Small group market faces health insurance policy cancellations


Industry analysts, insurers and state regulators warn that coverage terminations will potentially affect millions of people with small-group plans by the end of 2014, The Washington Post reported.

About 40 million Americans have coverage through small group plans--those that cover less than 100 workers. While the U.S. Department of Health & Human Services predicted 80 percent of small-group plans could have been discontinued by the end of 2013, many small employers renewed policies through the end of 2014, according to the Post.

However, insurers said they will send the bulk of small-business cancellation notices in October, ahead of the next open-enrollment period. Some small-business cancellations are due to policies that fail to meet Affordable Care Act requirements, others stem from insurers consolidating their plan offerings to maximize profits and streamline operations, the article noted. In Colorado, for example, small-group plans covering a total of 143,000 workers will get discontinued in 2014.

Most small businesses will experience a "labeling issue." That means businesses can shift to similar plans at similar prices with the same insurers but the plans may have different names, Jonathan Gruber, a key architect of the ACA and a professor of economics at the Massachusetts Institute of Technology, told the Post.

And some small businesses can qualify for new tax credits to help cover the cost of health insurance, the Post noted.

Companies that purchase health insurance on the Small Business Health Options Program (SHOP) marketplace,  which is available to businesses with 50 or fewer employees, can obtain a small business tax credit, according to a new FAQ from Westfair Online. The smaller the employer and the lower the average wage, the greater the tax credit.

The small-business cancellations come as some small businesses consider shifting their sickest, most expensive-to-insure employees to health insurance exchanges. But that strategy could threaten the viability of the online marketplaces by inflating the amount of sick and costly consumers shopping for health plans, FierceHealthPayer previously reported.

For more:
- read the Post article
- here's the small employer FAQ

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