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How Obamacare is affecting employers

October 26, 2013

HHGregg

Indianapolis-based electronics retailer HHGregg Inc., which is a client of Apex, expects migration to be the biggest driver of the 14-percent increase costs it expects from Obamacare next year.

Right now, only about 60 percent of HHGregg’s 6,700 employees participate in its health plan. But Gregg’s chief human resources officer, Charlie Young, expects that number to rise to 65 percent or 70 percent.

“That translates into rate increases for employees. There’s no way around that,” Young said. “The law is driving costs up.”

More than 80 percent of HHGregg’s employees work full time and qualify for health benefits. Young said the company’s health plans pass the Obamacare affordability test for all those workers.

Because of that, no full-time workers qualify for a tax subsidy in the Obamacare exchanges. And without those subsidies, the cost to buy the same level of benefits in the Obamacare exchanges would be significantly higher—50 percent or more higher, Young said.

So Gregg is starting a new health plan that is structured more like one of the low-cost bronze plans in the Obamacare exchanges, just to make sure it is providing coverage to its employees that is genuinely affordable, not just affordable under the Obamacare definition.

Hoosier Park and Indiana Grand

Rolly Luciani, who directs insurance and benefits for Hoosier Park Racing & Casino in Anderson and Indiana Grand in Shelbyville, is focused on what to do with his part-time workers.

The Centaur-owned racinos employ 1,100 full-time workers and 900 part-time employees. Right now, only the full-timers are eligible for health benefits. But on Jan. 1, Obamacare will require the part-timers to have health insurance coverage.

So Luciani is working with his insurance broker, Indianapolis-based MJ Insurance, to set up instructional seminars about the exchanges for part-time workers. MJ Insurance personnel will even be able to sign up workers for coverage on site.

“We don’t want our team members getting strapped with heavy penalties,” Luciani said. “If they all get impacted by something, that’s going to affect how our business operates.”

Centaur also expects about 150 of its part-timers to qualify for health benefits under Obamacare’s rules, which define a full-time worker as anyone averaging more than 30 hours per week.

Instead of limiting those workers to fewer than 30 hours, as some employers have done, Centaur plans to offer them health benefits. It estimates the cost of bringing them into its health plan will be $500,000 next year—or a 7-percent increase in total medical claims.

Luciani said he’ll likely look for changes to Centaur’s health plan to help offset about half of those costs.

First Person

Apex’s estimates were higher than another benefits consultancy, First Person Advisors, has seen among its clients. CEO Bryan Brenner said his clients are typically expecting cost increases next year of 3.5 percent to 4 percent from the new law.

However, Brenner is a firm believer that the law is driving up costs for employers. He experienced it with his own health benefits.

First Person learned a month ago that its benefits costs would rise next year 81 percent—or about $250,000. That’s because, with fewer than 50 workers, First Person would be affected by Obamacare’s new community rating rules.

Community rating means that, instead of each company being assessed for the medical costs of its own employees, employers with fewer than 50 workers across an entire region are pooled by an insurer. Community rating is nothing new, but Obamacare narrowed the difference in premiums insurers are allowed to charge to healthier employers versus sicker ones.

That change helps keep prices low for employers with older or sicker workers. But for a company like First Person, which has a relatively young work force and has been aggressively promoting wellness programs for 12 years, its costs would rise.

“In the small group market under 50, we’re seeing everything under the sun, from rate hold or reduction to ours, which is 81 percent,” Brenner said. “That’s one of the higher ones, unfortunately.”

But Brenner figured out a way to dodge the cost increase. First Person will renew its health insurance plan one month earlier than usual—on Dec. 1—so it won’t have to meet Obamacare’s new rules until Dec. 1, 2014.

By that time, Brenner expects, First Person’s work force will have grown to be larger than 50 people for a full year. So then the new community rating rules will no longer apply to First Person, and First Person can buy insurance priced low because of its healthy work force.

“We got lucky twice,” Brenner said.•

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