ACA confusion, unpredictability plague businesses

Lori Davis didn’t know what to expect last year in terms of the Affordable Health Care Act’s impact on her Houma-based business Rig Chem. The law’s effects on small businesses have since been uncoiled and Davis has signed up for another year of group health insurance for her employees, but Davis said she still doesn’t really know what to expect.

“Obamacare” was designed to lower costs through uniform offerings, allowing head-to-head comparisons of similar packages, and through enlarging the overall risk pool – though brokers routinely say the ratio of high- to low-risk new enrollees will skew riskier, possibly hiking premiums.

Unlike mandates to individuals and large companies, small business owners are not required to change the way they consume insurance, though a tax credit to subsidize their offering health insurance benefits to employees was expanded.

But the federal government’s delay of online “exchanges” for small business owners purchase that insurance, coupled with a flood of information and regulation throughout the health care landscape and lagging enrollment rates in all sectors, have dwarfed those apparent benefits and left Davis and many others in similar situations unsure of what their futures hold, according to owners, brokers and industrial spokespeople.

“(The law) is kind of a moving target,” said Davis, whose broker presented her with a couple of options for group-health insurance rates this year that were in line with previous years. “Things have been changing rapidly. … Right now, I’m OK with what’s happened. How is it going to shake out? I don’t know going forward?”

Rig Chems’ employees are enrolled in a better plan this year than last by way of a lower deductible, but the wellbore chemical manufacturer and supplier’s insurance costs went up roughly 5 percent, Davis said. The company pays the full cost of employees’ health insurance premiums, she said.

“Even when you’re talking with insurance company reps who are supposed to help you, they don’t know the answers either,” said Monica Folse, owner of the brokerage firm Houma Health Insurance Service. “Different parts are constantly changing, so it’s hard to be prepared.”

Louisiana’s small business owners won’t be able to compare or purchase group health-benefit plans online until November – one year after the original launch date – but the framework guiding employers of less than 50 people through the Affordable Care Act is still in place and enrollment remains open.

The small-business online exchanges have been delayed in states that are relying on the federal government for management, which Louisiana joined 35 other states in opting to do.

Instead of comparing plans and enrolling online like the law set out, Louisiana’s “small” employers until at least this fall must educate themselves about and enroll in the Small Business Health Options Program (SHOP) via offline media – paper, pens, brokers and agents.

“In those 36 states (small business owners) aren’t able to get online and sign up for SHOP, but they can still use an insurance broker, an agent or they can contact the insurance company directly to sign up for the SHOP exchange. And I don’t think a lot of small business owners are aware of that,” said Renee Amar, director of Louisiana Association of Business and Industry’s small business council.

Some Louisiana companies have begun seeing early indications of a more costly future. A Metairie business owner saw his rates climb by 40 percent, Amar said. At least six small business employers who utilized Houma Health Insurance Service saw their rates increase by at least 20 percent, Folse said.

By the grace of finagling, however, those seven employers were spared from the increases in the short term, as they advanced their policy renewals to last December and were rewarded with relatively modest upticks: 5.5 percent and 8 percent, in some cases, Folse said.

“It’s kicking the can down the road, because obviously, he’s going to be hit with that increase next year,” Amar said.

Amar contends that premium costs are going up in Louisiana because a lack of participation. “I think their vision was that we would have a lot more people purchasing health insurance, especially when you have an individual mandate and an employer mandate. Part of the problem is that they’ve delayed at lot of these things, and so you don’t have a lot of people necessarily purchasing the insurance to have the buying power to drive the cost down yet. I’m more interested to see like over the next year or two what that does.”

Only Blue Cross Blue Shield Louisiana and the nonprofit Louisiana Health Cooperative currently serve the Tri-parish area. More companies could enter the fray as the law’s regulations become clearer.

Already exempt from penalties levied upon large businesses that don’t offer adequate health benefits as determined by the new law (see below), small businesses as demarcated by the law can purchase group health insurance plans in an exchange and could be eligible for expanded tax credits applicable to premium costs.

Unlike the individual insurance exchange, SHOP enrollment is open all year long.

Aided most are small businesses with 25 or fewer employees with average salaries less than $50,000 – these companies could be eligible for tax credits that cover up to 50 percent of a group plan’s premium costs, though a number of factors determine the credit’s precise amount.

Only purchasers who use the exchange are eligible for the subsidy, though not everyone who does so meets the criteria.

“What I’m finding out is by the time most of these groups do the formula, it doesn’t really benefit them,” Folse said.

Small-business employees who are not offered adequate insurance as designated by the federal government and make less than 400 percent of the federal poverty level are eligible for tax credits in the individual marketplace. Individual enrollment for 2014 closes March 31.

South Central Industrial Association Executive Director Jane Arnette and Thibodaux Chamber of Commerce CEO Kathy Benoit both said if their members are dealing with ACA coverage-related issues, those problems haven’t reached her desk.

“As far as providing coverage for employees, I really have not heard anything out and about,” Benoit said. “I think the impact isn’t going to be immediately known.”

EMPLOYER MANDATE LOOMS FOR LARGER COMPANIES

At least one local business owner has sold a subsidiary company to decrease his or her employee count in order to avoid Obamacare’s looming employer mandate rules, a Houma insurance broker said.

Monica Folse, owner of Houma Health Insurance Service, declined to provide specifics. But she said local employers near the 50-employee threshold are wary of Affordable Care Act regulations yet to be implemented.

Originally set to take hold this year, the employer-mandate provision was delayed last summer.

It will be applied to businesses with 50 or more “full-time equivalent” employees. FTEs are determined by adding the number of hours worked by full- and part-timers to quantify a business’ labor usage. The law also set the full-time threshold at 30 hours per week, derived from monthly averages.

The provision aims to eliminate cases of people living between 100 and 400 percent of the federal poverty line while working for larger businesses from relying on the government to subsidize insurance premiums and is so referred to as the “free rider clause.” Thus, if none of a business’ employees are in this range, the business is not bound by the mandate.

Businesses that meet the limit – while having at least one full-time employee within the applicable salary range – are required to offer insurance deemed affordable by federal standards to all of their full-time employees (30 hours per week) and those employees’ dependents.

Critics lament the mandate as an inhibitor to business growth on multiple fronts. Primarily, businesses near the 50-FTE threshold could be discouraged from pursuing expansion due to the disparity in overhead costs that benchmark could come to represent. Because the penalty is calculated based on the number of full-time employees – rather than equivalents – it could lead to companies stacking their payroll with part-timers, goes another common complaint.

Some large companies already provide adequate and affordable benefits and won’t be impacted. Chet Morrison Contractors, based in Houma, is one of them.

“We don’t really have any concerns when it comes to the new laws because we are so affordable already,” said Leslie Naquin, the company’s human resources director. “We have a well-rounded, rich benefits package that we offer to the employees that is affordable. It exceeds the requirements.”

But the mandate will be particularly cumbersome on businesses in the service industry, Folse said.

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