Health Insurance Costs Expected to Continue Rising for Employers

Insurance agent at computerWhether it can be attributed to the Affordable Care Cat, also known as Obamacare, or not – insurance premiums are expected to continue to rise in the coming years.

In February, the federal government’s Centers for Medicare and Medicaid Services admitted as much in a released six-page report that found premiums will rise for almost two-thirds of small- to medium-sized companies.

“This results in roughly 11 million individuals whose premiums are estimated to be higher as a result of the ACA and about 6 million individuals who are estimated to have lower premiums,” the report said.

Before the standardization of premiums that took effect on January 1, 2014, “firms with employees who had better than average health risks would typically pay lower premiums, and therefore, they were more likely to be the firms that offer health insurance. As a result, most of people with coverage in the small group market have premium rates that are below average,” the report said.

CMS reported polling several experts who said 60 to 67 percent of smaller firms had below-average premiums before the ACA. Therefore, CMS calculated that 65 percent of small companies will see their premiums go up, and 35 percent will have lower premiums – equaling 11 million and 6 million people, respectively. While some companies renewed their policies to preserve their existing premiums before the end of the year, when the old plans change over premiums will begin to spike in the employer-sponsored market.

Employers to Get Hit by Cadillac Tax

In addition to premium adjustments, some employers will have issues with the excise tax on so-called Cadillac health insurance plans. A tax on plans exceeding $10,200 for individuals and $27,500 for families, the excise tax affects around 42 percent of employers in 2018 if they made no changes to their current plans, according to a recent report from Mercer LLC.

The report found that many employers are either making changes to avoid this potential tax. Nearly 20 percent said they have already dropped their Cadillac plans and an additional 33 percent said they were considering dropping their coverage.

Alternatives for Employers LogoHealth-Life-Dental-Insurance has two suggestions for those employers looking for an alternative to group benefits, yet still want to offer decent, affordable health insurance: self-funded group plans or letting the US government pick up the tab through Obamacare.

Self-funded groups have long been an attractive option for larger companies and Obamacare has made this option even more attractive for smaller employers. Self-funded groups pre-fund for any potential claims and any unused funds are rebated back to the company. Stop loss insurance would cover an employer in case of catastrophic losses.

The other option would be to completely replace group benefits with an Obamacare plans. In some situations, the government would contribute more to a health plan than an employer could. Some employees would receive a higher take home pay in this scenario.

If employers are considering either of these options, Health-Life-Dental-Insurance provides multiple options for coverage as well as expert recommendations.