Small businesses concerned about changing health insurance system

For decades, the ways in which companies large and small obtained health insurance coverage for their employees didn't change very much. However, since the passage of the Patient Protection and Affordable Care Act, a lot of things have begun to change in this regard. And while those aren't all necessarily bad things, they could create some complications for specific kinds of smaller businesses in particular when it comes to how they shop for coverage from one year to the next.

Right now, it seems that many companies are still trying to grapple with the new requirements being laid out for them by the ACA, especially if their situations are changing quickly, according to a report from Crain's New York Business. For example, the categories into which businesses fall can vary from one state to the next, based on their size, but starting next year there will be an additional designation at the federal level as well.

What's happening now?
For instance, in the state of New York, “small group” businesses are currently those with between two and 50 employees working at least 30 hours per week, and such companies face insurance rates determined at the county level, the report said. That is to say that all companies fitting within this range of employment pays the same rates regardless of the demographics of their work force or the particulars of the company (age of workers, industry in which they operate, and so on).

Meanwhile, there are different rules regarding businesses with between 51 and 99 employees, the report said. Those companies must submit data about all their workers' ages and other information, including the firm's industry. However, that also may tend to help executives or owners find health plans that better fit their employees' unique needs, even if it does require a little more work.

Many firms use the end of summer and beginning of fall to plan for health insurance in the following year, but new requirements could muddy the waters.

What's changing for 2016?
However, next year the “small group” businesses will include all those described above, meaning that the firms with between 51 and 99 employees will be lumped in with the smaller ones, and lose some of the flexibility they once had, the report said. That may be particularly troublesome for companies that tend to employ a lot of millennials – for whom health care costs tend to be much lower – or operate in less dangerous sectors, because they might see their costs go up considerably.

In addition, because of these alterations, the number of companies that extend plans to small businesses could fundamentally change, as might the types of coverage being offered, the report said. That, too, may be problematic, and for companies that are growing quickly, the requirements they're supposed to meet may change rapidly as well.

For this reason, health insurers may need to do a little more to reach out to the companies for which they currently control insurance plans, and potentially try to help them understand what's changing and how that affects them. This may be particularly important now, just before many businesses large and small may look to alter their coverage for the coming year.