Delaying health plan renewals appears to be the new normal under the Affordable Care Act, especially for small businesses.

The number of such delays expected through December 1 soared 322% within the past year, while 94% of the 32% of respondents reporting this action were small firms with 100 or fewer employees. Many of them face rate increases ranging from 30% to 160% in states that did not allow renewal of grandfathered health plans, according to a recent United Benefit Advisors survey of 9,950 employers sponsoring 16,967 plans nationwide.

The findings also suggest it’s still too early to gauge the ACA’s full impact because several states allowed the renewal of plans that predated health care reform, serving to delay the effects even further. As a result, there’s barely any noticeable movement on cost or coverage.

Also See: CHROs tie higher health, labor costs to ACA

“We’re seeing little change in premium rates and employee benefit plans, and that’s because many employers renewed twice in 2013 to delay the effects of PPACA,” Carol Taylor of the D & S Agency, who chairs the UBA Client Compliance Solutions Committee, said in a statement.

She also reported a 412.4% increase in the number of companies with 50 or fewer employees with a December 1 renewal deadline between 2012 and 2013, which Taylor predicted will “have a ripple effect for years to come in the small group market.”

Perhaps not surprisingly, UBA found that employees are shouldering higher out-of-pocket costs and reduced benefits as a result of employers now paying an annual average of $9,504 per employee compared with $9,302 in 2013. 

Out-of-pocket maximums climbed more than 6% within the past year to $3,500 for median single coverage and to $8,000 for median family coverage, while average network deductibles remained fairly level at $1,901. Taylor placed these findings in context: “If you were to look only at the average out-of-pocket costs and deductibles, you’d be missing a big part of the story. The median numbers show a significant increase because the lower end of the scale is dropping off, so we’re getting used to a new norm in higher out-of-pocket costs.”

Other highlights show:

  • A slight decrease in plans with no network deductible within the past year to 20% from 21% for individuals and to 20.8% from 22.5% for families.
  • A slight decrease in plans with no out-of-network deductible within the past year to 6.9% from 8% for individuals and to 8.1% from 9.8% for families.
  • A rapid disappearance in plans with 100% co-insurance, which decreased by 14.8% since 2012 (this coverage level is now offered at 36.2% of plans for individuals and just 1.3% for families).
  • Regional disparities, with annual per-employee costs averaging $10,931 in the Northeast, $10,130 in the north-central U.S., $9,513 in the West, $8,254 in the South and $8,088 in the central region of the country.

Les McPhearson, CEO of UBA, urged employers to become well acquainted with their benchmark on medical plans, adding, “this is not only for their industry, but in their state, region and nationally as well.”
Bruce Shutan is a Los Angeles-based freelance writer.

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