Choice Stories

December 31, 2018

Small Group Health Insurance Changes and Costs in 2019

A new year is here and with it come several changes to health care, insurance requirements, and costs. Here’s what you need to know for 2019.

The State of the ACA

In December 2018, a Texas judge ruled that the Affordable Care Act (ACA) is unconstitutional. However, it will still take time for the case to play out. It is now being considered by the Fifth U.S. Circuit Court of Appeals in New Orleans. Even after that court rules, further appeals are expected, and the case could wind up before the U.S. Supreme Court in 2020.   New for 2019, the U.S. Department of Health & Human Services (HHS) – the federal agency that administers the ACA – announced updated payment and cost-sharing provisions, risk adjustment program changes, and increased flexibility in the operation of the federal and state-based exchanges. The latter includes Small Business Health Options Program (SHOP) exchanges, such as Covered California for Small Business.   In proposed rules, the ACA’s risk adjustment program, which mitigates potential adverse selection for participating insurers, would be updated. The goals are to reduce regulatory requirements and empower both consumers and employers. Among the measures designed to grant states increased flexibility is the ability to modify Essential Health Benefits (EHBs), which could increase affordability of coverage for individuals and small businesses.

Large Employer Mandate

The federal employer mandate, which affects businesses with 50 or more full-time or full-time equivalent employees, continues in 2019. It requires Applicable Large Employers (ALEs) to offer “affordable” health insurance that provides minimum value to 95% of full-time employees and their children up to age 26, or to face penalties. For help determining whether your business is an ALE, ask your employee benefits agent, or visit the IRS ALE web page.   Smaller employers – those with fewer than 50 full-time equivalent employees – are not subject to the ACA employer mandate and are not required to provide employees with health insurance coverage. Those businesses that elect to offer employee health insurance may qualify for a Small Business Health Care Tax Credit, subject to certain federal qualification guidelines.

Health Insurance Reform in California

California Gov. Gavin Newsom announced in his inaugural address on January 7, 2019, that he wants the state to adopt its own individual mandate. He also called for new state-funded subsidies to help middle-class Californians afford health insurance. Whether Congress will act to give the state greater authority to implement its own health care programs, while still receiving federal funding, remains uncertain.

Premium and Deductible Forecasts

Experts at HR consultant Mercer expect an average group health insurance premium increase per employee of 4.1 percent in 2019 for employers making plan changes. For those not making plan changes, the expected increase is 5.3 percent. Over the past decade, health care cost increases have ranged from 2.1 percent (in 2013) to 6.9 percent (in 2010) for employers making plan changes, based on research by the Society for Human Resource Management (SHRM).   In 2018, employees paid nearly a quarter of their premium for single coverage (23 percent) and one-third (31 percent) of their family coverage premium. Those amounts are up less than one percent from the previous four years, according to a report by the International Foundation of Employee Benefit Plans (IFEBP). A similar trend is expected in 2019. Mercer research last year found the average cost of employee health coverage was $12,666 for all employers, $12,148 for employers with 10-499 employees, and $13,018 for employers with 500 or more employees.   For workers with employer-sponsored health plans, deductibles have gone up, too. Those with individual health coverage, nearly half (46 percent), now have a deductible between $1,000 and $2,999. For employees with family coverage, roughly one-third (29 percent) have a similar deductible, while 26 percent have a deductible of $3,000 to $4,999, and nearly a quarter (23 percent) have a deductible of $5,000 or more.

What Does It Mean for Your Business?

To understand what these changes mean for you and your business, it’s important to consult an expert. Your employee benefits agent can walk you through your options and provide a health insurance quote based on your budget and needs. If you’re not currently working with an agent, you can search here for one in your area.

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