Group Health Rates at a Rise – The Problem with a Solution
- Affordable Care Act, Defined Contribution Plans, Employers, Healthcare Costs, Premiums
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There are many different small businesses and employees that are seeing a large increase in their group health-insurance rates under the Affordable Care Act. However, it is not just small businesses but also businesses of any size. They are seeing higher deductibles and co-pays in 2014.
A lot of the blame for the cost increase is being put on Obamacare, but the law is only accelerating the trends that are making it this way. The cost of health care was on the rise prior to this law and continues to be on the rise, but people are noticing it now when it comes to choosing a health-care plan. A lot of the increases are somewhat small (around 7 percent), but if small companies do not lock in these increases now, they might be faced with higher rates later on down the road (around 25 percent to 30 percent).
There is another option that small businesses can look into as well – defined contribution plans and benefits. This can allow the companies to avoid expensive group health insurance, as well as benefits to retain and recruit good employees. Small businesses also do not need to go through the employer mandate and can either offer traditional insurance offerings or pay the tax penalty. If there are less than 50 employees, then the mandate does not apply to them.
With defined contribution health-care benefits, employees can choose their plans and even get subsidies if they’re qualified. Small businesses can then predict costs associated with the health benefits since they are the ones that set the amounts that are going to be spent. Employees use the plan that works best for what they or their families need and brokers can add this to their offerings to retain their clients by offering them a more affordable option.