Small Employers and the Affordable Care Act (ACA)

The ACA law will have the most significant impact on small employers when it comes to benefit design offerings and cost. The smaller employer is not required to offer benefits and is not at any risk of a penalty for not doing so. However, the law does make substantial changes in how the small group market will be rated and what benefit designs will be available.

Plan/Rating Changes

  • No underwriting for health status (except tobacco use). Everyone will be guaranteed the ability to purchase insurance regardless of health status beginning January 1st, 2014.
  • Age rating restrictions (3:1 ratio) – the oldest person on the plan cannot pay more than 3 times what the youngest person on the plan pays.
  • No cost difference for gender
  • Small groups must purchase plans that fall into a Metallic Level (Bronze, Silver, Gold Platinum)
  • All non-grandfathered small groups and individual health plans must cover Essential Health Benefits (Essential Health Benefits Description)
  • The out-of-pocket cost on non-grandfathered plans cannot be more than $6,350 for individuals and $12,700 for family coverage as of January 1st, 2014.

Given these changes, there may be employers who currently offer benefits that do not met these requirements. This may result in dramatic benefit or cost changes in 2014.

Should you look at renewing your insurance plan in December before these requirements go into effect? Some employers believe the changes will negatively impact their employee benefits program and are reviewing the option of renewing their plan off cycle in December to get one more year of current rating practices and plan design availability. This will allow them to secure a known benefit package while evaluating the impact to small employers in 2014 prior to their renewal in December.

Let Burchfield Insurance help you review this option to see if it may make sense for you and your company.

What requirements do employers have to comply with in regards to the ACA? There are numerous requirements on employers that are part of the new law. Some have already been required and some are coming up in the future. For a list of some of these requirements, click here.

What is the best strategy for small employers in regards to offering benefits to their employees? There is not one solution for all employers as there are many factors to consider and review. Let Burchfield Insurance meet with you to review your current benefit plans and your corporate goals to help develop a winning strategy for your company.