MORE CHANGES IN HEALTH REFORM FROM THE OBAMA ADMINISTRATION

Once again the Obama administration is making changes to the Affordable Care Act Law. "If you want to keep your health plan, you can keep your health plan".  When this was found out to be untrue, the Obama administration changed the law to allow the States to make the decision if they wanted individuals losing their coverage be allowed to keep it. This ends up falling on the insurance companies who have been working feverishly to abide by the laws under the ACA, spending millions and millions of dollars on technology, compliance and communication to make sure their insureds don't fall through the cracks only to have to go back and say "never mind President Obama says it's OK to keep your plan".  Well, many insurance companies said no or gave a small window of time to go back and re-enroll in their previous plan.  However, this was only for a year and would then need to elect a reform plan.  So, now, because their are still so many uninsured's the administration is allowing those individuals who lost their coverage be allowed to purchase "Catastrophic" coverage under the reform plans under the "hardship provision".  Normally, these plans are only reserved for people under 30 years old (young and invincible plans). Keep in mind though, you may still end paying more for that catastrophic plan than you were paying for your previous plan you were forced to give up under the Affordable Care Act. As it stands now, if you were one of those people who gave up their personal plan and are not able to get that plan back, the individual mandate does not apply to you for another year.

CAREFIRST DECIDES HOW TO HANDLE THE PRESIDENTS CHANGE OF HEART

As we all know the President is now allowing the states to decide whether they let individuals keep their plans if they want. (Even if they aren't grandfathered)  It appears that this would only be a one year reprieve in any regard.  It also passes the buck to the States.  There was also a question if small employer groups would be allowed to remain with their current plans without having to be forced into reform coverage.  According to Carefirst, Individuals who have received termination notices will be given the opportunity to remain on their current plans if they renew them by mid-December.  In reference to the small group employers (those under 50 full-time employees)  there will be no change from current procedure.  In other words, non-grandfathered small group plans will need to move to reform plans at their renewal in 2014.  

NEVERMIND, YOU CAN KEEP YOUR PLAN.....ATLEAST FOR INDIVIDUALS

Today in a statement from the President, individual policyholders will now be allowed to maintain their current health plan if they so choose.  This was on the heels of tremendous pressure put on the President because of statements made by him....."if you like your health plan, you can keep your health plan, period".  As we all know this turned out to be untrue.  What seems to be overlooked are all of the individuals and families in employer based coverage being forced into reform plans. (Employer Group Under 50 Employees)  If employer based plans are not "Grandfathered" same as individual market, they would lose their current plan and be forced into a plan that now conforms to the Affordable Care Act (health reform).  The individual market is being addressed, the small group employer market is being overlooked.  

THE NUMBERS ARE IN!

Kathleen Sebelius annouced today the approximate count of people getting covered or expected to get coverage through exchanges/medicaid.   The big winners are people getting Medicaid and the big losers..........everyone else.  During the first month there were approximately 107,000 people who were able to log into the exchanges (Federal and State) and actually sign up for a plan. This is far, far, far below the estimates as one would imagine.  However, there were approximately 390,000 that were deemed eligible for medicaid or some other government funded plans. The problem that one would immediately see is that Medicaid has no income, meaning it is, for the most part, funded by the government (taxpayers) with no or little cost to the recipient.  If the administration was hoping that people paying into the system were going to help offset this, we may have a problem if the trend continues.  

Additionally, hopefully the administration will pull-back on not allowing people to keep their current health plan.  More than 11 Million people who purchased individual plans would be forced from their plan to purchase reform coverage.  This is not exactly what our President said we would be able to do.  

To be continued..................

INDIVIDUAL MANDATE DEADLINE DELAYED

With the roll-out of the Health Exchanges on October 1, 2013 came a host of problems and computer glitches that kept would-be participants from enrolling in Exchange Plans through the Maryland State and/or Federal Websites.  Due to these hurdles, the Administration is pushing the Individual Mandate Date (date which most citizens must have coverage or face a penalty) back from January 1, 2014 to March 31, 2014.  Many senate democrats are also calling for a push-back on the "Open Enrollment" time-frame as well.  

