WASHINGTON — Small businesses across Maine are renewing their health insurance policies months early rather than buying new plans that comply with the Affordable Care Act, reflecting confusion and uncertainty about the effects of the federal law.
Anthem Blue Cross Blue Shield, Maine’s largest insurer, says it is getting a “very sizable percentage” of renewals that will take effect before new coverage mandates begin Jan. 1. Insurance brokers also report strong interest among businesses that want to renew before year’s end.
Some businesses are renewing early to delay what will likely be higher premiums under the health care law. Others simply want more time to consider their options.
“We find people are still on the steep end of the learning curve as far as the Affordable Care Act and what their choices are,” said David Clough, Maine director of the National Federation of Independent Businesses.
For weeks, headlines have blared about the millions of Americans who have received cancellation notices from their insurers because their policies won’t meet minimum coverage standards under the Affordable Care Act.
Robert Neveu is in the less publicized but sizable group of business owners who got cancellation notices for insurance bought for employees on the “small group market” and are now struggling to navigate the new system.
Neveu, who runs the Portland-based software company Certify LLC, summed up his experience in the past 30 days with two words: frustration and confusion.
He said he was shocked initially to learn that his employees’ insurance plan – for which Certify pays 100 percent of the premiums – will not comply with the new law. He also fears that changes to the rate-setting system could drive up costs and lead to hiring discrimination, especially against older workers.
Neveu opted for an early renewal of his company’s current policy and was pleased to get a discounted rate, only to face the possibility that the insurer’s offer could be withdrawn after President Obama announced last week that insurers can honor non-compliant policies for another year. Neveu has since learned that his company will be allowed to renew at the lower rate, and hopes that will end the roller-coaster ride for him and his 30 employees.
“I don’t have a political ax to grind,” Neveu said, noting that he voted twice for Obama, the law’s chief architect. “But the impacts on my business are mind-boggling.”
Anthem Blue Cross Blue Shield has long offered early renewal, and has been talking with clients about the option since the spring. The rate of early renewals has increased significantly in recent months, with a “very sizable percentage” of early renewals for contracts that were to expire in the first quarter of next year, said Eric Jermyn, the company’s small-group sales director.
“The whole early renewal discussion is really about giving employers time to meaningfully consider their options and what is the best thing for them, for their employees and for their families,” Jermyn said.
A political storm in Washington could lead to more changes to the Affordable Care Act, and that uncertainty isn’t helping businesses.
Tony Payne, business development director for Clark Insurance in Portland, said his agency has fielded requests from clients that want to renew insurance plans before Jan. 1. Other businesses are debating whether to continue offering insurance to employees at all, he said.
“I think confusion continues to be the order of the day,” Payne said.
The Affordable Care Act set minimum standards for insurance plans. Those new standards prompted cancellation or change notices to millions of policy holders nationwide who bought their insurance as individuals or through the small group market, which typically is used by businesses with fewer than 50 employees.
About 90,000 Mainers are covered through the small group market and 32,000 buy coverage on the individual market, according to the Maine Bureau of Insurance.
Obama’s announcement last week that insurance companies can keep offering non-compliant plans next year relieved some time pressure on affected individuals and companies – but only temporarily.
Joel Allumbaugh, an insurance broker and CEO of the National Worksite Benefit Group, a Hallowell-based insurance agency, said none of his clients’ current plans would comply with the new standards. So even if they renew this year, they will have to choose a different, and likely more costly, plan next year, he said.
His agency is now working with those clients to evaluate the pros and cons of renewing early.
Allumbaugh serves as health policy director of the Maine Heritage Policy Center, a conservative think tank that’s strongly critical of the health care law, but he said his clients are making decisions on “real numbers,” not his policy analysis.
Seth Goodall of Richmond, New England’s regional administrator for the U.S. Small Business Administration, said small businesses nationally pay 18 percent more for health insurance than larger companies. A central goal of the Affordable Care Act is to create a larger insurance pool for small businesses.
“Over time, we want to make sure we lower the costs (of health care) for small businesses,” said Goodall, a Democrat and a former Maine state senator.
Goodall said the SBA has been working closely with businesses to help educate them about the new law.
He and other supporters of the law noted that many employees will get more comprehensive coverage, and that employers will often have more plans from which to choose.
Rhett Buttle, vice president of the Small Business Majority, a Washington-based advocacy group that supports the law, said the law will stabilize rates, after years in which insurance costs have outpaced inflation.
Carrie Baker, senior account executive for Norton Financial Services in Cumberland, said most of her agency’s small-business clients are renewing early starting Dec. 1 at “very competitive rates.” That gives them extra time to understand the new options and adjust their contributions to employees’ premiums accordingly, she said.
For those that buy new plans that meet the law’s standards, Baker said, “We’re not seeing grotesquely increased rates, but we were one of the most expensive states already.”
Norton Financial provides services to MaineToday Media, parent company of the Portland Press Herald.
Mark Pendergast, who owns Salmon Falls Nursery and Landscaping in Berwick, is unimpressed with his options so far.
Unlike Certify LLC in Portland, Salmon Falls Nursery and Landscaping didn’t get a cancellation notice from its insurer. Yet when Pendergast crunched the numbers for 2014 with his broker, the result was a 54 percent premium increase because of the new rating system, which more heavily weighs employees’ age and requires more comprehensive coverage for everyone.
He has since whittled that figure to the 20 percent range, since switching to a new broker. But Pendergast, who opposed passage of the Affordable Care Act, described the process as “a horror show.”
“In this market, a small business can’t sustain that,” he said of the rate increases. “It is going to be awful.”
Kevin Miller can be contacted at 317-6256 or at: