In light of learning employee insurance premiums could face massive spikes in the near future, several small businesses are opting to forgo coverage and pay staffers more to compensate for the lost benefits.
Agents and brokers have reported massive upticks in inquiries about individual coverage, undoubtedly stemming from individuals losing employer coverages.
Monty Hagler, owner of RLF Communications, a Greensboro, North Carolina based marketing company recently learned his employee insurance premiums could rise as much as 38 % forcing him to cancel coverage.
“Unless we dramatically changed our plan and went with the most basic plan, I said, ‘This is not sustainable,’ ” said Hagler.
In a recent survey by Society for Human Resource Management nearly 3 % of 1,600 small businesses responded that they plan to give employees subsidies next year so they can buy their own coverages on private insurance exchanges.
Hagler considered a variety of plans from different carriers, but all were too expensive or lacking key benefits. Health insurer WellPoint said last month that its book of small businesses has shrunk by 12 percent so far this year.
Granted small businesses aren’t required to offer insurance considering the Affordable Care Act exempts companies with less than 50 employees to do so, but several small to medium enterprises typically provided these coverages to retain workers and attract top talent.
“We’re seeing this happen with increasing frequency, and we believe we’ll see it with greater frequency this fall,” said Ken Fasola, CEO of HealthMarkets, based in North Richland Hills, Texas.
Several of these small to medium sized enterprises have started to bring in insurance brokers and benefits consultants to help their employees identify the best solutions going forward, serving as an ideal opportunity for business expansion.
Workers can do better on their own because they have more options than businesses, said John O’Donnell, president of Insurance Consultants of Central Florida.
“Small groups have to pick from two or three plans, whereas employees can go to the individual market, exercise more flexibility and have more autonomy,” O’Donnell said. He estimates 10 percent of his company’s small-business clients have ended insurance and given their workers money for coverage or are seriously considering it.
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