Navigating Health Care Reform as a Small Business
The Patient Protection and Affordable Care Act (ACA for short) includes a very broad array of changes that impact the small business owner. Some changes require immediate action on the part of small business owners, while others will affect the health insurance products available to small businesses beginning in 2014. It’s important to understand these changes and anticipate changes in your processes that will need to occur so that you can remain compliant with new regulations.
Health Insurance Plan Changes
While it is true that if you like your insurance coverage today, you will likely be able to keep similar coverage, there are new requirements for health insurance plans beginning in 2014. Some or all of these requirements may require changes to your current coverage, whether it be a change of the specific services covered or a change of how much money an individual will have to pay for those services.
Employers cannot require their eligible employees to wait any longer than 90 days from the date they become eligible under the plan for their health insurance coverage to begin.
Essential Health Benefits
One of the objectives of the ACA is to ensure that consumers have the health insurance coverage they believe they have when they purchase a policy or enroll in a group plan. One of the ways the law accomplishes this is by requiring that all plans cover some basic benefits, called Essential Health Benefits. Under federal law, these include ambulatory services, emergency services, hospitalization, maternity and newborn services, mental health and substance use disorder services, behavioral health services, prescription drug coverage, rehabilitative services, habilitative services, laboratory services, preventive care and wellness services, chronic disease management services, and pediatric vision and dental services. There may be additional services that are required to be covered in some states based on individual state laws.
I’m sure many of you have heard of the metal tiers and how each tier covers a higher percentage of expected health care costs, but let’s look at an example to see what that looks like in terms of coverage. A very simple health insurance plan covers all required essential health benefits and nothing additional and covers physician office visits and prescription drugs under the deductible and coinsurance provisions. So what would the metal tiers look like for this plan? Here are some examples:
• Bronze (60% of expected cost) – $2,000 deductible, 50%
coinsurance, and $6,350 out-of-pocket maximum per individual.
• Silver (70% of expected cost) – $1,500 deductible, 70%
coinsurance, and $4,850 out-of-pocket maximum per individual.
• Gold (80% of expected cost) – $1,000 deductible, 80% coinsurance,
and $2,000 out-of-pocket maximum per individual.
• Platinum (90% of expected cost) – $500 deductible, 90%
coinsurance, and $1,500 out-of-pocket maximum per individual.
Plan designs can vary widely from carrier to carrier and even between different plans offered by the same carrier, so these metal tier designations can be achieved by a wide variety of plan design combinations.
The ACA includes a reinsurance program that begins in 2014 and continues through 2016. Each individual covered for health insurance will incur a fee, which is $5.25 in 2014 and is expected to decrease the following two years. Your health insurance carrier will be responsible for paying these fees.
Taxes, Notifications, and More
There are additional requirements beyond the health insurance plan changes that small business owners need to be aware of. These include the availability of tax credits, notification of the availability of the Marketplace requirements, Flexible Spending Account (FSA) limits, Medicare withholding and tax assessment changes, new incentives for workplace wellness programs, and new health insurance coverage reporting requirements. You can head over to the U.S. Small Business Administration (SBA) website for more information on these items.
In addition, the SBA is hosting a free one-hour webinar where small business owners can learn more about the Affordable Care Act. There are a number of time slots available from November through mid-December. You can visit http://www.sba.gov/healthcare to learn more and to register for a session.
Don’t get blindsided by health care reform changes. You can find a list of key principles of the ACA, including a complete timeline of past and future implementation dates, here.
At Pekin Insurance,® we understand the unique concerns and constraints of small business owners and will strive to go Beyond the expected® in assisting you with navigating through these changes. We offer a wide variety of ACA-compliant group health insurance products to meet your needs. Contact your Pekin Insurance agent today to find the right plan for you and your employees.
Actuarial and Model Office Manager