cost in 2014.
- Health Insurance Exchanges – MNSure, the Minnesota health insurance exchange, is still expected to be up and running for the open enrollment period that begins on October 1, 2013.
The delay provides some relief for mid-size and large businesses, especially those with large part-time staffs, but other provisions of the law will move forward unabated. All of this means significant premium increases for small groups in 2014.
Feel free to contact me if you would like to learn more about how the provisions of the ACA will specifically impact your business and what strategies you can adopt to minimize that impact.