Small businesses race to renew health plans early

• Many small businesses mull ending health insurance benefits in 2014
• In some areas%2C 80%25 of small businesses move to early renewal to avoid ACA mandates
• Early renewal robs employees of important benefits in health law%2C industry watchdog says

Thousands of small businesses around the U.S. are racing to renew their health insurance policies Dec. 1 to beat large premium increases their brokers say will hit them Jan. 1 when the Affordable Care Act takes full effect.

Some health insurance brokers also say 2014 may be the last year many of the companies even offer health insurance.

Insurance brokers from several states told USA TODAY that 60% to 80% of their small-business clients — those with 50 employees or fewer — are renewing their policies early to skirt the law. Companies with more than 50 employees aren't allowed to adjust their renewal dates.

Many companies are still waiting to hear what rates they'll be facing in 2014, as state insurance commissioners are backlogged with tasks related to ACA compliance.

The National Federation of Independent Business estimates 42% of the at least 7 million small businesses with 50 or fewer employees offer health insurance. On Friday, the group released a survey in which 64% of 921 small-business owners and operators reported they pay more for insurance premiums per employee in 2013 than they did in 2012.

The Department of Health and Human Services says the situation is better than it has been in the past. "Since the Affordable Care Act became law, health care costs have been slowing and premiums are increasing by the lowest rates in years," HHS spokeswoman Joanne Peters says. "The law is making it easier for businesses to offer coverage, just like it did in Massachusetts when employer coverage increased after reform passed."

Beginning this summer, insurance companies warned brokers and businesses that rates could rise dramatically because of the ACA, and some of these agents say they are seeing increases of 30% to even 100% in premiums, especially for businesses that have young workforces. That's because companies will no longer be able to charge older people more than three times they do younger ones.

Moving up renewal dates, which could affect millions of workers, will save these employees money on their premiums, but critics warn it also means they won't benefit from some of the ACA's provisions. Among the changes that take effect Jan.1: fully paid preventive care doctor visits, limits on out-of-pocket expenses and mandatory dental coverage for children.

"The consumer protections are in there for a good reason," says Wendell Potter, a former spokesman for Cigna insurance, now an author and industry watchdog. "The value of the policies that will be mandatory after (Jan. 1) will be much better."

Plans offered by small businesses, Potter says, "often have skimpy coverage or very, very high deductibles. That's why many of them are less expensive."

In Chicago, health insurance broker Allen Wishner, an ACA supporter, says most of his clients' plans already had the most important benefits required in the new law, so he doesn't think the delay puts their employees at a disadvantage.

Wishner says 72% of his 1,600 small-business clients that have responded to insurers' early renewal offers decided to go with Dec. 1 renewals. He expects that trend to continue when his other 1,000 clients make their decisions.

What's happening in some areas:

•In Louisville, Ky., broker Matt Schwartz says about 60% of his small-business clients are renewing Dec. 1. He estimates the new insurance rating rules will increase healthy younger companies' group rates anywhere from 30% to 100%. His early-renewal clients hope at least to delay that for up to 11 months, he says. After that, "clearly, some of these small businesses will drop their insurance," he says. .

•In Hampstead, N.H., Tom Harte says it would benefit about half of his approximately 200 small-business clients to renew on Dec. 1. It was an easy decision for one company that was facing a 3% premium increase in December vs. a 20% one in January. "I'm 100% confident some healthy young groups' premiums in other states are doubling," he says.

•In Americus, Ga., broker Russ Childers says he has just received the rates for his small-business clients, and many of them are significantly higher — unless the company employs a lot of older workers. His advice to clients: "When in doubt, early renew. Then they can switch to something else later." But he says he's not doing it for the insurance companies. "We sell what our clients need."

•In Sacramento, broker Laurie Rood says about 80% of her small-business clients — ranging from law firms to pest control companies — moved to a Dec. 1 renewal date. Rood says companies are unhappy they have to "purchase additional benefits they didn't need."

• In Scotts Hill, Tenn., J. Darlene Tucker says most of her small-business clients kept their 2014 renewal dates, often because it's too hectic at the end of the year to have to deal with insurance.

All businesses with 50 or more employees have to provide health insurance beginning on Jan. 1, 2015. NFIB said its study showed 13% of businesses plan to cut the hours of part-time workers next year. However, it noted no more than half of those cuts are related to the ACA. Rood says many restaurateurs in her area reduced their employees' hours so they would be considered part-time and not eligible for insurance, but all the state and federal website problems means those workers can't get online to enroll yet.

The federal and state health insurance marketplaces will all have a Small Business Health Options Program, or SHOP, that will allow small business owners to make side-by-side comparisons of plans. Enrollment in SHOP is year round and coverage could start Jan 1. Workers in small businesses that don't offer coverage will have better options for insurance and consumer protections and a competitive individual marketplace, HHS says.

As for whether small businesses will continue to offer insurance, Wishner says, "anything could happen in a year." Nervous about all the unknowns about their newly insured customers, many insurers "have been raising rates pretty steadily over last four years." And he says he's had to tell companies in previous years that they were facing 30%-50% premium increases and "employers pay it."

Childers says his clients, which range from a college foundation to a timber farmer and sprinkler company, are hoping to continue offering insurance after next year, even with rate increases.

"Most haven't made a decision yet because they don't know what it's going to cost next year," he says. "Most of them think they will be able to offer something, but as costs go up over the years it becomes harder and harder."