AN EASIER WAY TO FIND RATES AND POTENTIAL SUBISIDES FOR REFORM PLANS

Anyone tried to get on the Maryland Health Connection website to see how affordable the health plans are?  From time to time I was successful and generated a couple scenario plans for clients.  What I found was that you needed to input a lot of information to find out if there were any Advanced Premium Tax Credits (APTC/Subsidies) available as well as the cost of the various "Medal" plans (Bronze, Silver, Gold, Platinum).  In addition, I also found that Carefirst, in many age bands, appeared to have the most competitive rates. Below is a link through our Portal (Brooks Benefit Services), that allows you to search, review, and see if you are eligible for APTC/Subsidies and apply for coverage if you don't. If you do qualify, you can only get those APTC's/Subsidies through the Maryland Health Connection Website. The Carefirst website is much easier, less time consuming, and will not log you off in the middle of doing a search.  Here is the Carefirst Medical Plan link. Please note that when you input the plan start date you should choose January 1, 2014.  If you do qualify for the "Subsidies" please feel free to contact me, Ben Brooks,  for assistance at 410-239-5009 or ben@brooksbenefit.com.  

MARYLAND HEALTH CONNECTION, SORT OF UP AND RUNNING

What a day.  We have had a partial government shutdown and the Maryland Health Exchanges are up and running, well sort of.  Trying all day to get into the exchange to compare rates, plans and features was met with absolutely no success. What I do know from some of my clients who were able to get rates, they were not very happy.  In fact very disappointed to find out that they were going to be paying the same or higher rates for inferior plans than they currently have.  It is important to remember that the Affordable Care Act is suppose to make plans both more affordable, accessible and provide decent coverage to those who otherwise wouldn't be able to obtain medical insurance in the individual market. 

Most brokers/consultants have taken the appropriate training to become certified to sell these plans both inside and outside of the Maryland Health Connection.  We are trying hard to educate not only the employers but the employees as well. Below please note the Maryland Health Connection logo and our reference ID which we would appreciate the employees using when completing applications as this not only credits our firm but also keeps the employees connected to our clients through Brooks Benefit Services.  In the upcoming weeks/months we will be reaching out to offer a time to set-up educational meeting for your employees.   If you would like to schedule a meeting in the meantime or request a copy of the PowerPoint Presentation, please do not hesitate to contact us at 410-239-5009 or ben@brooksbenefit.com.

Brooks Benefit Services, LLC

Benjamin Brooks

Consumer Assistance Reference ID: 9000054278

NEVERMIND, WE AREN'T GOING TO FORCE YOU TO NOTIFY YOUR EMPLOYEES OF THE EXCHANGES

The U.S. Department of Labor, after stating fines of about $100 per day for noncompliance, is now telling employers that they will not be fined if they fail to notify their workers of their health insurance exchanges by October 1, 2013.  What’s interesting is that they wait nearly two weeks prior to the “drop dead” date to do this.  Most employers have probably complied with the requirement already.

The Department of Labor announced on September 11, 2013 through a question and answer format specifically addressing the fine:

Q: Can an employer be fined for failing to provide employees with notice about the Affordable Care Act's new Health Insurance Marketplace?

A: No. If your company is covered by the Fair Labor Standards Act, it should provide a written notice to its employees about the Health Insurance Marketplace by October 1, 2013, but there is no fine or penalty under the law for failing to provide the notice.

Employers are told that they should still provide the information to their employees, seemingly as a recommendation rather than as a requirement.

NOTIFICATION OF THE EXISTENCE OF HEALTH EXCHANGE-URGENT

Essentially all employers must notify all of their employees, regardless of those on a medical plan or not, of the existence of the Health Exchanges.  The Model Notice of Health Exchange is the Notification issued by the Department of Labor (or one that contains essentially the same information) that MUST be sent to ALL employees by 10-1-2013. There are three pages to the notification.  Page 2 needs to be completed by you prior to sending to your employees. The third page is optional.  All newly hired employees must be given the notification within 14 days of Hire.

Below please find the distribution and delivery requirements. 

