Cost of health insurance... OUCH!

To folks who wonder about what affect the affordable care act will have on small businesses, here’s a specific example. I’m not going to get political about this… I’m just relating facts…

I handle the policy work for Mindnest’s company’s benefits. At the warning of our insurance broker a few months ago, we renewed our plan in December of last year (a few months early) to avoid having to renew this coming March on the 1-year anniversary. Our total premium increased about 15%.

We had renewed through our broker, but we just received the direct information from the insurance company itself, giving us the info for renewing this March (seems that group didn’t get the word we had already renewed through the broker).  Bottom line: our premium would be going up 64%, but the employees would also be subject to this:

• out of network coinsurance increased
• doctor visit coinsurance increased
• specialist coinsurance increased
• DOUBLING of out of pocket max (from $8000 to $16000)
• drug costs significantly increased

If we were really renewing now, and if we wanted to maintain the best plan we could, while sticking with about the same premiums we were paying, we’d have to go to a lower plan, but that would hit our employees with this:

• big increases in coinsurances
• doubling of coinsurances to see doctors and specialists
• doubling of deductibles
• TRIPLING of max out of pockets (each family could spend up to $25000 a year)
• more than doubling of drug costs

Note that all of these other costs are items that directly hit the employee, not me the employer. So even if we were to hold OUR costs the same, the employee takes a huge hit. The inherent value of the insurance has been decreased.

So, as small employers are asked to double their costs for providing health insurance, they certainly may choose to do that, but how many will simply dump their employees into the exchanges and pay a small fine instead? Or, how many will hold the line (or pull back) on salaries, bonuses, and other benefits to compensate for the extra burden? I guess we shall see.