When Eric Tetler's insurance broker told him the health care premiums for his small business were going up 19% in 2014, Tetler feared he'd have to send his employees to the new health insurance exchange to buy their own coverage.
That was with a Dec. 1 renewal date, which meant the plan wouldn't have to comply with the major provisions of the Affordable Care Act, which take effect Jan. 1. He could have moved his renewal to Jan. 1 so the policy would be ACA-compliant, but that would have meant a 29% increase, says his broker, Tom Harte. Tetler's recycling and refining company, which employs more than 50 people, won't be required to provide an ACA-compliant plan until 2015.
Tetler stuck with his Dec. 1 date, sent his father and father-in-law - the company's founder, no less - to Medicare and raised employees' deductibles by $1,000 a year. That kept his premium about the same as this year's.
But his employees won't benefit from the ACA provisions that take effect Jan. 1, such as fully covered physicals. Tetler has mixed feelings about that. He sees benefits to what the ACA aims to accomplish, but thinks it comes at too steep a cost.
"Even though I may be for health reform in some manner, this is all wrong," says Tetler, president of Windfield Alloy in Atkinson, N.H. "At some point as a company owner, I will need to say no more and drop our health plan altogether and be confronted with losing valuable employees."
Most of the big changes required under ACA will happen in 2014, but insurance plans have had to comply gradually since the law's 2010 passage. Most notably, insurers now must allow people to include children up to age 26 on their plans and drop any caps on lifetime benefits.
Many small businesses remain in the dark about how the ACA affects them, however. When asked this year if their insurers had changed their small business' benefit package because of the law, 22% of 604 companies queried said they hadn't, and 34% said they didn't know, according to a report from the independent research organization NORC at the University of Chicago.
They aren't likely to miss the big changes coming next year for ACA-compliant plans. What will be different next month: Insurers will be prohibited from refusing to cover people with pre-existing conditions, charging them more or delaying their coverage. Plans will also be required to cover certain "essential health benefits" and fully cover preventive care.
"All of those things may be wonderful, but they're adding to costs," says Nancy Taylor, a health care lawyer with the Greenberg Traurig law firm, who represents business clients.
Proponents of the law, however, say the ACA-compliant plans that consumers and small businesses are buying are far better plans than what they've had, and they're worth extra money. Besides, they say, even higher premiums can still mean lower total costs when new mandatory provisions for care are considered.
"Most consumers will be able to find a better deal in the marketplace than their current plan, with better coverage and lower out-of-pocket costs," says Joanne Peters, spokeswoman for the Department of Health and Human Services.
Here's a closer look at the new provisions that ACA-compliant insurance plans will have Jan. 1:
Pre-existing conditions: Under current law, employers can delay group plan coverage for nine months to workers with pre-existing conditions, says Taylor. That will no longer be allowed in January. People with pre-existing health conditions also won't have to worry about being denied insurance. Before the ACA, someone with cancer or mental health problems, for example, often was unable to find affordable health insurance. Some couldn't find any insurer to cover them.
Most employers didn't delay coverage, "but some employers did," says Taylor. "If you're buying fully insured (plans) for employees, one person with a really serious health condition can create some cost problems."
Essential health benefits: States can go further than ACA mandates in requiring insurance plans to have at least the same benefits as a "benchmark" plan they choose. In January, all plans will have to include coverage for maternity and newborn care, prescription drugs, services at ambulatory facilities, hospitalization, mental health and substance use disorder services, rehabilitative services, lab work, preventive and wellness care, chronic disease management, and pediatric dental and vision care. About 68 million people are expected to use those services once the law is fully implemented.
That's a big change: HHS has estimated that 62% of those with individual insurance policies don't have maternity coverage, and nearly 20% lack mental health service coverage.
Fully covered preventive care: Doctor visits for procedures such as blood work, physicals and colonoscopies have to be covered fully with no co-pays or cost sharing. One of law's goals is to limit frivolous medical visits and treatment for ailments that could have been caught earlier.
How small businesses and insurers adjust to the ACA remains to be seen. Jon Gabel, co-author of the NORC report, says the ACA discourages large rate increases by requiring a federal review of increases above 10%. Besides, he says, small businesses and their brokers can often negotiate far lower rates than those first quoted. That's what Tetler learned, but in his case, it took a non-ACA plan to reach a cost he could afford.
Tetler says he has to offer health insurance to stay competitive. He will only be able to pay 60% of his employees' premium costs for 2014 (down from 80%) and expects that to drop to 50% and maybe 25% due to expected increases. But he'll do all he can to keep offering insurance.
"I feel a little obligated to make sure everyone's OK," he says.
By Jayne O'Donnell