Distribution Requirements

Employers

Any employer who is subject to the Fair Labor Standards ACT of 1938 is required to distribute the Exchange Notice to its employees. Employers who do not currently offer health care coverage to their employees and/or are not subject to the Employer Mandate under the ACA are not exempt from this notification requirement.

Employees

ALL employees must be provided with an Exchange Notice, including employees who are not eligible to enroll in employer-sponsored benefits. A few exceptions do apply. A notice does not need to be issued to:

• Spouses and dependent children covered under an employer’s plan,
• COBRA participants, and
• Retirees (even if they are enrolled in an employer-sponsored health plan).

Delivery

When it comes to getting the Exchange Notice into the hands of employees, the updated guidance provides employers with two options: 1) First Class Mail and 2) Electronic Distribution. You may choose one option for all employees or a combination of both (depending on your employee population). Please note that electronic distribution is only permissible if the following DOL regulations are satisfied:

• Access to the electronic delivery system is an integral part of the employees’ work duties.
• A statement regarding the importance of the Exchange Notice is provided.
• A free paper copy is made available upon request.

     

AETNA/COVENTRY PULLING OUT OF THE INDIVIDUAL MARYLAND EXCHANGES

Earlier this week Aetna, who recently purchased Coventry Health Plans, told the Maryland Health Administration Commissioner, Therese Goldsmith that both Aetna and Coventry will be pulled out of the mix for plans offered on the individual exchange.  Aetna requested rates for one of their plans that was 29% higher than what the exchange would allow and decided that to lower their premiums by that amount would be unprofitable. Aetna and Coventry, however, have shown no signs that they are pulling out of the Small Group Exchange Plans.  

POSSIBLE DELAYS TO THE INDIVIDUAL MANDATE UNDER TRANSITION RELIEF

According to IRS Notice 2013-42, for non-calendar year Medical Plans, transition relief is available for those plans that begin in 2013 and end in 2014.  If your coverage is available through an employer, depending upon when that coverage is made available to you (or your spouse) would depend upon when you would need to obtain coverage.

Example 1. You are eligible for enrollment in a non-calendar year employer sponsored medical plan beginning August 1, 2013 and ending July 31, 2014.  You have parent/child coverage for you and your 10-year old son.  You do not elect coverage for yourself/son on August 1, 2013.  Under this rule you would have transition relief through July 31, 2014.  If you do not elect coverage at this time, penalties would be assessed.

Example 2. You are Married and both you and your spouse are eligible for enrollment in a Non-Calendar Year Plan of an Employer for the 2013-2014 Plan Year and in a Calendar Year Plan with your Spouse’s Employer for 2014.  Your plan begins August 1, 2013 and ends July 31, 2014.  Your spouses plan begins January 1, 2014.  You do not elect coverage for you and your spouse under your plan August 1, 2013 and your spouse does not elect coverage for the both of you on January 1, 2014. In this example both you and your spouse would have transition relief until your plan renewal in August of 2014.  If at this time, no coverage was elected, penalties would be assessed.

(From IRS Notice 2013-42)

GREAT NEWS! KEY PROVISION OF HEALTH REFORM DELAYED UNTIL 2015

Do you remember when employers with 50 or more employees were either going to offer affordable, minimal essential coverage or pay stiff penalties?  Well, that provision has been delayed until 2015.  

"We recognize that the vast majority of businesses that will need to do this reporting already provide health insurance to their workers, and we want to make sure it is easy for others to do so. We have listened to your feedback. And we are taking action," Mark J. Mazur, assistant secretary for tax policy, wrote in a post on the Treasury Department's website.

"Obamacare costs too much and it isn’t working the way the administration promised,” Sen. Mitch McConnell, the Senate Minority Leader, wrote in response to the decision, adding: “The fact remains that Obamacare needs to be repealed and replaced with common-sense reforms that actually lower costs for Americans."

Any way you slice it, it's good news for larger organizations that are trying to implement the provisions of the law without getting themselves into a lot of hot water in the meantime.  This definitely gives them a bit of breathing room.

HAPPY FOURTH OF JULY

From our home to yours, we wish everyone a happy and safe 

Fourth Of July celebration.  Thanks to all the troops and families

who have suffered to keep our country free. 

