Small businesses across the country are getting their health-care insurance renewal notices for 2015, and many of those envelopes contain a big dose of sticker shock. That's because, thanks to loopholes in the Affordable Care Act, many small businesses renewed early this past year and held onto 2013 rates. But those loopholes are gone, and rates are on their way up for many small businesses.
"As a small business that provides health care for its employees and their families, we're definitely shopping around and [planning to] leave our current provider," says Michael Bremmer, CEO of TelecomQuotes.com, an online business that provides technology solutions for nonprofit organizations and government agencies. "Our rates went up almost 30 percent this year."
For businesses like his with fewer than 49 employees, Bremmer says the rising cost of providing medical benefits is forcing his business to make some tough staffing decisions. "Sadly, it's led me to hire more virtual freelancers instead of actual employees because health costs are too great," Bremmer explains. "If a business owner can't make a decent return on capital and time, why would they risk their business?"
Increases Across All Sectors
Not even health-care professionals such as doctors are immune from the rising cost of small-business health-care premiums. Chad Laurence is a chiropractor in Hockessin, Delaware, who says the increases in health-care costs affect him as an individual, as a health-care provider and as a small-business owner.
"My own health insurance bill went from $123 to $276 per month in one year—that's an increase of 124 percent," Laurence says, "and I have no prior [poor] health history and a current clean bill of health. My deductible increased as well—from $5,000 to $6,000." Laurence says he researched other plans to try to find a less expensive option, but he couldn't find one that included the 100 percent hospital coverage he insists on getting.
Laurence is able to cover his own personal costs for insurance but says he can't afford to help his staff pay for health insurance. "I have three employees, and they have to pay their own way," Laurence says.
Beyond the hit he and his staff are taking, Laurence says the entire rising premium situation will have an impact on his business. "As a chiropractor in private family practice, my patients who are small-business owners are seeing a rise in their costs," Laurence say, "and they can no longer afford to get the normal health care they were once receiving.”
In an effort to find insurance that works for them, some small-business owners are drilling down into the data to make their health-care insurance decisions. Peter Korytko, president of Preclinical GPS, a Bainbridge Island, Washington, company that provides project management services for businesses developing new pharmaceuticals, offers his employees health care at no cost to them.
"We used an elaborate decision-making process that included estimating health-care use over two years for each employee," Korytko says of the analytical approach he took to select a new plan. "Then we compared that to the total cost for premium, deductibles and co-pays, as well as maximum amounts paid per person."
After analyzing that spreadsheet, Korytko selected a platinum-level plan with a larger deductible than he'd chosen before. "The calculations and the data build some confidence into the decision," he says. "That said, insurance is about mitigating the future, which, by definition, hasn't yet happened. We won't know if this approach worked until next year when we can look back at our actual costs."
Some people simply won't accept the higher increases. Maria Hammer, CEO of Chicago-based North Shore Pediatric Therapy, says the renewal rate for 2015 for her business came in 12 percent higher than last year's rates. "That meant not only were our employees going to have a decrease in their take-home pay, but our company was going to have quite an increase in the amount we cover for our employees," Hammer says.
That's when the company decided to start looking around for other coverage options. "We were able to find a very competitive carrier that could give us almost the exact same benefits at a lower cost for our medical coverage," Hammer says. "We also researched the options with our ancillary companies to cover life, long-term disability, dental and vision. We were able to save a substantial amount of money without sacrificing very good coverage."
Hammer says her practice is taking the savings and adding it to the employee benefit package so short-term disability coverage can be added to the portfolio. "Had we kept our current carrier—along with the increase in our premium—we wouldn't have been able to add this additional employee benefit."
Seems like shopping around for health insurance can pay off.
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