I recall on several occasions - although I have no cite so I fully admit I may be mistaken - hearing/reading that ACA would have no impact on larger businesses and really only have effect (in terms of existing rates) on smaller businesses with under 50 full time employees.
So my first question would be is this accurate?
Second and more to my point is a (surely false) suspicion that perhaps some larger businesses (namely pro republican businesses) may be using ACA as an excuse to hike rates on employees in order to save money and/or influence opinion.
I ask all this because my wife works for a large financial institution with nearly 50,000 employees and was just notified that she and most of the company not sitting in corner penthouse offices would see what amounts to an approximate 18% increase in her monthly premiums starting in January 2014. Along with her notification of said, came an email that specifically named the ACA as the cause for the increase.
So while I be acting as an alarmist, conspiracy theorist and/or misinformed about ACA, the fact that the rate increase was directly a result of ACA says that there is an impact to larger businesses. And while I do not have my wife’s email to type verbatim, I recall the wording to be very biased against ACA.
Is this normal?
Are others experiencing this?
Surely in such a regulated industry my suspicion has to be false because it would be illegal, right?
Ironically I work for a much smaller company (500 employees) and my rates will largely be unaffected (we have been told there may be a 1-2% increase due to some maintenance/reporting overhead).
I can’t speak to much of this, but it strikes me as more than a little counterintuitive (just because it’s counterintuitive doesn’t mean it’s not true, just that some more explanation is required.)
Businesses of more than 50 employees will be required to pay a penalty if their full-time employees do not have a health plan that meets the minimum standards or if they certify for a premium tax credit to buy health care on the individual market instead of through their employer’s plan.
From http://www.sba.gov/content/employers-with-50-or-more-employees
Businesses with less than 50 employees do not have to provide health plans that meet those minimum standards and are not penalized if their employees have to go looking for health care plans on the exchanges. Just that seems like it would be a big impact on large businesses and a small impact on small businesses, but there are some requirements the ACA imposes on small businesses (>50 employees/FTEs)…
Ability to participate in the Small Business Health Options Program (this doesn’t seem to be required)
Must give notifications of the Health Insurance Marketplace
Must provide standard summary of benefits & coverage form
Employers who receive medical insurance premium rebates must determine if these rebates constitute plan assets
Must change tax withholding for Medicare taxes
Net investment income tax will be applied (it’s unclear to me how this is different for employers of >50 people vs. anyone else, but I’m including it in the list for completeness’ sake)
There may no longer be waiting periods of >90 days for the activation of employer-provided health insurance
Traditional Reinsurance Program fees will be applied to employers for employer-sponsored and self-insured plans, anticipated to be $63/year/individual on plan
Incentives for the creation of workplace wellness programs will change
Employers with self-insured plans will have to report the details of coverage for each individual on the plan
I’m sure these are not low effect, but I’m not sure how they will compare to the effort required for changes to larger employers. My guess would be that many large employers already offer health care plans that meet the minimum requirements for coverage under the ACA, and so in that way, the effect on them may be small.
I couldn’t possibly say why the premiums for a specific plan increased or what would be legal/illegal.
Broadly, large employers who previously provided insurance plans which were not compliant with ACA minimum coverage (e.g. plans that did not provide adequate preventative care or contraception services, plans with too high a deductible, etc…) may be impacted by increasing rates.
Now that such employers must switch to a plan plan that offers higher benefits, they will see premium increases. Some of that increase is due to meeting ACA requirements. Some of the increase may be due to a general increase in the costs of medical care.
An individual employee of such a company may see his/her share of the premium increase by a large margin (i.e. 18%) if the employer chooses to pass most/all of the premium increase on to the employee.
Example:
Pre-ACA $500/month total cost per employee. Employer pays $400. Employee pays $100
Post-ACA $525/month total cost per employee. Employer pays $405. Employee pays $120.
Total premium per employee increased by 5%. Employer’s share increased by 1.25%. Employee’s share increased by 20%.
If the employer was big and cheap, they are affected.
If the employer provided decent benefits to their employees already, the effect should be minimal. Everything I read suggests the reason employers (or rather their insurance companies) raise premiums is because what they offered was not considered adequate health care.
After all, if they could get away with offering no benefits, the employees would not see any fee increases either.
Other than reporting requirements, it doesn’t seem to affect those companies who already had good medical coverage for employees.
My company (130,000 employees) shows our premiums rising by 51 cents per month.
My wife’s company (~200 employees) is increasing premiums slightly more, but roughly in line with annual changes in the past.
My son’s company (86,000 employees) isn’t changing premiums significantly next year. (Unsure of exact amount, but he said it’s negligible)
None of these seem affected in any noticeable way by the ACA. My company had to do some sort of analysis about whether we’re a Cadillac plan (we’re not), but that seems to be the only noticeable change. We were told in our annual enrollment period we had the option of using one of the exchanges, but I never looked into it.
Anecdotal, I guess, but supports your original statement about ACA having little impact on large companies.
I work for a very large company with an adequate, but not great, benefit plan. Our premiums are going up 7% for 2014. Which isn’t great; but for a while they were going up 10-13% every year so 7% seems pretty good.
Some of it is because the plans had to be improved to meet ACA requirements (such as covering adult children to age 26) and some of it because of the additional administrative cost due to ACA - for example the added complexity to determine benefit eligibility among our population each year (our plan is self-insured so my employer is on the hook for administrative costs as well as benefit payments).