One of the biggest myths of the Affordable Care Act is that the law doesn't affect small businesses. It does. Significantly.
Sure, businesses with less than 50 full time equivalent employees are exempted from the corporate mandates requiring that we provide affordable health insurance to our full timers. Yes, some very small businesses are potentially entitled to a tax credit. But the fact is that most businesses – big and small - do provide healthcare to our employees. And the ones that don't provide healthcare find themselves at a significant disadvantage to their larger competitors who do.
In survey after survey, healthcare consistently ranks as one of the top benefits desired by employees. Not offering this benefit prohibits companies from attracting good people.
Unfortunately, Washington has now made things more difficult.
Congress failed to pass a healthcare bill. The President is threatening reprisals. Government subsidies to the insurance industry may be cut off.
More people may be exempted from the mandate requiring them to buy healthcare insurance. Funding for key components of the Affordable Care Act may be withheld. Enforcement by the IRS and Department of Health and Human Services may be curtailed.
All of this will continue to contribute to the law's inevitable breakdown. But more importantly, it is already adding a huge amount of uncertainty to the insurance markets.
As I write this, regulators in Tennessee, Delaware, Washington State, Maryland and Connecticut are requesting individual rate increases for next year ranging anywhere from 22 to 150 percent - yes, I said 150 percent, and more companies will be submitting their rate increase requests to state regulators over the next few weeks.
No one I know blames these companies, because no one I know would want to play ball on a field where the rules are constantly changing. This is not a great time to be in the health insurance business.
Nor is it a great time for the rest of us paying for health insurance. We want to provide healthcare insurance for our employees. In many cases it's a necessity if we hope to successfully recruit new people or retain our best ones so that we can grow. But, even with the "Affordable" Care Act, health insurance premiums for most of us have increased by double digits over the past few years and continues to represent one of the most significant line items on our income statements.
So what do businesses - particularly small businesses like mine with fewer resources - do?
During the past few weeks, I've talked to dozens of my clients and asked this question of benefits consultants, payroll companies, HR experts, accountants and attorneys. Without exception I keep getting these three words thrown back at me.
"Stay the course."
Stay the course means this: when the seas are rough, the weather is bad, the skies are darkening and the outlook is uncertain, put your head down and keep moving forward...with grim determination, courage and care.
In 2017 and for the year after that, “staying the course” means doing these six things:
· Sticking with a high deductible, "bronze" plan. This is what the lion's share of my clients are doing. It's the least expensive option and the least generous. But it keeps us in the game.
· Re-considering who we’re covering. If you're paying the premiums for your employees' family members then good for you. But know that most of us aren’t. This benefit is becoming less and less popular among small and medium sized businesses. You may want to reconsider and only cover the individual employee.
· Starting a Health Savings Account (HSA) Plan. These have been enormously popular over the past few years because they're inexpensive to setup and, through pre-tax contributions by both you and your employees can help defray some of the costs of those higher deductibles and out of pocket expenses.
· Self-insuring more. Most larger companies do this but this strategy is tougher for smaller companies because self-insuring requires good data and strong in-house administrative personnel. But even companies with only a dozen or so employees can offer a "hybrid" plan where an initial level of costs are self-insured before traditional group insurance kicks in.
Depending on the plan this could save your company money. Check out the Self-Insurance Institute of America for more options.
· Establishing a Healthcare Reimbursement Account (HRA). Thanks to December's 21st Century Cures Act, you can now setup an HRA without onerous penalties from the IRS. This means you can put pre-tax money away for employees so that they buy their own healthcare insurance instead of providing your own.
· Educating your people. I don't need to tell you that the healthcare environment is a mess right now. Even the experts don't have the answers. So imagine how confused your employees are. Making decisions out of ignorance will ultimately cause your employees (and you) to pay more for their insurance. So cough up a few hundred bucks and ask your local benefits expert to hold a quarterly seminar with updates throughout the year. Smarter people will make smarter choices.
It seems clear that the Trump administration is going to do everything in its power to force changes in the current healthcare law. Congress may find itself compelled to (gasp!) come up with a long term, bi-partisan healthcare bill to avoid a potential crisis.
More and more states will likely find themselves stepping up and creating their own healthcare programs. Without question, we're looking at many changes over the next few years. These changes will be disruptive and create uncertainty in an area of vital importance to our businesses.
Hopefully these changes will result in better options and strategies for controlling your healthcare costs in the future. But for now my friend, there’s little else we can do but just stay the course.