Small employers grapple with rising health premiums

Chicago Tribune

YJT Solutions isn't required to offer health insurance to its 35 employees, but the Chicago company does. In fact, it covers 100 percent of its workers' individual costs.

But that was tested when the company saw a 27 percent increase in monthly premiums this year, and it anticipated a similar jump for 2015 if it stayed with the same plan.

'People enrolled in a family plan were going to be paying almost $2,000 a month for their health care premium,” said manager Tiffany Fitting, noting that employees pay for dependents' costs and the company pays individual premiums. 'We knew that something had to change.”

Many small businesses that offer health benefits are feeling the same pressures. Rate increases for small companies are outpacing those of larger employers, with mandated benefits under the Affordable Care Act one factor in driving the jump, experts said.

As a result, more than one-third of small businesses said they'll likely eliminate health benefits by 2018, according to Mercer data.

Now in its second year, the federal Affordable Care Act requires companies with 100 or more full-time workers to offer affordable coverage or pay a fine. Beginning in 2016, companies with 50 to 99 workers will be subject to the act. Smaller firms will remain exempt.

Data from Mercer shows that insurance costs for small companies jumped 20 percent from 2010 to 2014, compared with 15 percent for companies with more than 500 employees.

YJT's Fitting said the prospect of $2,000 a month for family coverage was even spooking potential job candidates. The company decided to ditch its old plan for a high-deductible plan with a health savings account.

Fitting said shopping for coverage through the federal Small Business Health Options Program, or SHOP, an online exchange established as part of the Affordable Care Act, wouldn't offer her anything more than her broker ultimately found.

As of June 1, SHOP's 18 state-based marketplaces had enrolled about 76,000 people in plans, according to the Government Accountability Office. Data for SHOP have not been made available, but are expected to be similar, suggesting that the program failed to enroll the 2 million customers that had been estimated for 2014.

Blue Cross Blue Shield said it will offer a private exchange for small businesses this year called Blue Directions that will allow small business owners to offer up to six plans and contribute a set amount to employees' plans, based on their ages.

Richard Allegretti, vice president of marketing strategy and business development at Health Care Service Corp., the parent of Blue Cross Blue Shield of Illinois, said his company research shows that about 80 percent of companies with two to nine employees do not offer coverage, along with 60 percent of companies with 10 to 50 employees.

'SHOP was appealing to the 20 and the 40,” Allegretti said. 'We're trying to appeal to the other ones too, to say: Think about the economics here and what you may want to do and knowing that you want to offer coverage. ... Let's see how we can do that. ”