God Bless America. 

Ben

RENEWING YOUR HEALTH PLAN EARLY (PRIOR TO JANUARY, 2014)

In a previous post strategies were discussed regarding avoiding some of the impacts of the ACA (Health Reform) beginning January 1, 2014.  As an employer new and additional taxes and fees, the elimination of average age rating, and new plan designs could affect Insurance premiums for your current health plan.  Most carriers are allowing early renewals, some are waiving their stipulations in order to do so.  For those who have a high deductible plan(s) this could be a problem as deductibles will reset.  However, some carriers are allowing a deductible carry-over for those employees who have not met their deductible and have had claims within the last three months prior to early renewal to be rolled over into the new contract year's deductible.  As mentioned, this idea of early renewal was touched on in the last post but due to its significance thought it may be a good idea to touch on it again.  The idea, if it makes sense for your firm, is to let the law get up and running instead of being a guinea pig early on.

WHAT SOME COMPANIES ARE DOING TO AVOID REFORMS AND PENALTIES

Strategy 1

As we all know starting January 1, 2014 almost every man, woman and child must have medical coverage or pay a fine.  Some religious groups, Indian Tribes  and others are exempt.  Here in the state of Maryland the exchange will begin enrolling people October 1, 2013.  In addition when employers renew their medical coverage, they are then subject to the reforms as well.  What this means is that each person within the group will stand on their own and pay premiums based on them self.  In other words a person who is individual and 38 may have a different premium than someone who is 58.  In addition, the family rate will be separated out to include the individual, the spouse, number of children, etc.  There will not be a melded four rate structure any longer.  In addition, there will also be additional premiums due on those employees who smoke, up to a 50% increase over the standard rate.  For this, employer group can expect (according to some carriers) an additional 5-15% increase on top of their already ridiculously high renewals.  What are the carriers suggesting?  Early renewals.........most of the carriers are coming out and saying renew early if it makes financial sense.   If you have a renewal that may be in January, 2014 through say July, 2014, you may want to renew December 1, 2013.  What this will do is simply delay the impacts.  However, if you have a HRA, HSA or some other high deductible plan, these deductibles re-set so it may not make sense to you.  

Strategy 2

Larger organizations with lower paid employees are going to get killed either by having to offer Affordable, Minimal Essential Coverage or paying fines......period.  What some companies are doing is offering Minimal Essential Coverage although unaffordable and creating  a potential penalty to the employer. What employers are doing is making available Limited Medical Benefit Plans at a lower cost than the subsidized coverage made available to them on the exchange.  A limited Medical Benefit Plan, depending on the persons age may cost approximately $40-$50 per month.  Lets say a 30 year old person making $10 per hour would pay $80 per month on the exchange for a subsidized medical plan.  The idea is that if an employee has a Limited Medical Benefit Plan that is working for them and the costs are considerably less than the exchange plan (although not nearly as comprehensive), they will stay with the lower cost plan.  If they do, the employer has avoided a $3,000 penalty since the only way they are penalized is when an employee actually gets a subsidized health plan on the exchange.  

As a note, Limited Medical Benefit Plans typically offer preventive care, some prescription benefit's and other services.  They typically do not or have limited coverage for hospitalization.  These plans can be dangerous to the employee if they aren't explained very well and would caution any employee electing this coverage in place of a true medical plan. 

Strategy 3

Self-Fund....or partially self-fund.  Since health insurance, for the most part, will be guaranteed issue (except self-funded plans), and rates will favor older people rather than younger people, the population will be made of an older, more expensive pool.  If you have a relatively healthy group, you may be able to avoid the additional costs that the exchange will saddle employers/employees with and your healthy population will stand on its own merit.  Partially self-funded plans go down to as small as 5 employees and have premiums that are guaranteed.  In addition you will have a standard four tier rating structure. 

MEMORIAL DAY

WE WOULD LIKE TO THANK ALL OF THOSE PEOPLE WHO SERVED AND SACRIFICED SO THAT WE MAY BE FREE.

GOD BLESS YOU, YOUR FAMILIES AND THE UNITED STATES OF AMERICA.

