Many businesses are spooked because of the uncertainty of a health insurance exchange. To understand whether you should be concerned and to prepare for purchasing on the exchange, you should look at your costs over the last few years. Have they been predictable? Have they helped or interfered with your planning? Has your business changed in the recent past to accommodate the cost of coverage? Understanding your past and current cost trends for providing health coverage is the foundation for understanding the future effects the coming changes may have on your business.
One of the certainties businesses all over the state and nation have been talking about for years is how insurance costs are rising and gobbling up an increasingly large chunk of their overhead. Health insurance premiums are reported to be up to 18% higher for small businesses, in part because they don’t have the bargaining power of larger companies. It is also increasingly expensive for employers to administer and maintain health insurance for their employees. Some companies offer insurance to a subset of their employees, some to all employees, and some to an employee’s family. Employers also struggle with the number of plans to offer and the percentage of premium they can afford to pay, which in turn affects employee morale and retention. Also, the illness or injury of an employee in a small workplace can cause premiums to increase.
Often, rising health insurance costs consume any raises businesses would otherwise give to their employees. Health insurance premiums have gone up three times faster than wages in the past ten years. Businesses are being buffeted by interests purporting to speak on their behalf, but the reality is that all businesses are slightly different and have different cost pressures. Knowing your own experience will help you to understand the debate going on in Montpelier and plan for the future as you evaluate and price your options on the exchange. Thus, enacting step two
, knowing your insurance costs and trends, and assessing their predictability and increases will help you evaluate your financial picture relative to the changes to the marketplace brought on by health care reform.
The next post will address Step Three: Understand the Tax Credits Available to You for Purchasing Insurance on the Exchange.