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Many individuals, employers, and several state governments were awaiting the results of the Presidential election before taking the time to figure out how health care reform impacts them.
Now that the election is behind us and health reform is ahead of us, they're asking: What's next?
The health reform regulations will affect three main areas: individual insurance, small employers (under 50 employees), and larger employers with 50 or more employees.
Future guidance and clarification is almost certain.
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IndividualStarting in January 2014 everyone (with some exceptions) will need to have health insurance or pay a penalty. Qualifying coverage can be obtained either through an employer or purchased individually. If your employer doesn't offer adequate insurance (or it costs too much) you will be able to buy a guaranteed issue policy through an 'exchange' or on the open market. An exchange is simply a marketplace (such as a website with phone support) where customers can compare policies. Medicaid eligibility will be expanded to 133% of the federal poverty level (FPL). Those with incomes between 133% and 400% of the FPL will be able to apply for premium credits to help offset the cost of coverage bought through an exchange. NEXT STEPS: If you have had the same plan since before March 23, 2010 and can hold off changing it you might consider waiting. The plans sold in 2014 are expected to cost more because of mandated benefits, taxes and the guaranteed issue requirement. Open enrollment for the exchange is scheduled to start October 1, 2013 for a January 1, 2014 effective date. Here's a calculator to help estimate a potential credit based on income.
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Small Groups (fewer than 50 employees) Small employers are not required to offer insurance to their employees and as it stands now won't be required to after 2014 either. Employers that continue to offer coverage will be able to shop on the open market, or through an exchange. The small group exchange (called SHOP) is separate from the individual exchange. Small group plans will still be subject to certain rules - for example the new employee waiting period cannot be more than 90 days. We expect many employers will continue to offer coverage for morale and competitive reasons while others may be happy to offload that cost and responsibility. NEXT STEPS: Your insurance carrier has most likely implemented the required benefit changes to your plan to date. Colorado is already community rated so that will help reduce the rate impact due to PPACA. Small employers offering coverage need to continue to provide employees the usual required documents including the new SBC (Summaries of Benefits and Coverage). You can get those from your carrier (or call us). Carriers will be redesigning their product portfolio to meet the new minimum benefit requirements. Some groups may be eligible for the (up to) 35% tax credit that's been available for a couple years. In March 2013 a new notice advising employees about the availability of the exchanges will be due. We will have more on that when they're ready.
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Groups (50 or more employees)Companies with 50 or more full-time employees that do not offer health insurance, offer insurance but don't contribute enough towards the cost, or offer a plan that doesn't meet the minimum benefit standard will be hardest hit.
Beyond some new record keeping requirements, employers that already offer a group plan and pay enough of the cost are likely to see little impact. The higher cost factor will likely be in the form of increased employee participation in the plan.
Employers that do not provide affordable coverage to their full-time employees, or offer a plan that does not meet the minimum benefit standard will have to pay a 'shared responsibility' penalty. A full-time employee is defined as one working 30 or more hours per week.
The method of calculation of the number of employees, and the penalty (if any) is beyond the scope of this newsletter but we are ready to assist with that calculation. Employers with a population of seasonal or variable hour employees will need to keep track of hours worked.
Employers that issue 250 or more W-2's need to indicate the cost of their coverage on the 2012 W-2's (issued in January 2013). Smaller plans (less than 250 W-2's) are exempt for now but may voluntarily provide this information to their employees.
NEXT STEPS:
Employers with 50 or more full-time employees that don't currently offer insurance may want to consider offering a plan. The penalty (not tax deductible) could go towards an employer contribution instead. For that reason (among others) simply paying the penalty may not be the most desirable option. If you're not doing it already, we suggest you start tracking employee hours-especially for those that work variable hours around the 30 hour/week average. The reason to start now is that there is a voluntary 'safe-harbor' look back period of up to 12 months when doing the full-time employee calculation.
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