There are still a lot of unknowns about the Affordable Care Act, but there is one thing that most experts agree on: Health insurance is going to become more expensive for many businesses next year.

To learn what companies with fewer than 50 employees can expect, Thinking Bigger Business interviewed Ron Rowe, Blue KC’s department vice president of small group and consumer market products.

Many analysts are forecasting big increases in the cost of coverage next year. Does that match what you’re seeing?

“Our numbers show that the average rate increase for those businesses is going to be significant. But using the average is somewhat misleading because there’s actually a continuum.

“We’re going to have a lot of very good news to give to some employers—that, you know, your rates are going down. On the other end of the continuum, though, there are some groups that are looking at significant increases as a result of the changes.

“To say that every employer should brace for big rate increases is probably good advice to be ready for it, but not all of them are going to get it. Some of them are going to get some very good news.”

Is there anything that small businesses can do to avoid a big rate increase?

“They’re not going to be able to do as much in ’14 as they used to because of modified community ratings. The insurance industry has to start rating employers in that under-50 segment with a methodology called modified community rating.

“It basically means we have to set rates based upon age bands, and there’s a few other factors we can put in there, but when we set those rates, those rates are what will be used for every group, regardless of if the group is healthy, or if the group is high risk and has people with a lot of utilization.

“Once the rates are set, the rates are set. If you’re a healthy group, you’re going to be getting the same rates as if you’re an unhealthy group. The negotiating that used to be able to be done to say, well, you know, the person that was driving up the claims in this group isn’t with us any longer and, OK, we’ll adjust down for that—all of that is gone.

“Insurance companies, we will still set our rates, and there will be competition amongst insurance companies—who has the lowest rates, the best networks and all of that.”

What should small business owners be doing right now?

“It’s going to be almost impossible for an employer to figure out on their own what to do. The business is changing dramatically in terms of the rules that we have to play by, the products that have to be offered, the way they have to be rated. … If I owned my own small business, the first thing I would be doing is calling my broker and saying, ‘OK, what are we looking at here?’

“There’s not a lot the brokers can tell them today. That’s the unfortunate part. We hear about everything that’s going to change, but until all of the health insurance carriers have their new products filed and approved, and their new rates filed and approved, it’s just speculation. We won’t have final approval on all of that stuff until September.

“It’s probably a good idea to talk with your broker. Let the broker know that you’re concerned and you want to be one of the first on his list because these guys are going to be very busy come the last part of the third and the first part of the fourth quarter.”

What would you tell employers who are thinking about ending their employee plans?

“If you have more than 50 employees, and you decide not to offer coverage, you’re going to be subject to penalties. So that’s the first thing you want to know. If you have fewer than 50 employees, no penalties apply, so you don’t have to worry about the penalty aspect of it.

“But I also want to encourage companies to think broadly and clearly about the importance of providing health care coverage. Cost is, as it should be, a critical consideration, but managing it as an investment in a well-centered workforce is a rallying point businesses would benefit from if they embrace the concept.”

Are there other options for small businesses?

“We’re hearing a lot of talk about new options for providing coverage that get around the Affordable Care Act. Most of those options that we’ve heard about involve being self-funded.

“I would caution a business owner, if they’re considering taking something for a health insurance option for their employees that’s new and different, to find out and ask very specifically if this is a self-funded option. Self-funding has long been a good solution for large employers, but it’s very, very dangerous for small employers because you actually become responsible for paying claims before reinsurance kicks in.”