There's been some hand-wringing lately about the potential impact small employers could have on the health insurance market if they are able to skirt regulations under the federal Patient Protection and Affordable Care Act.
The concern is that cost sharing, which is among the central tenets of healthcare reform, could be undermined if small employers with relatively healthy workers and dependents are able to stay out of the Small Business Health Options Program (SHOP) or health insurance exchanges.
If that were to happen, then firms with sicker employees would find themselves stuck with ever increasing premiums because there wouldn't be enough healthy workers in the mix to balance the risk.
Weighing the Options
That's a very real worry for the folks at the National Federation of Independent Businesses, explains Kevin Kuhlman, manager of legislative affairs for NFIB. "We're going to see businesses sitting down with their accountants and looking at their options to see what works for them." In Kuhlman's view there are still so many unknowns in the ACA, including essential benefits, that small businesses are likely to try and stay away from it.
The ACA allows small employers to avoid participating in healthcare reform by self insuring or by maintaining their grandfathered health insurance plans—the ones that were in place before March 23, 2010. But in both cases the ACA sets the bar pretty high.
The grandfathered health plans still have to meet some basic standards such as no coverage exclusions for children and no lifetime limits on coverage benefits. But they are free from other requirements, including those that mandate coverage of certain prevention services with no cost sharing.
Grandfathered health plans may make routine changes. For example, adding new benefits is OK, but cutting benefits or increasing out-of-pocket spending would dismantle the special status and invoke ACA regulations.