Insurance brokers adapt to health insurance changes for businesses as Affordable Care Act is implemented

The broad contours of the Affordable Care Act are familiar to Massachusetts consumers: minimum standards for health insurance plans, a guarantee that no one is denied insurance, employer and individual mandates and health care marketplaces.
As the Affordable Care Act goes into effect, Massachusetts, which overhauled its health care system in 2006, will see far fewer changes than other states. Yet, companies buying health insurance on the private market will still discover a number of changes, some of which are small and many of which are complex. Western Massachusetts insurance brokers, who help employers find affordable health coverage for their employees, say they are just beginning the process of trying to explain the new regulations to their corporate clients.
“From a broker’s perspective, we have had to allocate a tremendous amount of time and energy and resources to get up to speed on the ever changing regulations so that we can guide our clients through this labyrinth,” said Joe Lawler, a broker at the Gaudreau Group in Wilbraham, who serves on the board of the Massachusetts Association of Health Underwriters. Lawler was appointed by Republican Gov. Mitt Romney to serve on a council that oversaw the implementation of Romney’s 2006 Massachusetts health care reform.
It is still too early for most businesses to assess the impact of national health care reform on the health insurance plans they offer. Health insurance renewal notices are only starting to go out to businesses that must renew their plans by Jan. 1. The most common renewal date for small businesses is April 1, according to the Retailers Association of Massachusetts.
But interviews with several brokers, who will be tasked with selling new insurance policies to their clients, indicate some of the challenges facing businesses buying insurance in the private marketplace.
“Bottom line, what it all adds up to, is uncertainty,” said Jim Conlon, president of J.F. Conlon and Associates in Amherst. “There’s a lot of moving parts. There’s new provisions and regulations that need to be complied with, and it’s difficult to plan and budget for everything with so much uncertainty.”
One obvious impact is the new fees and taxes. Government is providing tax credits to some small businesses to make it more affordable to cover their employees. But in general, new fees and taxes will add about three percent to the cost of insurance for fully insured groups, said Marc Criscitelli, vice president of employee benefits at FieldEddy Insurance in East Longmeadow.
That includes items such as a new tax on health insurers; a temporary “reinsurance” fee, which the government will distribute to insurers that take on large numbers of sick patients; and a fee to fund a non-profit research center that studies health care delivery and patient outcomes. “It’s just pass-through money taken from the employer and given to government agencies,” Criscitelli said.
Another change is in the number of hours an employee must work to be considered full-time. In Massachusetts, employers had been required to provide health insurance to anyone working at least 35 hours a week; the Affordable Care Act has a threshold of 30 hours. Nationally, there have been anecdotal reports of companies cutting hours of their employees to below 30 hours, although the White House says there is no statistical evidence that this is occurring.
Some Massachusetts brokers raised this as a potential concern in Massachusetts as well – although any such changes may not happen until 2015, when the employer penalty kicks in. Criscitelli said he anticipates the change being an issue for some of the health and human services agencies he works with, who hire employees into jobs like mental health counseling and pay them per diem. Lawler said the retail and hospitality industries are another area where this is a concern.
Lawler would not provide names of companies, but said he has clients who have employees working between 30 and 35 hours. “They can’t have a bunch of people come onto their plan, because it would put them out of business,” Lawler said.
The number of employees a company must have for the mandate to kick in is also different between state and federal law. In Massachusetts, employers of 21 or more full-time employees who did not provide health insurance had to pay a penalty of up to $295 per employee per year. Under federal law, in 2015, a penalty of $2,000 per employee per year will go into effect for employers of 50 employees or more. (The state penalty has been repealed in anticipation of the federal penalty kicking in.)
Ann Marie Kibbe, vice president of Health and Benefit Consultants in Springfield, said some companies might think twice about increasing their staffing to stay under the threshold. “Employers that hover around the 50 mark are thinking twice before they hire additional employees,” Kibbe said.
There are also a number of technical issues businesses must navigate. Lawler said some businesses will have to switch insurance plans because their current policies do not fit into specific actuarial categories set out by the government. Health insurers have been reworking their plans to fit into those categories, referred to as metallic tiers (i.e. platinum, gold, silver or bronze).
Richard Labine, president of Health and Benefit Consultants, said businesses have to make sure their plans meet the federal definition of “affordable,” meaning the cost of a single plan does not exceed 9.5 percent of an employee’s household income, to avoid a potential penalty.
Conlon said the rates for a group may change because rates will now consider not only the demographics of the employees being covered, but the employees’ spouses and children, if they are covered under the plan. This could either increase or decrease premium costs, depending on the individuals who are covered.
“The annual review period will inevitably take longer and be more complex as employers are confronted with new ways in which their rates are being developed, and in some instances being migrated to different plan designs than they’re on right now,” Conlon said.
Several business owners contacted for this story said they did not yet know how they would be affected by the new law because they had not had to renew their insurance plans yet. Chris Geehern, a spokesman for the Associated Industries of Massachusetts, a business trade group, said AIM is planning to survey its members to find out how they have been affected once the renewal notices go out. “I think employers are still trying to digest the nuances of the Affordable Care Act,” Geehern said.