Obamacare: Small Business Owners Dismayed By Options

The Cheat Sheet

The small business health insurance program implemented by Obamacare has not proven to be a popular option. It was meant to increase insurance at companies who employ fewer than 50 people, but multiple factors are negatively impacting enrollment in the program, which is known as SHOP.

First, for states which rely on the federal marketplace, there is no website to compare plans. The announcement was made in November 2013 by the Department of Health and Human Services (or, HHS) that the SHOP website would not be functioning until November 2014. Instead, if a small business owner wants to provide a marketplace plan to employees in 2014, they must use “an agent, broker, or insurer that offers a certified SHOP plan and has agreed to conduct enrollment according to HHS standards.”

With the help of the agent or broker, small business owners fill out a paper application, to be sent to the SHOP Marketplace. The application is then reviewed and the employer is notified of their eligibility. Rather than take this route, many small business owners have chosen to renew existing plans for 2014.

This action was expected by some insurance companies. Kristin Binns, a spokesperson for WellPoint, told Bloomberg in an email the insurer that, “Estimated less small-group movement to the SHOP exchange than we did individual movement to the individual exchange,” adding that “ in many states, early renewal impacted SHOP uptake.”

Enrollment may turn around in 2014, when employers in the 36 states using the federal marketplace can compare plans online. What is more troubling are reports that employers are shunning the SHOP Marketplace because of higher premiums.

David Allen, the CEO of Flatirons Practice Management, said he did not see any suitable options when comparing plans offered in his state, Colorado. The premiums on the plans available were lower, but the deductibles had increased. “It felt like the wrong thing to do, because we were shifting the burden off of me to my employees,” Allen said. “I don’t need the insurance exchange to do that for me.”

In New York, Mary Morse is a small business owner. She told Syracuse.com the cost of her employees’ plans increased about $100 per month. Before, the plans were $236 per month, half of which Morse paid. The comparable plan on the exchange included unnecessary and unwanted coverage. “There are a lot of things in these plans they have to pay for that no one is going to use,” Morse stated.

John Humkey owns Employee Benefit Associates Inc., a Lexington, Kentucky-based insurance broker. Humkey told Bloomberg he had signed up one small business for Obamacare. “The small-business owners, while they are out there working hard to manage their business, their focus is not on trying to understand the health-care law in order to put together a benefit package,” Humkey said.

Another sector of the business world facing changes as a result of the healthcare law are people who purchase insurance through a trade organization. Doctors, lawyers, and accountants who own practices, but have no other employees may fall into this category.

Cynthia Rutzick, a lawyer who owns a practice in Virginia was interviewed by the Washington Post. According to Rutzick, her previous coverage cost $1,500 per month for her, her husband, and their two children. It was purchased through the state bar association and already met standards required by the healthcare law, but it was canceled.

Next year, instead of 94 percent of the doctors being included on her plan, 84 percent are. Her husband will be going on Medicare, and the cost to insure her and her children will be $1,600 per month. According to her broker, a plan like what she previously purchased no longer exists. “So I had a blue car, but could not go out and buy another blue car,” Rutzick said. “I have to buy a red car, and it’s not as good and way more expensive.”

Small businesses are not required to offer healthcare if they employ fewer than 50 people. If they choose to provide coverage, it must comply with standards in the healthcare law. Robert Zirkelbach, a spokesperson for America’s Health Insurance Plans said that because of this, many employers are being forced to offer more comprehensive, costlier plans.

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