The May 30, 2015 article in the Chattanooga Times Free Press highlighted the reality of health care costs, insurance, and, in a way, the relationship of both to World War II’s Russian front. All of which is why businesses, particularly medium-sized businesses, should be looking ahead to next year for the major costs – and decisions – 2016 will bring.
“After losing $141 million in the first year of offering individual health plans through the federal Affordable Care Act, Tennessee's biggest health insurer wants to raise premiums next year by an average of more than 36 percent.
“BlueCross BlueShield of Tennessee, which enrolled nearly two-thirds of the 231,000 Tennesseans who signed up for health insurance exchange plans last year, said it initially underestimated the number and cost of the medical claims filed by new enrollees.”
When he first ran for president in 2008, then-candidate Barack Obama repeatedly said his plan would reduce health care premium costs to families by about $2,500 annually. That promise ran headlong into the reality of health care costs as an economics Russian Front: the more money and resources your pour into the battle, the more it demands.
Many in public leadership positions say, or believe, they have the health care cost answer. More government. Less government. More prevention. Less use of costly drugs. More exercise. Less use of expensive tests. Single payer. Free markets.
Whatever the answer is, no one’s found it or been able to convince the country the answer has been discovered. As insurers eye rate increase requests, other reports indicate that Affordable Care Act related health insurance deductibles will increase significantly as well. As Investors.com reported on May 28:
“It was barely more than a year ago, during the first Affordable Care Act sign-up period, when customers were stunned to learn that low-cost bronze plans carried deductibles of $5,000 or even $6,000.
“By now, the maximum $6,800 bronze deductibles being proposed for 2016 plans have likely lost most of their shock value. The new sticker shock is silver plan deductibles that can reach as high as $6,500 as insurers push the envelope in finding ways to hold down premiums.”
In Nov. 2014, Modern Healthcare magazine cited deductibles as a serious issue facing everyone in the health insurance market:
“Those deductibles already are weighing heavily on Americans. A new survey from the Commonwealth Fund (PDF) found that three in five low-income adults and about half of adults with moderate incomes believe their deductibles are “difficult or impossible to afford.” About 13% of Americans spend 10% or more of their income on out-of-pocket healthcare costs as well.”
It's important to note that the true cost of these high deductibles can be mitigated with tax deductible contributions to Health Savings Accounts. In 2015 an individual can contribute up to $3,350. Contributions for a family plan are $6,650. If the covered individual is age 55 or older he or she can make an additional $1,000 contribution. The maximum amounts increase to $3,350 and $6,750 for 2016.
Looming on the cost horizon for medium-sized businesses are the delayed – but not gone – employee coverage mandates.
Businesses with 50 to 99 workers have until 2016 to comply with Affordable Care Act employee coverage requirements before facing financial penalties that can be as much as $3,000 per employee. The insurance requirement in 2015 for companies with more than 100 employees was reduced from 95 percent of the workforce to 70 percent, for one year only.
In 2016, the mandates arrive in full-force for all businesses except those with fewer than 50 employees, who remain exempt from the mandate. Businesses that go from above 50 employees to fewer than 50 will have to prove to the government that the reduction wasn’t just to avoid the Affordable Care Act mandate. Businesses, not having yet felt the full force of Affordable Care Act mandates, are in need of thorough, thoughtful, careful, financial planning for 2016.
Starting now. The front’s approaching.