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Obamacare Alert: Better Get Ready for Big, Ugly Changes

Health Insurance is always difficult, but now that Obamacare has changed the rules, even the things that used to be simple are complex. Here's what you need to know.
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It's summer. Perhaps you're taking your annual vacation. Perhaps your company participates in a summer work week--where everyone works a bit more Monday through Thursday and then leaves at noon on Fridays. Everything seems to slow down a bit, and it's not the time when you want to think about super boring things, like health insurance and open enrollment. But, you need to.

Why? Well, first of all, the changes due to the Affordable Care Act ("Obamacare") are still not clear and there may be some big changes in store. For instance, Jaime K. Brennan, CPA found out that some of her clients were moving onto plans where every single one of their employees had to pay a different rate. She explained it this way:

One person with family, who was 28, got a rate much lower than one person with a family but who was 45. I 'll admit, I don't think most advisers or business owners knew that this kind of drastic change was coming. In a small group plan--less than 50 employees- each person in the family ( or employee and spouse) gets a rate, and then those individual rates are added up and become that employee's family rate. There is no longer any "group rate" or "experience rating".

That, as Brennan says, is drastically different from what employees and employers alike are used to working with. The old method kept rates down for older employers, and didn't treat families as just a bunch of random people who happen to be billed together. Brennan states that "This is going to literally be nothing short of disastrous for many small businesses."

Previously, to be compliant with the law, contributions had to be consistent within a class of employees, but now you can end up with employees who get a 200 percent increase, while a younger employee will see their rates drop. Since the business, according to Brennan, must be "non-discriminatory" in how they contribute, businesses are struggling to figure out how to do this when their employees have wildly different rates.

And that is just the nightmare on the employee explanation part. It also can become a bookkeeping nightmare. If the rates you end up having to pay per employee differs, you may have to reprogram your systems to be compliant. At the end of the year, Brennan warns, when most policies renew, you could find that your employees want to leave to join the exchanges. If that happens, you may have to disband your plan due to decreased enrollment.

Not only that, but employees may find it cheaper to kick their adult children off the family plan and punting them to the exchanges, where their young adults may be eligible for cheaper subsidized rates. "However," Brennan warns, "for any of those who are renewing in the middle of the year, going on the exchanges may not be an option since the open enrollment period has ended, and it does not appear that choosing to leave a group plan will count as a change in circumstances that allows people to enroll outside of open enrollment." That could be an unexpected nasty surprise.

Brennan fears that these changes won't only affect small business's bottom lines, but their ability to attract employees. Why would a good candidate want to work for a small business with a complex and expensive insurance plan, over a larger company? That will continue to hurt small businesses.

So, that's on the employer side--the stresses that go on behind the scenes. But you've got to explain that all to your employees as well. According to a recent survey conducted by GuideSpark.com, a company that specializes in employee communication, 82 percent of HR departments already find the health insurance open enrollment period so stressful as to overtax their resources. And that was under old plans that were familiar to the HR experts.

Keith Kitani, GuideSpark CEO, says, you need to begin the process now, if you want to be ready for your open enrollment period. You need to plan and prepare. "Open Enrollment is a painful combination of being both boring and confusing," Kitani says. The recent healthcare reforms are some of the biggest changes we've seen in 50 years, adding in yet more complex jargon to confuse employees on a subject they already find tedious to understand. Hands down, thus you're already at a disadvantage." Employees had difficulty understanding these plans in the past, now with big changes, your employees are going to be at an even greater disadvantage.

Kitani advises making a plan, now. Set goals and get your timeline in place. And then make sure the information is actually interesting so that your employees pay attention. Here are Guidespark's tips for making that possible:

1. Create engaging content. No more boring documents or legalese. You are competing for their attention with YouTube videos.

2. Make it human.  To ensure that your message resonates with employees, keep it focused on them.

3. Make it short. No one pays attention to multi page text documents or 20-minute videos in this age of 140 character tweets. The average YouTube video is four minutes.

4. Personalize the message. It should be from YOU to them. 

5. Reward them. If they pay attention and comply with what you're asking, they're doing you a favor. Don't forget that.

The important thing is to start talking to your insurance representative and your accountant and your HR person today, if you haven't already. The changes can be complex and confusing and, in some cases, anger inducing. Better be ready.

 

Last updated: Jul 8, 2014

SUZANNE LUCAS | Columnist

Suzanne Lucas spent 10 years in corporate human resources, where she hired, fired, managed the numbers, and double-checked with the lawyers.

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.



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