It’s long been predicted that Obamacare would encourage small businesses to drop their existing health plans and send their employees to shop for coverage on the public health exchanges. There’s growing evidence now that those predictions were right.
Last week, large insurer WellPoint revealed that its small-business insurance products lost 300,000 enrollees this year and that many of its small-group customers had decided to drop their coverage completely. Many small businesses kept their existing health insurance last year, thanks to a loophole that allowed companies to renew early in order to keep plans that weren’t compliant with Obamacare for one more year.
But now that all employer health plans must comply with Obamacare, some companies are reporting that their premiums are rising considerably, causing them to make the tough decision to stop offering coverage.
Nancy Smith, owner of the Great Arizona Puppet Theater in Phoenix is one such business. With only a handful of employees, the company could only afford to provide employees with a health plan with a very high deductible. Smith discussed the options with her workers, and they collectively decided that buying individual policies on the public exchanges made the most sense. “Everyone wanted to do it because our costs were too high,” Smith told the New York Times. Since small businesses with fewer than 50 employees will not be penalized for not offering health insurance under Obamacare, many healthcare analysts predicted that those firms would be particularly likely to drop coverage.
President Obama, however, hopes to encourage more small employers to keep offering their employees health insurance by signing up for the Small Business Health Options Program (SHOP) exchanges, which are available to employers with 50 or fewer employees. The SHOP exchanges got off to a rocky start, and most were barely functional last year. However, the SHOP exchanges are expected to work much more smoothly when open enrollment begins on November 15, despite some glitches discovered recently during tests.
One large benefit to buying through a SHOP exchange is that certain small employers with fewer than 25 employees can receive federal tax credits valued up to 50 percent of their health insurance premiums.
Some small companies have already found they can save a lot of money buying coverage through SHOP. Robert Jaffe, owner of Consensus Systems Technologies in Shenorock, New York told the Times that he was able to save $32,000 on health insurance by buying coverage off the SHOP exchange for his six employees.
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