Michael Szymoniak Employee Benefits Consultant View Bio

Affordable Care Act changes will affect small businesses

Employee Benefits Consultant Mike Szymoniak was recently featured in a Buffalo Business First article discussing how Affordable Care Act changes will affect small businesses and the benefits they provide to their employees coming on January 1st, 2016. The article, written by Tracey Drury, can be seen below or downloaded here.

Insurers Target Small Business

When Buffalo Philharmonic Orchestra employees open their paychecks early next year, they’ll see a significant drop in the cost of their health insurance.

The BPO is among thousands of companies across the country affected by a federal health reform measure that reclassifies “small employers” to those with fewer than 100 full time-equivalent employees. It’s among a handful of reform measures tied to the Affordable Care Act that kicks in for 2016.

At the BPO, the reclassification means orchestra administrators and musicians will now qualify for health insurance products at community-rated prices versus rates based on its own claims experience, said Kevin James, director of finance.

“We’re going to realize a savings of probably up to 20 percent on our health care costs, and that’s going to translate to both the BPO as an employer and to the employees with the cost share on both sides,” he said. “We never really noticed that we had high claims, but for some reason we’re one of the fortunate who are able to see this much of a savings as we change over to that community rating.”

The reclassification allows small employers to buy community-rated health coverage through brokers, direct through health insurers as well as through the Small Business Health Options Program (SHOP) on the New York State of Health online exchange.

Both insurers and brokers are working hard this summer and fall to capture a piece of that expanded business, while others are hoping to keep existing business customers with new product offerings and services.

The BPO is working with brokers at First Niagara Benefits Management and BlueCross BlueShield of WNY to identify which products it will offer to employees. It also is changing the timeline on its plan year from an Aug. 31 year-end to a Dec. 31 end date to allow the company and employees to benefit from the lower rates sooner.

Brokers said they have been working to educate their clients about the changes, explaining the advantages and keeping them up to date on reporting requirements. The reclassification applies not only to the number of employees but shifts from 50 eligible for insurance coverage to 100 total FTE.

“When you look at the landscape of Buffalo, we’re made up of small and midsized companies so we’ve had a pretty strong focus in this area even before the changes,” said Szymoniak.

Not every company will benefit from the change; some could see rate increases if they have low claims and a healthy workforce. In those cases, it might make sense to change the plan year to allow a company to renew in December at the existing experience rating and postpone the change until late next year.

“We work very much with a consultative approach, looking at what their claims were and comparing strategically to where they want to be financially, without removing benefits,” said Kathleen Armstrong, assistant vice president and employee benefits department manager at The Evans Agency in Angola. “We’ve always been advisers, but now they’re really relying on us in a different manner.”

At Lawley, that consulting role typically kicks in six to seven months before a business’ renewal date, but this year the company pushed that out to nine or 10 months to make sure companies truly understood their options, including providing side-by-side pricing comparisons when possible.

The reclassification opens up business opportunities, especially in a city where small employers are the majority, said Michael Szymoniak, employee benefits consultant at Lawley.

“When you look at the landscape of Buffalo, we’re made up of small and midsized companies so we’ve had a pretty strong focus in this area even before the changes,” he said.

Instead of focusing so much on negotiating with carriers and plan design, the change will allow the company to focus on value-added services in areas such as education, compliance and reporting. Companies can go directly to the insurer or use the state health exchange, but providing added services will hopefully bring clients in the door who want someone else to handle all the details, Szymoniak said.

Additionally, the firm’s Lawley Marketplace private exchange offers clients a way to give their employees more control over their health care dollars, including the amount a company is willing to contribute and how much more employees want to pay out-of-pocket for enhanced benefits.

“The products are what the products are, but this is a community that’s built on relationships and we feel responsible for our clients,” he said. “They don’t want to call an 800 number. They want to call someone they know and have that person problem-solve for them rather than the call center.”

For health insurers, the reclassification meant growth in the market size and additional claims data with which to figure its community-rated product pricing. In the case of Independent Health, that had a positive impact and at least in part led to the reduction in rates for the small-group market. Independent Health was the only local insurer that lowered rates for 2016 for small groups.

“We were able to put significant decreases on our small-group business, and largely that’s the result of lower claim costs and lower administrative costs,” said Nora McGuire, senior vice president and chief marketing officer.

BlueCross BlueShield has over 50,000 members in the small-group category and wants to grow that number with the reclassification expanding the market. It anticipates that the new BlueConnect private exchange will make BlueCross BlueShield’s products more accessible to those potential customers, said David Busch, senior vice president and chief sales officer.

“We have a variety of networks we can offer, and we’re now offering all of our networks at every metal level for small groups,” he said. “We’re still continuing to see an evolution, not only in the new channels but also how employers are accessing the market. We’re committed to being there with the products and services they need. We see BlueConnect as being a big part of it, as well as helping guide them through these changes.”

The change in classification adds about 750,000 individuals into the small-group category across New York, including a significant portion in Western New York. That means a jump in potential market share for insurers such as Health Republic Insurance of New York, which entered the local market last year in the first year of the statewide exchange enrollment. It remains the leader for SHOP enrollment both here and across the state with 30 percent of overall statewide enrollment.

The company plans to step up its advertising to land a bigger slice of the pie, including companies new to the small-group category.

“Buffalo is an important market for Health Republic,” said Debra Friedman, president and CEO. “We view the change in small group as an opportunity to grow in the region, as we continue to provide Buffalo-area businesses with the affordable, high-quality plans they seek.”

Other insurers, such as Univera Healthcare, aren’t focusing much attention on small-group opportunities on the SHOP because of lower levels of participation. Most groups will continue to buy through their brokers on private exchanges, and that’s where Univera will work to grow its business, said Pam Pawenski, vice president for commercial sales.

At the same time, as pricing becomes more competitive, it becomes more difficult to differentiate each insurers’ products, she said.

“All of us are always striving to grow, but it becomes more difficult in the current environment,” she said. “For small groups, price is typically king, so you really want to get to the lowest price point, which typically precludes you from adding bells and whistles.”

Groups of this size make up 20 percent of Univera’s business, she said. Market expansion, however, will make it more significant for 2016. Pawenski said Univera tries to stand out from competitors by stressing access to its national network of providers, as well as its PPO products.

The full article can be downloaded in PDF format here.

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