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Under ACA, some mom-and-pop businesses will be booted out of small group health insurance market

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For years, mom-and-pop businesses without employees and partnerships owned by two people would buy health insurance in New Jersey's state-regulated small group market. Under the Affordable Care Act, that will end in 2014, and they will have to shop in the state-regulated individual health insurance market instead.

Eileen Shrem, a health insurance broker based in Bradley Beach, said the ACA mandates that a small group have at least one employee in order to use the small group market.

But she said it's not clear if a business can be owned by one spouse with the other spouse getting a salary as an employee and still remain in the small group market.

Insurance broker Dutch Vanderhoof, a member of the state's Small Employer Health Benefits Program Board, said there is going to be "significant dislocation in the small employer market." But it was not immediately clear whether the change means higher insurance premiums.

Shrem said nearly all of her clients are mom-and-pop businesses, and 90 percent of them will have to move to the individual market. Some will pay less for an individual policy because they will qualify for a federal subsidy under the ACA — but because the Healthcare.gov website is still not working properly, she is having trouble arranging for subsidized coverage.

Vanderhoof said the variety of plans available in the individual market is far less than the group market, and the rates in some cases are dramatically higher. He cited one estimate that a third of those who migrate to the individual market will find a lower-priced plan, a third will see little change, and a third will face significantly higher prices.

David Oscar, a health insurance broker with Altigro, estimated that about 1,000 of his clients will have to shift from the small group to the individual market as their policies come due over the next few months.

"I have a lot of husband-and-wife groups, and I have a lot of small groups that are partners — maybe they are two brothers who are partners — and they will all have to go to the individual market," Oscar said.

Shrem said she has been aware of the new rule since August and said the change has been communicated to health insurance brokers who have been trained to carry out the ACA.

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