New York’s ACA Small Business Silver Lining
It’s human nature to resist change.
Take Matt—a hard-driving, successful business owner who rarely slows down for a healthy meal. He’s packed on the pounds over the years and ignored his knee pain and shortness of breath until his doctor prescribed high blood pressure medication. It was a wakeup call. After entirely changing his eating habits, Matt is 45 pounds lighter.
The benefits to his new lifestyle go well beyond getting off medication—he has more energy, a better attitude, and greater confidence.
In a similar way, many small businesses in New York are facing a mandate to change that can transform their businesses in ways that they never even imagined.
First, the basics. The mandate results from New York State legislature’s decision to classify companies with up to 100 employees as small businesses under the ACA. This impacts the type of health insurance that small and mid-sized businesses can offer their employees. Until now, New York employers with 51- 100 employees could purchase insurance in the Large Group Market, while companies with 50 or fewer employees purchased in the Small Group Open Market.
The difference between the two? Generally, the Large Group Market offers more choices and better rates. That’s because many insurers write only in the large group market, so there’s more competition. In addition, rates are set based on the health history of those being covered.
Small Group plans are significantly different. Their rates are set based on what’s called Community Ratings. This means that employers in a geographic region pay the same rate regardless of their employees’ health history, their age or gender.
Here’s the important news: starting in 2016, New York companies with 51 – 100 employees are relegated to buying Small Group plans. Companies of that size can expect to see their Large Group medical coverage canceled and to pay higher premiums if their employees are primarily young and healthy.
The implications are significant. According to the latest Empire State Development Report, ninety-seven percent of businesses in the state have 100 employees or less. These same companies employ more than 30 percent of New York’s workforce. Without large group medical coverage, many of these businesses may find themselves at a significant disadvantage when it comes to recruiting and retaining top employees. That’s because benefits are cited as imperative to job satisfaction among three out of every five employees according to SHRM.
So where is the silver lining?
I believe the New York small-business ACA designation is a wakeup call that will force all small businesses to consider PEOs. When they do, they’ll learn that they can offer Large Group medical plans. And that’s just to start.
The benefits of working with a PEO are extraordinary. Just imagine a highly productive and happy staff. Freedom from HR paperwork. Lower risk of employment lawsuits. Confidence that your human capital is being fully utilized.
That’s because PEOs become the ‘co-employer’ for the small business owner. What that doesn’t mean is that you lose control. You are just losing the back-office administration of having employees. A PEO pays the employees and taxes, protects the employer from liability, provides an HR consultant and can offer employees Fortune 500 benefits, and at lower rates than in the Small Group Market—because of our buying power.
At CLEAR Employers Services, for example, we offer the best healthcare benefits in New York through Empire Blue Cross Blue Shield. It starts with more local physicians, who participate because of Empire’s faster and easier reimbursements. Employees can video conference with a board certified physician and have their prescription filled as they head to the office. They also have access to a 24/7 nurse hotline for those midnight medical questions. Empire is the number one health insurer in the nation, covering one in three Americans and providing a coast–to-coast network of physicians with Blue Total Access, which even includes medical coverage for when you and your employees travel outside of the U.S.
There are numerous options for CLEAR’s customers including platinum, gold, silver and bronze. At the high end, we have a low copayment PPO option that gives the flexibility of network with minimal out of pocket costs. At the low end with having high deductible HSA compatible plans that lower the premium cost while providing a high plan year deductible to satisfy.
The benefits to working with a PEO go well beyond significant benefits—PEOs are proven to help small businesses succeed. According to the National Association of Professional Employer Organizations, companies who use one can grow 7 to 9 percent faster, enjoy 10 – 14 percent less turnover and are half as likely to go out of business as their peers.
Many of our clients tell us “I wish I had known sooner,” when they realize all that a PEO can do for them.
I believe that the New York ACA mandate means the time has come for PEOs. For the savvy small business owner, this means that the time has come to dream big, worry less and focus on the business priorities they love most.