Why Small Businesses Need To Offer Medical Plans Now More Than Ever:

In 2010, Congress passed the Affordable Care Act, which changed the world of insurance forever.  Since 2010 we have seen the cost of individual insurance increase drastically. This year alone Blue Cross Blue Shield of Texas is asking to increase premiums by as much as 60%.  This is not good because most other states usually follow along with what Texas does. This means nationwide people with individual insurance plans could see rate increases anywhere from 40-60%. First, let’s take a look at why rates are going up and then discuss what is going to happen and what needs to be done.

Why are individual rates going up? The short version, Insurance companies, are paying out more in claims than they are in taking in in premiums.  Also, people were making fraudulent claims, saying that they lost coverage from an employer mid-year then would sign up for a plan and have a major procedure. Then proceed to cancel their plan.  The more detailed version is that in 2013 insurance carriers averaged a profit of $42 per member per month.  The very next year, 2014, carriers averaged a loss of $43 per member per month.  This number got even worse the next year as carriers took a loss of $54 per member per month in 2015. 

Why does this affect small business employers?  As rates increase for individuals, employers are going to have to start offering plans, with multiple choices, to attract better talent.  Most industries can’t attract the talent they want unless a solid group plan is offered.  This is especially true in states like Illinois, where the largest, best PPO network Blue Cross Blue Shield, is not offered for individual coverage.  You also have to look at companies like United Healthcare, who left the Illinois market and are only offering individual coverage in three states.  Other carriers may follow United Healthcare and leave individual coverage. If the market shrinks to one carrier (Blue Cross Blue Shield), which it is looking better every day that it might, no one will pick an employer that doesn’t offer group coverage. Employers should really think about spending a little extra or at least offering a solid medical plan in the near future.  

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