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.
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.
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.
Thursday, May 23, 2013
Wednesday, May 22, 2013
Thursday, May 2, 2013
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.