Employers will be challenged by the new affordable care act regulations which will go into effect in 2014.
Penalties
A company who does not offer insurance and has 100 employees is looking at a minimum new expense of $140,000. The math for the new penalty is the following for an employer with more than 50 full time employees who offers no coverage:
* $2000 times the number of full time employees – 30
Even if they offer coverage and pay 60% of the cost of the health plan, if a family employee’s portion is greater than 9.5% of their pay the family can then buy on the exchange and the employer has to pay a $3,000 penalty. With some family plans at or above $20,000 per year that could add up as those employees are probably not paying for family coverage now because they cannot afford it.
For a family whose total income is less than $50,000, buying on the exchange is going to be a better value almost 100% of the time as their monthly cost on the exchange after the subsidy will be less than $400 a month.
An employer offering a health plan who has 20 families who are not joining and their contribution to be on the plan exceeds 9.5% of their income, they will be hit with a $60,000 penalty.
Communication
Like it or not, employers will end up having to explain the affordable care act to employees. Not just because they have to by law, but because their employees are going to demand it as they will want to understand their options between paying to be on the employer plan or going on the exchanges and buying it for themselves. The employers who don’t think they will need to do this are mistaken and will pay a steeper price in lost productivity and morale as employees spend precious time at work trying to figure this out. Just wait for open enrollment at your customer’s workplace this fall.
At a minimum, employers are required to provide a written notice about the law covering everything from what services are provided on the exchanges to the fact that they may be eligible for subsidies through the exchanges.
Small Business Communications
Even employers with less than 50 full time employees who don’t offer insurance will be hassled by the new law as the employee notification requirement appears to be for all employers and not just those over 50 employees.
Minimum Benefits
For a health plan to meet the minimum benefits it must cover 60% of the actuarial value of the benefits provided under the plan. The translation of this is basically, if you take a population of people and tally up all their claims after provider discounts a plan will meet this test if it paid out 60% of that total. The carriers are all designing benefit plans that meet that requirement using various combinations of copays, coinsurance and deductibles.
The plans must also include benefits for all the following:
- Ambulatory patient services
- Emergency services
- Hospitalization
- Maternity and newborn care
- Mental health and substance use disorder services
- Prescription drugs
- Rehabilitative services
- Laboratory services
- Prevention and wellness services and chronic disease management – not subject to deductible, coinsurance or copays
- Pediatric services, including oral and vision care
So employers who have plans they “like” better make sure they meet these requirements or they could be subject to the penalties anyway. That would be a very expensive mistake.
The affordable care act is going to be costly and burdensome to employers but it will be especially tough on the employers with just more than 50 employees up to a few hundred as they don’t have the extensive compliance and HR resources that much larger companies have.
Companies looking to find an educated agent to help them find coverage and handle the complexities of the ACA should go to Benepath.com to find their group health insurance quotes.
SPECIAL NOTICE
Recently, HHS announced that the federal exchange for small businesses will not be ready by 2014, so it looks like it will not be until 2015 when small group employers will be able to purchase on the exchanges.
