Uncertainty may be the most appropriate word among area employers when it comes to the Patient Protection and Affordable Care Act.

The culprit is frequent changes in the rules and deadlines associated with what many people call Obamacare.

“When you think about the impact of the Affordable Care Act to small businesses you should really put it in three buckets: uncertainty, additional cost and additional administrative burden,” said Jon Dingledine, vice president of consulting for Hill, Chesson & Woody, a Durham-based employee benefits consulting firm with an office in Wilmington.

The Affordable Care Act (ACA) changes how insurers are allowed to price health insurance on the small business market. Under “adjusted community rating” rules in the new law, insurers can’t charge healthier workers less for health insurance than they charge workers in worse health, similar to decreased car insurance rates for safe drivers compared to unsafe drivers.

In terms of uncertainly, the community rating change creates a situation “where most small business employers could not predict what the financial impact would be to their premiums,” Dingledine said.

The Centers for Medicare & Medicaid Services reported in February that the adjusted community rating rule would raise health insurance premiums on nearly two-thirds of the 17 million small business workers receiving coverage in the “fully-insured small group health market.”

“While some employers saw a slight decrease, many employers saw very significant increases, and a few of those increases reached close to 100 percent,” Dingledine said.

Beyond the premium impact, there was also uncertainty over plan design features as new mandated benefits were to kick in, “or so we thought,” Dingledine said.

“In late 2013, the uncertainty for these small employers only continued as it was announced you can keep your non-compliant health plan for one more year, putting on hold many changes that were to take effect,” he said. “All of this uncertainty has created an environment where small business owners are challenged to plan for the future course of their business.”

Because of those changes, local employers were confronted with the “additional cost” factor.

“Many employers experienced a significant impact to their bottom line as changes in rating methodologies and mandated benefits significantly increased the cost of providing health coverage to their employees and their families,” Dingledine said. “Several companies chose to change the effective date of their plan in part to delay the impact of these new costs.”

An additional administrative burden was created.

“Whether it’s the impact of communicating a change in benefits or dealing with a change in plan effective date, the uncertainty that the Affordable Care Act has created for the small business owner has required additional time and effort to make sure plans remain complaint and as affordable as possible,” Dingledine said.

“Small business owners need to be very specific in their hiring and monitor the number of hours worked by employees to be sure that the right employees are covered appropriately,” he added. 

M. Hughes Waren Jr., a benefits consultant with EbenConcepts in Wilmington, said it’s difficult “to find anything good in the ACA for employers.”

“The law mainly benefits individuals with lower incomes who don’t have access to employer-sponsored or other government coverage. For employers with less than 50 employees, the ACA has limited the choices an employer has for small group plan designs and increased taxes and fees on those plans,” Waren said.

“The most frustrating aspect of this law is the constant last-minute policy changes from the White House impacting how the law will be implemented. Business owners want to know what the rules are, come up with a benefit strategy and move forward,” he said.

Waren has found that business employees “typically don’t want to mess with the process of buying insurance on their own through the troublesome marketplace website.”

“They would rather have their employer provide it. Employers that have an affordable health plan have a great recruiting tool, but the ACA
is making it more difficult for employers to afford providing it,” Waren said.

The N.C. General Assembly “realized that small group plan choice was going to be limited once the ACA was in full effect,” Waren said.

In response, a state law was passed last year that allows reinsurance contracts to be written for employers with less than 50 employees.

“This small legislative change allows insurance carriers to create new products for employers that avoid some of the ACA mandates,” Waren said.
Two issues impact employers.

“The first is increased insurance cost, and second is the increased regulation and the compliance adherence cost associated with it,” Waren said.

Many of the area’s larger employers have long since engaged in extensive planning in anticipation of the ACA rollout. Cape Fear Community College has about 600 full-time employees and an additional 500 to 600 part-time workers.

“Basically, the new laws have put new limits on the amount of time that part-time faculty can work,” CFCC spokesman David Hardin said. “It definitely has had an impact here because we rely so much on part-timers, so it’s made an impact administratively.”

CFCC hasn’t delayed hiring because of the ACA, “but it has limited the number of hours part-time employees can work,” Hardin said.

“As a result, it has increased the teaching burden on full-time teachers. In some cases, it has limited the number of classes that we can offer,” Hardin said.

Alliance Credit Union, with two locations in Wilmington and others in California, has about 25 employees in North Carolina, including a “combination” of full- and part-time workers, said Rick DeCrescente, regional vice president and vice president of sales.

“We had our human resources do [research] on it back when we were doing our benefits sign up,” DeCrescente said.

The company already had a health care benefits package in place for both full- and part-time employees, he said.

“It’s something we’re coping with. We’ve had very little change within our company because of it,” DeCrescente said.

President Barack Obama signed the Affordable Care Act into law March 2010. Comprehensive health insurance reforms will be implemented over a number of years.

A key challenge to employers, particular small business owners, is “how they provide a full compensation plan to their employees,” Dingledine said.

“One potential glimmer of hope for some small businesses is the new Health Insurance Marketplace. As the issues get worked out of the online marketplace, some employers are considering an exit to their employer-sponsored plan in favor of sending their employees to the health insurance exchange to purchase their coverage,” he said.

Wilmington-based Bob King Automall Inc. has been in business for more than 40 years and includes several dealerships. It employs about 180 people, including about 160 full-time workers, said company president Bob King.

He said the business’s deadline for ACA compliance has been extended to November 2015.

“We won’t be under Obamacare for a year after our anniversary date,” King said.

How the ACA will affect the business won’t be clear until then, King said.
With constant changes to the ACA’s deadlines, King said the effect is hard to project.

“It depends on who gets elected in 2014 and 2016. Hopefully, some of it will be changed,” he said.

“It’s going to be based on what the insurance company does. I’m sure we will get a heads up, probably some time next year.”