Small Businesses Race to Renew Insurance to Beat Obamacare Deadline

Sunday, 03 Nov 2013 09:34 AM

By Sandy Fitzgerald

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Insurance brokers across the country say small business clients are hurrying to reset their insurance policy renewal dates to Dec. 1 to beat the huge premium hikes they fear will hit them on Jan. 1 when Obamacare takes full effect.

The brokers told USA Today that 60 percent to 80 percent of their small business clients who have 50 employees or fewer want to renew their policies early to keep their costs lower. Larger companies, who employ more than 50 full-time workers, can't adjust their renewal dates.

According to the National Federation of Independent Business, nearly half of the 7 million small businesses with 50 or fewer employees offer health insurance for their workers. On Friday, the group released a survey showing 64 percent of 921 owners reported paying more for insurance in 2013 than in 2012.

Some agents say they're seeing increases of 30 percent up all the way to 100 percent on companies' premiums, especially if their workers are younger. According to Obamacare rules, companies are limited charging older people more than they charge younger workers, so premium prices are rising to make up the difference.

But while companies and their employees will save money on premiums by moving up their renewal dates, they'll miss out on changes that take place on Jan. 1, including limits on out-of-pocket expenses, mandatory dental coverage for children and paid preventative care doctor visits.

Wendell Potter, an industry watchdog and former spokesman for Cigna Insurance, said that plans offered by small businesses often have "skimpy coverage or very, very high deductibles," and insurance policies through Obamacare will have much "much better" value.

But insurance broker Allen Wishner said most of his clients' plans already have the required benefits in place, so changing the renewal dates should not harm employees much.

Wishner said his clients' rates are varying depending on their renewal dates. One company will save $100 a month by renewing on Dec. 1 over what it pays now, but would have to pay $4,200 more a month if it renews on Jan. 1 or later. But another of his companies was to face monthly premiums of $6,500 if it renews on Jan. 1, but would have to pay $2,000 more than that if it renews on Dec. 1, so it will stick with its usual January renewal.

Annual insurance hikes are nothing new for most small businesses, reports The Cleveland Plain Dealer.  If an employee has a serious illness, or has been hospitalized recently, small businesses often know their premium rates will rise.

"I’m not certain about all that many things that surround my life," said Paul Nachtwey, vice president of the employee benefits practice at Beachwood-based Todd Associates, a brokerage and advisory firm. "I am certain of that. It will be bad out of the gate, and it will only get worse."

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