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“Keeping The Health Plan You Have” Not So Simple For Entrepreneurs

Micro-Businesses Are Unsure Of New “Grandfathered” Status Rules for Health Plans

Washington, D.C., August 18, 2010 – When it comes to health insurance, micro-businesses (less than 10 employees) and the self-employed have long faced difficulties finding coverage that meets their affordability and health needs. The new health care law, the Affordable Care Act, offers entrepreneurs the choice to keep the plan that they already have, provided that it meets certain requirements. The trouble is that most entrepreneurs are uncertain that their plan will meet these new rules and how the changes required by the health reform law will affect their monthly premium costs, according to a survey released today by the National Association for the Self-Employed (NASE).

Micro-business perceptions of “grandfathered” plan status:

• Sixty-five percent of micro-businesses say they only somewhat or slightly understand the new "grandfathered" plan requirements and how it may impact their ability to keep their plans.
• Of those aware of the requirements to maintain "grandfathered" status of a health plan, 43 percent believe they can keep their plan. Fifty-seven percent were either unsure or knew that they would not be unable to keep their current plan.
• Ninety-two percent believe the self-employed and small business owners should receive a notice from their insurer or from the Federal Government about whether their plan qualifies as a “grandfathered” plan

With close to 50% of micro-business respondents wishing to keep their current coverage, a clear understanding of the “grandfathered” status regulations will be essential to a small-business owner’s ability to maintain their existing coverage.

“The self-employed and micro-businesses are always looking at how to get the best deal and health coverage is no exception,” commented Kristie Arslan, executive director of NASE’s Legislative Offices. “Our concern with the current “grandfathered” status regulations is that it leaves business owners with little wiggle room to make key adjustments to their existing health plan to maintain its affordability for the business owner and employees. Ultimately, micro-businesses will be forced to drop their plan they were hoping to keep and be pushed into the new insurance market which is likely to offer more robust, but also more expensive health plans.”

NASE’s survey found that approximately 67 percent of respondents have changed insurance carriers since the inception of their business, with 55 percent indicating that the primary driver for the change corresponded with the desire to find a better deal or lower costs. Many who made adjustments to their existing health plan to address costs did so by adjusting their deductibles – a move that, under proposed rules, would force them to lose their “grandfathered” status.

The Coalition for Affordable Health Care, of which the NASE is a member, recently submitted a letter to Health and Human Services Secretary Kathleen Sebelius containing suggestions to promote choice, flexibility and more affordable coverage to those who need it most – the self-employed and small-business owners.

Full survey results are available online on the NASE’s Research & Statistics page.

Methodology:
Posted on the NASE Web site, the survey was available for members and other small business owners to take in August. Over 230 small business owners opted-in to the online survey and respondents were prohibited from taking it more than once.