07252017Headline:

Small Talk: Family insurance in jeopardy at small companies

The ACA is accelerating a trend toward reducing family coverage that has been in place for a number of years at companies of all sizes as employers try to cut costs, according to health insurance brokers. But family coverage is particularly in jeopardy at small companies.

“I would say 99 percent are giving it some consideration,” says Rich Fahn, owner of Excell Benefit Group, an employee benefits broker in Northbrook, Ill. “They don’t know what the cost impact will be, so everything’s on the table.”

Owners are aware that by reducing family coverage they’d be cutting back on a benefit that’s important to their workers, so many ask Fahn about benefits that will please employees but not cost the company any more money. Among them: voluntary life and dental insurance that they could buy at a group rate that would cost less than individual coverage.

Anthony Mongeluzo provides health insurance for the 41 employees of his computer services and hardware company and their families, paying between 50 percent and 55 percent of the premiums. But his costs have been going up 20 percent a year, and he’s concerned about what will happen under the ACA. If premiums balloon under the law, he might have to cut back on family coverage to be sure he’s offering insurance to his workers that meets the law’s affordability requirements.

“I would have to weight it toward my employees,” says Mongeluzo, president of Pro Computer Service, based in Moorestown, N.J. “It’s something I’ve definitely thought about.”

Mongeluzo isn’t required to provide insurance under the ACA because he has fewer than 50 workers, But if he meets his goal of expanding his staff to 100 employees in the next three to five years, he would be subject to the law. He’s aware that reducing family coverage might not go over well with his workers. He says he will discuss his plans with his staff, and see how they feel about it.

Small businesses owners are delaying decision

Small business consultants say their clients are holding off on making decisions about dependent coverage because it’s such a sore subject with employees, and because owners have so few answers about their costs at this point. Not only are premiums for 2014 not set, many consultants and benefits advisers also say it will take at least a year, and perhaps two or three years, to get a true picture of how much the ACA will cost.

“What business with 60 or 70 employees is going to want to tell anybody that they’re going to cut the coverage for the families until they’ve implemented the law?” said Henry Hutcheson, president of Family Business USA, a consultancy based in Chapel Hill, N.C. “They’re going to batten down the hatches and wait for the reverberations to bounce.”

What Next?

Related Articles