How to Avoid Double Digit Group Health Premium Increases
Group health insurance premiums continue to rise despite political promises that The Affordable Care Act will “level out” health insurance premiums. Small businesses can avoid Double Digit Group Health Premium Increases next year by offering individual health insurance plans to their employees and implementing a Premium Reimbursement Plan.
Group Health Insurance Premiums Continue to Sky-Rocket
The cost of group health insurance has been increasing steadily over the last 10 years and many small business owners are struggling to keep up with the costs. The cost of group health insurance has almost doubled between 2009 and 2013.
While the Affordable Care Act (ACA) is to blame for group health insurances premium increases, the truth is, premiums were on the increase long before the ACA became law. For example, between 1999 and 2013, group health premiums increased by almost 131 percent. Today, the national average cost of a family health plan is over $13,000 per year whereas back in 1999 the cost for a family health plan was about $5,400 per year. For New York small business owners, the increases have been even more devastating with the average cost of insuring a family today being over $16,000 per year.
With the changes and implementation of the Affordable Care Act in 2014, many small business owners scrambled last year to lock in lower rates and avoid inevitable increases that were on the horizon. However, now that 2015 is almost upon us, small businesses are facing double digit increases at renewal time.
How Small Businesses Can Control Double-Digit Premium Increases
Small businesses can avoid the coming group health insurance increases by transitioning their employees to individual health insurance combined with a Premium Reimbursement Plan or Defined Contribution.
Individual health insurance costs 60% less than group health insurance and has other benefits as well. The employee owns the insurance plan which makes it portable. With group health insurance, the employee leaves their health insurance behind if they move on to another employer. The employee can also choose an insurance plan that fits his or her needs and is not subject to the employer choosing a health plan for all the employees.
To implement a premium reimbursement plan the employer must first follow the guidelines set-forth by ACA, The IRS and ERISA to be certain the plan is compliant. Then the employer must decide how much he or she will contribute to the employees’ health insurance expenses. This contribution or allowance can be the equal for all employees, or it can vary depending upon employee status and/or family situation.
With small business owners facing double digit group health premium increases next year, business owners will need to seek creative alternatives to keep their health premiums reasonable.
For more information or to set up a compliant reimbursement program, give our office a call at: 914-633-1717