Will older advisers pay more than younger colleagues for health care coverage?

Previously, all workers in a small business paid the same premium based on average age

Dec 10, 2013 @ 11:51 am

By Liz Skinner

Financial advisers who work with or employ a younger staff — a common demographic in an industry where the average adviser is about 52 years old — could see their cost of personal health insurance rise under new small-business provisions of the Affordable Care Act.

Under the new health insurance system, new plans must charge participants different premiums based on their age, family size, geography and tobacco use. Older plans can consider health status and other demographics.

Small-business health care plans traditionally have based rates on the average age of employees, so that older individuals in a plan benefited from lower rates if there were many younger employees on staff, while younger staff subsidized the difference, according to Michael Kitces, a partner and director of research at Pinnacle Advisory Group.

Under the new small-business plans, older employers could see the cost they pay increase as the premiums reflect their actual age, he said.

Insurers will set ascending age-based costs for employees who are 21 through 63, with one premium level for those 64 and older.

Meanwhile, the Obama administration announced last month that it would delay rolling out the electronic exchanges for firms to buy small-business plans until October 2014 with the hope of avoiding the disastrous technical glitches that the individual health insurance website incurred and in some respects still faces.

But firms can purchase a Small Business Health Options, or SHOP, plan directly from an agent who will help the employer file a paper application, according to a Nov. 27 post by the Department of Health and Human Services.

SHOP exchanges are supposed to make health insurance cheaper for small businesses, which usually can't access as many plans as larger companies and typically have to pay higher premiums. The exchanges also will help firms outsource the administrative tasks of offering health insurance to their employees.

Companies with fewer than 25 employees that join the SHOP program can earn up to a 50% tax credit if the employees make less than $50,000 a year and the company pays at least half of the premium cost. The average wage calculation does not include the owner, partners or family members, which makes the $50,000 threshold more tenable.

What firms and their employees end up paying for health care under the new plans will vary greatly based on the state from which they operate, according to Mr. Kitces.

The ACA requires companies with 51 or more employees to insure their workers or face a $2,000 per employee fine. However, many small advisory firms feel pressure to offer insurance because most of the competition does, and their employees will be subject to the health care act's mandate that individuals have their own policies if they don't qualify for Medicaid.

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