BROOKS BENEFIT SERVICES, LLC

HEALTH REFORM: WHAT ABOUT THE KIDS?'

I just received a call from a client who said "What about the kids?  If coverage is affordable at work for me but not when I add my children and/or spouse, then what?"  Well, that's a great question.  Since affordability is only contingent on the cost as it pertains to individual cost and earnings (no more that 9.5% of W-2 income), it doesn't take into consideration the financial impact of family health care costs.  So, depending upon the income level of the family, the children may be eligible for the Children's Health Insurance Program or "CHIPS".  In addition if the household income does not qualify them for the CHIPS program, Children Only health plans will be made available on the exchange at the same coverage levels as adults (bronze, silver, gold, platinum, etc).  It is also important to note that there are tax penalties associated with not having medical coverage starting January, 2014 (Individual Mandate).  However, in a separate proposed regulation the IRS stated that uninsured children and spouse of an employee will not be subject to the individual mandate if the cost of coverage for the entire family was more than 8% of household income.  Of course that will be up to each individual family to prove to the IRS.

SMALL GROUP HEALTH PLANS COSTS THROUGH THE EXCHANGE

One of the largest medical insurance carriers in Maryland has announced that costs for Small Group Health Plans through the Exchange will cost 10% to 20% more due to mandated Essential Health Benefits  taxes, fees and assessments imposed on carriers.  Here is a partial break-down of those additional mandates/costs:

Transitional Reinsurance Program: $5.25 Per Member Per Month
Health Insurer Fee: Estimated at 2-3% of Premium
QHP Certification Fees-Not yet determned from Federal Government
Non-Grandfathered Groups-Pediatric Dental and Vision Being Added to Small Group Plans

This comes on the heels of information from President Obama's budget sent to Congress on April 11th, 2013 stating that costs for the Network of Health Insurance Exchanges for only half of the states will cost more than doulble the intial estimate.  Even though the intial costs projections were for the set-up of all states Exchanges.  Go figure, this is going to cost a heck of a lot more than we first were told by the President and the Federal Government.

Maryland Delaying The Launch of the Small Business Exchange

The state’s health department changed the start date for businesses to enroll in the small business exchange from October, 2013 to January 2014. The state’s decision comes after the federal government said it would give states until January 2015 to get up and running a key piece of the small business exchange that gives employees more insurance options.

The health insurance marketplaces for both small businesses and individuals were supposed to begin enrollment this October for coverage that would take effect in January. The individual exchange is still expected to stick to that timeline. The exchanges are part of the federal Affordable Care Act.

Excerpt from the Baltimore Business Journal, April 3, 2013

3:1 AND WHY THIS RATIO IS HUGELY IMPORTANT

As part of Health Reform (Affordable Care Act), one of the requirements is that insurance carriers can't charge the oldest members more than three times the cost of coverage of the youngest policyholders.  What this means in a nutshell is that the younger, healthier, minimal users of health care are going to be paying as much as 40% more than they do now.  With medical costs and insurance costs spiraling out of control, hitting the youngers with higher costs is simply going to make them stay out of the market, pay their penalty and get guaranteed issue coverage when they need care.  We need the younger population getting coverage to offset the older users.  If not, the majority of people with health coverage are going to be the older population and those who need it.  So what this leaves us is less dollars coming in and more dollars being spent because now we will have guaranteed issue coverage and the older, higher users of medical care paying less to satisfy the 3:1 ratio.  Currently, the "Liberty Act", HR 544 is being kicked around a bit.  This would change the ratio from 3:1 to 5:1. This could potentially make it more attractive to the younger population and gain more premium dollars.

ESSENTIAL HEALTH BENEFITS COULD MAKE AFFORDABLE CARE UNAFFORDABLE

Essential Health Benefits

February 20th, 2013, the Department of Health and Human Services issued a final rule outlining essential health benefits and actuarial value requirements under the Affordable Care Act.

About the Final Rule

Under the ACA (Affordable Care Act), health plans in state health insurance exchanges must provide coverage for 10 broad categories of benefits, such as maternity care, prescription drugs and preventive care. 

The final rule goes beyond what regulators initially proposed and applies to non-grandfathered plans for individual and small group markets inside and outside of the health insurance exchanges.

