If you’re in the wine industry in California, you know that harvest is coming earlier than ever before. But something else is coming that may be unexpected for wine-related businesses, and that’s a big change to the definition of “small group” employers by the Affordable Care Act (ACA) in January 2016.
For wine-related businesses, the time that you would have had to consider the issue and your options for benefits renewal is now loaded down with harvest-related production and activities.
The good news is that you do have choices to adapt to this change, and here’s what you need to know about it…
The ACA is redefining what it considers to be small group employers from one to 50 employees to up to 100 employees in 2016. The American Academy of Actuaries estimates the change could impact more than 150,000 businesses, nationwide, and here in California’s wine country, we estimate the majority of wine businesses will be impacted as well.
That’s because a large part of the wine business here falls into the 51 to 100-employee category. If that’s you, your winery was previously classified in the benefits world as “large group” employer, and you’re going to face some stricter regulations with the change next year as a small group employer.
Just some of the things you can expect with the change if you’re a large group employer transitioning to a small group:
- The employee benefits plans are more limited in number and design, and they will be classified in the following structure: platinum, gold, silver and bronze.
- There will be a unique rate for every covered individual as opposed to the current composite rates. For example, a family of four that currently has one rate for all covered members will have four separate rates (one for each member) determined by age. In addition, other factors may come into play like geographic location and tobacco usage.
- The overall aggregate costs for these plans as compared to current large group plans will vary by group. However in many cases, they could be significantly more expensive for similar small group plans. On the other hand, some large group employers could see a decrease in premiums because small group benefits do not increase rates based on medical history of employees.
To make the transition easier, employers have the option to stay in the large group market a little longer by taking advantage of the insurance carriers’ one-time early renewal program offer this year. This option essentially grandfathers companies in, and extends the large group benefits through 2016. (And be prepared for this to overload carriers, as more businesses will have the same renewal date moving forward).
As another consideration, think about what we call a wine collective trust, where wine-related companies of 51 to 100 employees have the option to be pooled together for insurance and stay classified as large group employers, so they’re not impacted by upcoming changes (and they also typically enjoy savings from 5 percent to 40 percent).
Regardless of which option you choose: a) renewing early and staying in large group through 2016; b) switching to small group in January; or c) joining a wine collective trust, try not to delay the decision, as time is limited.
With the early harvest this year in California, wine-related businesses have enough to consider, and with the upcoming changes, there’s more work to be done before year’s end. So my takeaways for wine-related businesses and the upcoming decision include the following:
- Don’t wait to explore your options. There’s no magic formula on which option you should pursue, and your broker will be able to explain how moving to a small group classification in January will impact your employee benefits plan.
- Start as early as you can with renewals if you’re looking to extend your large-group status through next year. Kaiser renewals will be out by the end of August, and other carriers are expected to follow mid-September.
I hope this helps you navigate the upcoming changes and gives you something to think about next. With a little preparation, you’ll be winning, not whining, in 2016.