Small Business Owners: Prepare To Pay Higher Premiums

The Affordable Care Act’s employer coverage mandate doesn’t take effect until 2015, but early plan renewals are starting to roll in.

And for some businesses, the premium jumps are outrageous.

Insurance brokers report their clients are being asked to pay 35-120% more for policies renewing from July to December.

Some workers are at higher risk than others of losing company-sponsored coverage. Those seeing the highest increases: employers with younger, healthier male workforces. That’s because Obamacare prohibits offering lower rates to healthier groups. It also narrows the allowed premium gap between older and younger enrollees.

Professional, white-collar companies such as law or engineering firms will bite the bullet and renew at higher prices because they need to compete for scarce skilled labor.

The changes threaten to put many enrollees at risk of cancellation or non-renewal this fall.  Moderately skilled or low-skilled people making $8 to $14 an hour working for landscaping businesses, fire-prevention firms or fencing companies could lose work-based coverage because the plans cost so much relative to salaries.

Employees who keep their coverage might see leaner take-home pay, which could hurt the economy.

The premium hikes could have political implications, too.  It’s been estimated that as many as 85% of small-group plans renew in November and December.  Because new premiums go out 60 days before coverage takes effect, those price hikes will hit mailboxes in September and October — just before November’s elections.


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