Most of the rules include benefits that commonly are covered by plans, including:

Ambulatory patient services;
Chronic disease management;
Emergency care;
Hospital services;
Laboratory services;
Maternity and newborn care;
Mental health and substance use disorder services, including behavioral health treatment
Pediatric services, including oral and vision care
Prescription drugs; and
Preventive wellness services

However, some changes represent an expansion of coverage to include rehabilitative care, pediatric dental care and pediatric vision care. Further, the rule expanded coverage and federal parity protections for mental health and substance use disorder services, including behavioral health treatment, to both the individual and the small group market.  The problem is that the more coverage that is added to the "Essential Health Benefit List" the higher the costs will become until eventually "Affordable Care" is anything but affordable.  

The final rule also prohibits insurers from discriminating based on an “individual’s age, expected length of life, present or predicted disability, degree of medical dependency, quality of life or other health conditions”.....but not if you are a smoker.  If you are a smoker, you could be charged up to 50% more in premium.

Benchmark Plan

For 2014 and 2015 each state was to select a base-benchmark plan as the reference for defining EHB in the state.  States could choose 1) the largest plan by enrollment in any of the three largest small group insurance products in the state; 2) any of the largest three state employee health benefit plans; 3) any of the largest three Federal Employees Health Benefits Program plans; or 4) the largest insured non-Medicaid HMO in the state.  For Maryland the  Health Care Reform Coordinating Council selected the CareFirst State of Maryland PPO for State employees to be Maryland’s benchmark plan.


Actuarial Value

Actuarial Value, or AV, is calculated as the percentage of total average costs for covered benefits that a plan will cover. For example, if a plan has an AV of 60 percent, on average, a consumer could expect to be responsible generally for 40 percent of the costs of all covered benefits in that plan.

Starting in 2014 plans in the Individual and Small Group Markets will need to meet certain Actuarial Values.  The Center for Consumer Information and Oversight has posted an Actuarial Value Calculator to help determine if your plan meets those requirements. 

The plans offered (Metals) will consist of the Bronze Plan with an Actuarial Value of 60% of cost, Silver, 70% of cost, Gold at 80% of Cost and Platinum 90% of Cost.  In addition there will be a Catastrophic for those individual who are eligible (under 30 and other metal plans are unaffordable)  This age used to be younger and will only hurt the loss ratio of the exchange even further.


Cost of Coverage

Insurers and some business groups had lobbied the federal government to scale back the scope of mandated coverage categories because of concerns that such coverage would make policies too costly, the Wall Street Journal reports. However, rather than scale back benefits, the rule includes several ways to limit the costs to consumers, such as capping total out-of-pocket costs and limiting the deductible amount for plans offered in the small-group market to about $2,000 for an individual and $4,000 for a family.  Again, adding all of these additional benefits and limiting exposure to the covered person will only add cost to the final product and have the exact opposite effect of what the Affordable Care Act was designed to do, make care more affordable and available to all who need it.

SO WHAT'S IT GOING TO LOOK LIKE?

I know, everyone is on the edge of their seats wondering what the health care environment is going to look like come the big day....January 1, 2014.  The date of the full enactment of the Affordable Care Act (Health Reform) in all its glory.  Well, it's anybody's guess but I'll give you mine.  Carriers will be offering their guaranteed issue Medal Coverage's (bronze, silver, gold, platinum plans) through the Maryland Health Benefit Exchange.  Coverage may be accessed by individuals or groups of up to 50 employees.  Our firm will be able to help you access those coverage options in the same way we do now.  Carriers will also be offering the same coverage directly through them.  So, in a sense, they will be competing against themselves.  

Plans that probably will start to become very popular are the partially self-funded medical plans.  These are plans that look at the medical history of the group and come up with a premium much as plans are now.  However, if you have a good claims year and dollars aren't spent on claims, these will come back to the employer.  If they don't, then your only exposure is what you've already paid in premium, no more. 

 In time, the exchanges become full of unhealthy people and will probably become unattractive to most healthy employer groups and individuals who will purchase on the underwritten private market.  It seems that the exchanges are going to be a death spiral unable to sustain itself.  So in order to keep it breathing those life support dollars will need to come from somewhere.......fines, taxes and penalties.  

