Changing health insurance

Many small-business owners are caught in a bind created by the federal health-care overhaul that has made choosing health-insurance plans for their workers a trickier calculation. Companies whose health plans are up for renewal are seeing sharp increases for the coming year. In years past, they could simply seek other bids. But this year, the new health-care law complicates the decision to switch plans. Under the health-care overhaul, companies that keep their existing health plans will be exempt from some of the new law's requirements, such as providing yearly physical exams and other benefits that could add up to substantially higher costs starting in 2014. The U.S. Chamber of Commerce estimates that 20 or so new rules could raise companies' health bills by 1% to 3% each. Companies forfeit "grandfathered" status if they change their health plans. Last week, new regulations outlined limits on the changes that can be made to a plan before it is subject to the requirements that will take effect in 2014. For example, increasing a plan's deductible by more than a certain amount could trigger the forfeiture of grandfathered status. Even grandfathered plans, though, will have to comply with many of the law's reforms, such as covering adult children up to age 26. Many small businesses would like to keep their grandfathered status but can't afford the premium increases. The new rules allow changes to deductibles, for instance, that adjust for medical inflation plus 15%. Tax credits of up to 35% should help small businesses with 25 or fewer workers offset rising costs, and eventually health-insurance exchanges- the new marketplaces where consumers can shop for coverage- will help push prices down. The law will also allow a grace period during which plans can undo changes that may have unwittingly triggered the forfeiture of grandfathering. Source: Wall Street Journal
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