A new option for small business health benefits

For most small business owners, the routine is all too familiar…
1. You shop around for a health care benefits plan for your employees.
2. You compare the premiums.
3. You decide on the best value.
4. Your jaw drops as you absorb another double-digit annual premium increase.
5. You make a decision about how much of that increase you will pass along to your employees.

Richard Blomquist, an employee health benefits consultant and president of Blomquist Benefits LLC in Mequon, says 2015 should be the year that small business owners seeking health benefits for their employees should consider breaking that routine.

In fact, he advises Wisconsin small businesses to consider dropping their employee benefits plans altogether and directing their employees to seek individual coverage through the federal exchange established by the Affordable Care Act, otherwise known as Obamacare, instead. Chances are, they will find the costs of coverage for individuals through the exchange are lower than the same employees would receive in group plans with insurance companies, Blomquist said.

“There are some strategic steps that companies can take today. Companies with less than 100 full-time equivalent employees are not required to provide health benefits to their employees. The current environment makes it very attractive for these employers to terminate their plans,” Blomquist said.

“Rates for 2015 were released in early November, and it appears that individual insurance rates are substantially lower than group rates. Comparing individual rates to group rates, for exactly the same plan with the same insurance carrier, the premium for every employee would be less under the individual plan. The entire group cost would be 28 percent less,” Blomquist said. “With a cost difference of this magnitude, a small employer could terminate its group plan and increase an employee’s wages by an amount close to what is currently being paid in insurance premiums. The employee could then go into one of the exchanges and purchase (his or her) health insurance and potentially have money left over even after taxes. The employee could also apply for the subsidies provided by ACA and potentially pay even less out of pocket.”

Blomquist’s strategy is validated as a viable option worth pursuing by a recent in-depth statistical analysis by Kaiser Health News. In the report, titled, “More Competition Helps Restrain Premiums in Federal Health Marketplace,” a surge in health insurer competition appears to be helping restrain premium increases across the country in 2015.

KHN looked at premiums for the lowest-cost silver plan for a 40-year-old in 34 states (including Wisconsin) where the federal government is running marketplaces for people who do not get coverage through their employers. Consumers have until Feb. 15 to enroll for coverage in 2015, the marketplace’s second year.

The number of insurers offering “silver” plans, the most popular type of plan in 2014, is increasing in two-thirds of the counties in those states, according to the analysis. Silver plans are popular in part because they offer consumers mid-level premiums with deductibles that are not sky high. They tend to carry annual deductibles of between $1,500 and $5,000 and require insurers to pick up an average of 70 percent of medical costs. The federal government subsidizes premiums for those earning less than four times the nation’s poverty level.

In Wisconsin, “silver” health care insurance premiums in the federal exchange will go up by single-digit percentage points or will actually drop in all but two of the 72 counties in 2015. In fact, the premiums will drop in 17 Wisconsin counties, as the number of insurers competing in the exchange continues to increase.

In southeastern Wisconsin, the following premium rate changes are projected for 2015 in the federal exchange: Milwaukee County, 0 percent (flat); Waukesha County, up 4 percent; Racine County, up 1 percent; Kenosha County, up 1 percent; Walworth County, up 4 percent; Washington County, down 4 percent; Ozaukee County, down 4 percent; and Sheboygan County, up 6 percent.

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