Top Philly health insurer stops small-business policies, offers new ones

(Updated, with comments from Independence Blue Cross and from an independent benefits consultant) "This week a large number of small businesses have been receiving notices from Blue Cross/Blue Shield that their plans will not be renewed when they terminate, because the plans do not conform to Obamacare and have had one or more minor changes in the past three years and are not grandfathered," veteran Philadelphia banking lawyer Alan Fellheimer tells me. His firm is one of those cancelled, he says.

Independence Blue Cross, Fellheimer says, told him he doesn't have immediate replacement plans available yet, "though they are working on it." The former bank president turned boutique lawfirm boss says other small businesses, including his clients and competitors, "are receiving these notices. Every small law and accounting firm I have spoken with who carries a group plan with BC/BS is receiving the same notice." The insurer also warns eventual replacement plans "will be materially more expensive." He wonders how many companies will end up cancelling coverage and paying workers to buy their own.

(New doctor's comment): Doctors, too: "We are a physician group with 36 employees. Our plan was also cancelled," writes Dr. Stan Kofsky of his Abington practice. "Our new plan is 17% higher. Can you ask, why 17%?" He noted IBC, like the government has said some replacement plans will cost more, some less. But "I haven't heard of any going down.... Ask the IBC people if the doctors will see any of this increase in reimbursement."

"We do have products – 37 options – and have laid out pricing [and other details] for customers with renewal dates of Jan. 1, 2014, IBC spokeswoman Judiemarie Thomas told me. Replacement "Blue Solutions" plans are available, "and are being communicated in letters that started to go out this week."

UPDATE: How expensive? "In some cases, the rates for the new ACA compliant plans will be higher than current costs, and in other cases they won't be – consistent with what we're seeing across the industry," added Thomas. "So, contrary to your posting, we are ready to go with a full suite of health care reform compliant products across all the tiers that small employers can move into in 2014."

Some up and some down? I asked Thomas whether IBC anticipates the effect on its insurance revenues will be higher, or lower, as a result of the new ACA Obamacare plans. No reply so far.

EARLIER: Are employers having their insurance cancelled with no comparable replacement plans, as Fellheimer contends? "Partially true," says Carsten Pedersen, licensed health insurance broker, who runs benefit consultants Patriot Benefits Group, Hatfield. "In 2014, employers across the nation with two to fifty employees will not be able to renew their current small group health plan," under Affordable Care Act (Obamacare) guidelines, he notes.

But Pedersen also says there are already "alternate plans that will replace the current plans, as dictated by ACA.  Some employers will pay less and some will pay more."

What about IBC? The Philadelphia region's dominant health insurer, he says, "most certainly has ACA-compliant plans available starting on Jan. 1, 2014, as required by law," with plan designs and rates that brokerages like Pedersen's are already calculating for clients.

Will many small employers just cancel coverage and pay employees more to buy their own? ACA taxes individual plan contributions more heavily than group plans, Pedersen notes; so "dropping employee benefits is not only a problem from an employee morale and productivity standpoint, it can also be more costly for the employee due to taxation."

He urged firm owners who share Fellheimer's initial reaction to consult with healthcare brokers, who "compare all available options in the marketplace, in addition to providing administrative services related to employee benefits, so the employer can focus on running their business while we handle their benefits."

In short, at small firms, "you can't keep your health plan," Pedersen concludes. But yes, you can replace it. Though we're only starting to figure out how much that may cost.