In the meantime........................

Employers of all sizes need to:

1. Make sure their plans aren't discriminatory based on income.
2. Not allow waiting periods longer that 90 days
3. Make sure their part-time employees are working 29 or less hours a week on average
4. Notify ALL employees of the existence of the Health Exchanges (was in March now June/July maybe)
5. Issue Summary of Benefits Coverage of medical plans to ALL eligible employees
6. Let employees also know that they will be charged an additional 50% surcharge for medical plans offered through the exchanges if they are smokers.

In addition, those employers over 50 employees:

1. To avoid potential penalties associated with offering "Affordable" "Minimal Essential Coverage" Do a "Pay or Play Calculation".  (We will/have worked with our clients to arrive at these numbers)
2. Show value of health plan for those employers issuing more than 250 W-2's

This is simply a snap-shot of what the health care landscape could look like come 2014 and some areas needing to be addressed to avoid fines or penalties.

HEALTHCARE EXCHANGES AND COVERAGE COSTS

January 1, 2014 and people are flocking to the health exchanges to find cheap health coverage because the Affordable Care Act (ACA) has promised "Affordable Health Care". According to the ACA, affordable means the cost will be no more than 9.5% of income.  If it is higher than 9.5% there will be tax credits and/or subsidies given to make it affordable.  

Interestingly, the cost of a person who is 64 years old cannot be any higher than 3 times the cost of a 20 year old.  In other words, the cost for older people, who use on average 5 times the amount of health care than a 20 year old, would pay less while the 20 year old will pay more, than in our current market.  In addition, if you are a smoker, your premium can be up to 50% more than a non-smoker at the same age level.  The question is, if I am a smoker and paying 50% more than a non-smoker making it unaffordable for me, will I get a subsidy even though if I wasn't a smoker it would be affordable?  Since the smoking surcharge is considered a penalty, the answer seems to be no.  

Since coverage in the exchanges will be guaranteed issue, it seems that younger, healthier people will find cheaper coverage elsewhere while older, sicker people will flock to it. If this happens it won't be long before the exchanges implode and/or we are taxed even more to supplement the deficit. 

YOU NEED TO TELL YOUR EMPLOYEES ABOUT THE EXCHANGES, MARCH 2013

According to the Affordable Care Act (Health Reform), by March 2013 all employers must notify their employees of the existence of the Maryland Health Benefits Exchange.  In addition they will need to provide:

1. Written notice informing employees about the state’s Exchange, including a description of how the employee may contact the Exchange for assistance.
2. Notification to employees if the plan offered by the employer is inadequate, meaning it does not meet the actuarial value of 60 percent. The employer must let employees know that they may be eligible for a premium tax credit and a cost-sharing reduction if they purchase a health plan through the Exchange.
3. Employers must notify employees that if they purchase a health plan through the Exchange, the employee may lose the employer’s contribution to health benefits offered by the employer.

The Maryland Health Benefit Exchange will begin enrollments into their plans October 2013 for a January 1, 2014 effective date.  Brooks Benefit Services will be forwarding verbiage for this notification to all of our clients.  In addition we will be able to assist any employees with determining whether the exchange plans may or may not be a good fit for them.  It is important to remember that the exchanges are available to all employees whether they are full-time or part-time.  

The Maryland Health Exchange is going to be made up of several plans: Bronze, Silver, Gold, Platinum and a Catastrophic plan for younger people.  These plans will be underwritten by current carriers and will basically compete with themselves.  Since the coverage through the exchange is guaranteed issue, many believe most of our sickest and oldest individuals will jump or be pushed into these plans.  Since the cost of these plans is directly relative to the individuals income, it could make more sense to go with an exchange plan than one through an employer and visa-versa.  Depending upon the size of the employer (50+ Full-Time Employees), if the employee goes to the exchange,  your plan is deemed to either be "un-affordable" or isn't "minimal essential coverage", you will be fined.....heavily.

If any of this is new to you or needs further conversation, please do not hesitate to contact our office at 410-239-5009.