Shifting insurance equations

By Stacy Cowley / New York Times News Service

Published Dec 12, 2013 at 12:01AM

For nearly 20 years, Keith Perkins offered health insurance to employees of his small electrical contracting company in Greencastle, Pa., and footed most of the bill. This year, with the arrival of the Affordable Care Act’s insurance marketplace, he decided to stop.

Perkins, who is 54, did the math and calculated that most of his employees, who are spread across Maryland, West Virginia and Pennsylvania, would come out ahead if he dropped his group policy and let them buy insurance individually through the new federal and state exchanges.

He knew the move would be unpopular with some employees, but he was tired of trying to choose one plan every year to cover all of their diverse needs.

“Some of my guys are on the lower end of the wage scale,” said Perkins, who typically has 10 to 18 employees. “When I did the subsidy calculator, I realized many of them would actually be better off if we didn’t offer coverage. We took the amount of money we were paying for health insurance and dumped it into their paychecks instead. And this way, they get to make the choice, not me.”

America’s smallest employers, those with fewer than 50 workers, are not required under the Affordable Care Act to offer insurance or contribute to their employees’ health care costs. As a result, some companies, seeing that their employees now have attractive options at HealthCare.Gov, are seizing the opportunity to wash their hands of one of their thorniest and most expensive business problems.

It is too early to say how the Affordable Care Act will affect that trend, but health insurance has long been a headache for small businesses. Their policies are typically more expensive than comparable plans available to larger employers, and because the risk pool of participants is tiny, one sick employee can increase a group’s premiums sharply.

Brokers say they expect 2014 to be a wait-and-see year in the small-business market.

Steve Hooper, president of the Health Economics Group, a Rochester, N.Y., company that manages corporate benefit plans, said many of the workers in his region, including most of his own employees, have incomes low enough to qualify for the federal subsidies available to those who earn up to four times the federal poverty level, about $46,000 annually.

“We have a lot of part-time people and single moms with kids,” Hooper said. “The New York exchange offers some tremendous options for them that are better than anything else out there.”