Since the beginning of 2017, healthcare in the United States has been frontpage news numerous times. As soon as the result of the 2016 presidential election came in, the health insurance market faced incredible uncertainty. This was especially true for the Affordable Care Act
Since then, we have seen many insurers reacting to this uncertainty in various ways. Some have pulled out of markets all together, while others are drastically reducing the number of plans they offer, especially for small group plans
. This uncertainty has led to premium increases for group and individual plans, and expected raises to ACA policies.
Then in early October, President Trump announced an executive order
that further clouded the future of the Affordable Care Act. With open enrollment now underway, we are finally seeing how the ACA is being impacted, and it is significant.
Premiums for the Most Popular ACA Plans Are Increasing an Average of 34%
It was recently announced that ACA premiums are set to rise significantly across the board. For “silver” plans, the most popular offerings amongst ACA customers, the average price on HealthCare.gov increased by 34%. Market uncertainty and the elimination of federal payments to insurers by the Trump administration are seen as two of the biggest reasons for the hike.
Despite the premium increases, many ACA customers will be insulated from them. Premiums for certain customers are subsidized by the federal government. More than 80% of ACA customers who buy
through government marketplaces receive these subsidies. However, those customers who do not qualify for the subsidies will be forced to pay the full premium prices. This could be as large as $100 more per month in many states.
Many states face significantly larger average silver plan premium increases. Some of the largest state price hikes include:
- Iowa – 69%
- Utah – 64%
- New Hampshire – 50%
- Florida – 49%
In the local area, New Jersey is set to increase by 29%
on average and Pennsylvania is rising by 42%
Premiums for Other ACA Plans Are Also Increasing
Increases to Affordable Care Act plans aren’t limited to just silver plans. And while the premiums didn’t increase as much as with the silver options, double digit rate hikes are occurring
with each level of ACA coverage.
At the bronze level, the second most popular type of ACA plan, increases are at an average of 18%. Gold plans will cost 16% more than last year. These plans are among the priciest available in the ACA marketplace and are purchased by around 4% of customers. Lastly, platinum plans are rising by an average of 24%, and are purchased by fewer than 1% of all ACA customers.
What Does This Mean for 2018 and Beyond?
With the ever-increasing complexity and uncertainty with healthcare, it’s becoming harder and costlier than ever for small businesses to administer health insurance benefits to their employees. We have already mentioned that price increases are occurring throughout the healthcare market – it’s not just isolated to ACA plans.
As the Trump administration acts on the October 12 executive order, and makes future changes to the Affordable Care Act and healthcare in the United States, further impacts will be felt throughout the health insurance industry. This could very well lead to more insurers exiting certain markets
, or raising premiums even more. Small businesses could be facing an even harder time in the future if more changes do occur in 2018.
A PEO Can Help Small Businesses Meet These Challenges Head-On
As the healthcare and health insurance markets (not to mention HR) grow more complex, small businesses have options available to help handle these changes. Partnering with a professional employer organization (PEO) is one option that can benefit small business owners and employees
PEOs can help with the complexities and confusion of ACA and other employment-related compliance issues. PEOs also provide small businesses with access to large-group benefit packages at much lower prices. Being able to offer better benefits can help a small business in more ways than one. In addition to helping with employee happiness and engagement
, benefits play a key role in recruiting and retention. You may be surprised just how valuable a PEO partnership can be, especially when navigating the constantly changing health insurance market.
Want to learn more about PEOs? Check out our eBook, How Well Do You Know PEO? This eBook provides an overview of the PEO industry as well as helpful information for brokers and employers!