Get Ready to Sell Alternatives to the ACA this fall

Health insurance companies across the country are going to be raising their rates substantially and consumers, especially those with little or no subsidies, will be seriously considering their alternatives.

The Wall Street Journal reported that multiple insurers across the country have requested rate increases ranging from 8.2% to 65.2%. While those requests will most likely be pushed down by regulators, consumers will be faced with significant increases this fall.

Why Is This Important to You?

  1. A Consumer Ready for Change
    They will be seriously searching for alternatives when they see the increases.
  2. A Price Sensitive Consumer
    Many will drop their expensive exchange plans.
  3. A More Engaged Consumer
    They will be open to hearing about other options.
  4. A Consumer with Money
    Even though they are priced out of the exchange market, they have an established budget to buy health insurance, and will take your offerings seriously.
  5. A Consumer Interested in Ancillaries
    If they stay in the market, they will most likely be buying plans with much higher out of pocket costs, increased copays, and deductibles and they will be very open to ancillary products like accident, critical illness and metal gap plans.

Right now is the time to start planning your strategy for open enrollment. Be proactive, not reactive by having a game plan in place now for the impact of these rate increases this fall. It will lead to a productive selling season where you can work smarter, not harder to meet your income goals.

Affordable Care Act Postpones Employer Penalty

Obamacare faced another significant setback yesterday when the administration announced it would delay the implementation of the employer penalties by a year until 2015. The Obama team bowed to complaints from business groups about the impact the law would have on their companies and their ability to hire new employees.

Mark J. Mazur, the Assistant Secretary for Tax Policy at the U.S. Department of the Treasury, published the news yesterday on the treasury site. The post, Continuing to Implement the ACA in a Careful, Thoughtful Manner, attempts to paint this as a deliberate move to ease the reporting burden on employers as the initial forms were overly complex.

While this postponement does not change other parts of the law, analysts have noted that this delay may be a harbinger of more bad news for Obamacare to come. Especially considering that the federal government has not completed the work necessary to setup exchanges in the 30 states who will not be setting up their own exchanges. This is a herculean task that many experts believe cannot be accomplished in the remaining four months prior to open enrollment.

The Washington Post noted that this is a significant event for the administration, diminishing Obama’s credibility and threatening his legacy as the employer mandate is now in jeopardy of being permanently removed from the act. Which would undermine the entire law as the revenue the mandate will generate significantly contributes to the cost of this new entitlement program.

Employer Coverage Declining

Another article you should read is a thoughtful piece in Forbes where they go into the potential impact of this policy change on employer coverage and they also note that it may not be legal to delay the implementation without an actual change in the law. Essentially, the administration can choose to not enforce the law, but its still the law.

The coming months are going to be exceptionally interesting as we all count down to implementation of one of the largest government run programs in the history of the country.

The ACA and a Unique Interpretation of How ERISA May Apply

ERISA-CongressRecently, Employee Benefit News published an article by Craig J. Davidson, CEBS on how reducing employee hours may create an ERISA problem for employers. Essentially his argument states that employers will be reducing employees hours to to avoid setting up a benefit plan, which interferes with the right of the employee to participate in the plan and therefor this is a violation of ERISA Section 510.

The portion of ERISA which he is basing his thesis states “”It shall be unlawful for any person to discharge, fine, suspend, expel, discipline or discriminate against a participant or beneficiary for exercising any right to which he is entitled under the provisions of an employee benefit plan … or for the purpose of interfering with the attainment of any right to which such participant may become entitled under the plan … ”

Here’s the problem with this argument – there has to be a plan in place which the employee would otherwise have a right to participate in.

The fact is, employers will be reducing hours to avoid a penalty assessed by the government. There is no obligation for the employer to setup a plan so ERISA does not apply to an employer who does not offer a benefit plan and is seeking to legally avoid the penalties of the ACA.

The ACA does not require employers to setup a health plan, it simply penalizes them for not doing so.

Reducing employee hours to reduce or eliminate government penalties does not infringe on an employee’s right to participate in a plan because there is no plan.

At the very least, this interpretation of ERISA is a stretch. A stretch that will make a lot of money for attorneys at the very least.

This does not mean that there won’t be an attempt to enforce this interpretation of ERISA but if you or your client does not offer a plan, applying ERISA will be a hard argument for the government to make.

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