How Will ACA Mandates Impact Companies’ Ability to Pay for Insurance?

How Will ACA Mandates Impact Companies' Ability to Pay for Insurance?

Millions of Americans rely upon the health insurance their spouses receive from their employers to help them pay for their own medical costs, but changing federal laws may make it more difficult for them to receive this type of coverage down the road.It’s believed that many smaller companies in particular will face a rather tough decision when the Affordable Care Act’s business mandate goes into effect in 2015, according to a report from the Associated Press. The rule was originally scheduled to go into place at the start of next year, but the Obama administration recently announced that due to problems getting the health insurance exchanges for small businesses implemented properly, the mandate that all companies with 50 or more full-time workers must provide them with coverage would be delayed by one year.

However, many companies are already wary of how that rule will impact their bottom lines, as the ACA is expected to drive insurance costs as much as 20 percent higher in some states, the report said. That, in turn, has led to some thinking about the ways in which they can reduce costs while still being compliant with the mandates for covering workers. Anecdotally, it seems that many are now considering axing coverage for family members, and only extending health insurance to their employees themselves.

Currently, many companies which offer health insurance for both employees and their families pay between 10 and 30 percent of their overall premiums on coverage for the latter people, and that can have a significant impact on their costs, the report said. By cutting these out, companies that fall within the ACA’s mandates will be able to enjoy reduced peripheral health insurance costs even as they provide more workers with the option for coverage.

“I would say 99 percent [of companies] are giving it some consideration,”  Rich Fahn, owner of the Illinois-based employee benefits broker Excell Benefit Group, told the newspaper. “They don’t know what the cost impact will be, so everything’s on the table.”

The impact of such a decision on small businesses
While the obvious benefit of this kind of decision would be that companies would end up paying less for workers’ health insurance policies on a per-person basis, the report said. However, it might have some unintended consequences as well. Many companies use benefits as a means of attracting the best possible candidates for job openings, and these people might be a little bit turned off by the fact that they might not be able to have their families covered by their work-sponsored health insurance plans.

This may likewise lead to tough decisions about other benefits instead, the report said. For instance, dental insurance, life coverage, or retirement savings matching could be reduced or not even offered, which could likewise serve as something of a turnoff for the very best candidates.

Currently, it seems as if the difficulties faced when considering all these options are prompting many owners to put off the final decision as long as possible, the report said. That, though, could only create more issues going forward, because it might mean that they have less time to actually implement whatever plan they come up with before the ACA takes effect and the companies have to start providing coverage to their workers.

When making such decisions, it might be wise for owners to instead consider ways they can reduce their own costs for other types of small business insurance, including workers’ compensation or liability insurance policies which might come with sizable price tags. Finding more affordable coverage in these areas may create enough wiggle room to make keeping family members covered a reasonable option.