Many small businesses renewing health-insurance plans in 2014 for their employees have been finding their costs increasing as a result of the federal Affordable Care Act and rising health care costs, the state’s leading health insurer said.
But a decision last month by the state Department of Banking & Insurance that allows insurers the option of continuing plans that were being canceled may provide a break for small businesses, Horizon Blue Cross Blue Shield of New Jersey said.
“Given the federal requirements to modify current products, we are assessing the impact to our members. Our initial sense is that this decision may still provide some relief for our small-employer customers,” the insurer said in a statement.
Some small businesses and employees may face significant premium increases next year, and some don’t know what to expect.
Local insurance executives say they have seen average increases of about 50 percent for renewals of such plans. Small-business group plans cover as many as 50 employees.
Bill’s Canvas Shop in Woodbine is a Horizon Blue Cross customer. It received a notice that its existing plan would be unavailable when the policy is up for renewal in March.
Owner John DiPompeo said he did not yet know what a new policy would entail or what it would cost.
The company has about six employees who take health insurance, and the company covers half the premium.
“It makes it extremely difficult, because this is the time of the year we start doing our budget for next year,” said DiPompeo, of Upper Township. “Am I going to advertise, buy a new truck and new equipment? We’re in the dark for the most part right now, not knowing where we’re going to be.”
Stephen Sanborne, senior sales executive at Thomas Heist Insurance Agency, is seeing a trend of high premiums for small-business policy renewals for January. The agency has offices in Atlantic, Cape May and Cumberland counties.
Sanborne said a small sample of these plans locally were showing average increases between 40 percent and 60 percent.
Previously, annual premium increases averaged about 10 percent, he said.
“I probably had 30 to 40 cases come up for renewal in January. While some of them only had a 15 to 20 percent increase, at the other end, others were 100 percent,” he said.
As they are being renewed in 2014, small-group plans are being converted into comparable plans that meet Affordable Care Act requirements, said Mike Sheeran, account executive at Glenn Insurance Inc., which has offices in Absecon and Vineland.
Some of the drivers include current deductibles of $2,500 being reduced to $2,000, mandatory pediatric dental coverage and no pre-existing condition exclusions, he said.
In one instance, Sheeran said, a small business with 27 enrolled employees is paying a $7,900 monthly premium for the group in 2013. The premium for the next closest plan in 2014 is about $14,000, he said.
The new plan would lower deductibles, but maximum out-of-pocket expenses for each employee would increase, he said.
Sanborne said many of these changes did not involve major changes within the companies themselves.
“These plans primarily are the same people (as previously). They’re not big census changes,” Sanborne said. “For the last year and a half, the industry average among all the carriers that work down in this area has been a 10 to 11 percent increase. All of a sudden we’re seeing these massive increases in almost every group.”
Meanwhile, the underlying costs of health care continue to increase, said Tom Rubino, director of public affairs for Horizon Blue Cross Blue Shield of New Jersey.
“What’s compounding that increase is the new law,” he said.
New requirements of the federal health care law are part of the change. For example, gender is no longer being used as a rating. And the law may require additional benefits that previously were not chosen.
“If they had a lot of younger female employees or older male employees, they would see a decrease as opposed to the opposite,” he said. “On the other end, if they had higher deductibles and lower actuarial value, then they could see a significant increase.”
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