Increasing health plan premium costs are a growing burden for the employers who choose to provide health insurance coverage to employees. For small business owners operating on limited budgets, these increases are even more significant. The passage of the Affordable Care Act (ACA) creates additional responsibilities for employers regarding the minimum requirements and pricing of insurance plans for employees. Employers make difficult decisions to determine how to continue to provide health insurance at a fair and reasonable price, without harming the small business.
The case study by Spencer (2014) examines the options of small business owners, John and Liza, faced with a 25% increase in ...view middle of the document...
The passage of the Affordable Care Act seeks is a significant step in advancing health care equality for women. Insurance companies will no longer be able to charge higher premium rates based on an employee’s gender (Pratt, 2013). Based on this knowledge it would be ill-advised for John and Liza to charge Mary a higher contribution rate because she is a woman, and recommended that they explore another option.
Another option is to penalize employees who smoke with increased rates, rewarding employees who do not smoke. A 2009 study by the Journal of Tobacco Policy & Research found that smokers take more sick days than their non-smoking co-workers. Even smokers who are otherwise in relatively good health typically have higher medical costs compared to non-smokers, justifying the increase in insurance premiums within this group (Kapur, Karaca-Mandic, Gates, & Fulton, 2012). Employees who fail to meet the deadline should face increased premiums, as their decision negatively effects the employers overall plan. Insurers are able to charge tobacco users 50 percent more than nonusers who are not participating in a cessation program (Pratt, 2013).
Employers should provide smokers with resources to help them quit, and a deadline in order to do so. Insurance companies are often able to provide smoking cessation resources through Employee Assistance Programs. However, rewarding employees for quitting smoking is also problematic as employees may not be truthful about their status and nicotine tests are costly and often unreliable (Kapur, Karaca-Mandic, Gates, & Fulton, 2012). Rewarding people for quitting smoking is worthwhile only if smokers quit permanently. If the program causes people to quit temporarily and then they take up smoking again as soon as they pass a nicotine test then it’s not an effective use of employer time or a cost-cutting tactic.
In addition to deciding how to deal with the existing premium increase, John and Liza are concerned that the potential new hire, Robert, will be problematic for their insurance plan due to his wife’s pre-existing condition. The Association Provisions of the Americans with Disabilities Act (ADA) prohibit denying an otherwise qualified employee a position based solely on a health condition, as enforced by the Equal Employment Opportunity Commission (EEOC) (Questions and Answers About the Association Provision of the Americans with Disabilities Act, 2011). Not hiring Robert based on his wife’s condition would be a risky choice. The potential decision not to hire an otherwise qualified employee based on the health condition of a spouse demonstrates the widespread repercussions that steadily increasing insurance premiums have on small businesses.
In 2008, over half of small business owners reported health-care costs as their number one problem (Wade & Phillips, 2008). Rising costs make it difficult to provide coverage that is sustainable and affordable. Due to several factors, including high broker fees and...