Healthcare Reform - For Employers

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What are the major changes happening in 2014 that will have an effect on health insurance requirements and options for small business employers?

In 2010, President Obama signed the Patient Protection & Affordable Care Act (PPACA) and the Health Care & Education Reconciliation Act of 2010 into law. Combined, these two laws are now referred to as “The Affordable Care Act” (ACA) and significantly change how consumers access health insurance.
Some changes that are already in effect, including:

  • Preventive care is covered with no cost share
  • Young adults may be covered on their parent’s plan up to age 26
  • There are no maximum lifetime limits
  • Pre-existing conditions are covered for children under the age of 19
  • Insurance companies must spend at least 80% of premiums on medical care and less than 20% on administrative costs

Other changes will begin January 1, 2014, for example:

  • Small businesses will be able provide coverage to their employees through the Federal Marketplace/SHOP
  • The Marketplace will help people compare, choose, and purchase individual/family policies
  • Essential Health Benefits will be standardized for individual/family and small group plans
  • Most Americans must either have insurance coverage or pay a penalty
  • Most people can only enroll during certain times of the year
  • Insurance companies cannot deny coverage to someone with pre-existing conditions
  • There are new limits on how insurance companies can determine premiums
  • Tax credits will help cover the cost of coverage for some individuals (visit www.HealthFirstHealthPlans.org and click on the Health Care Reform section to see if you might qualify for a tax credit that could lower the cost of your coverage or visit http://kff.org/interactive/subsidy-calculator/).

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What is the SHOP (Small Business Health Options Program) and how will this program affect small business employers?

A “small business” or “small group” has 1-50 eligible employees.

The Federal Marketplace (also called the Exchange) is for individuals who purchase their coverage independently, and it also includes the SHOP, which is for small employers seeking to provide access to health insurance coverage for their employees. Starting in 2014, the Marketplace will only allow small employers to provide one health plan option to their employees. Starting in 2015, the SHOP will be expanded so small employers can select a level of contribution and also allow their employees to choose from a number of insurance plans available.

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Do all businesses have to start a new policy on January 1?

Most insurance policies are in effect for one year, so if you have coverage for your business that began sometime during 2013 and want to keep it until it ends, you can. If you don’t want to keep it, you can review the plans on the Federal Marketplace for Florida and select a new plan that starts on January 1, 2014. If you choose to keep your current plan you will be eligible to choose a new plan when your coverage is due for renewal. Whatever you decide, your future coverage will renew and be updated effective on January 1 of each year based on choices you are able to make during the annual open enrollment period (October through December).

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What do small business employers need to know about their new healthcare options in 2014?

Small business employers will be able to provide coverage options to their employees either “on” or “off” of the Federal Marketplace. Many health carriers who offer plans for small employers on the SHOP will also offer those same plans as well as other federally compliant health plans without using the SHOP (off the Marketplace). The requirements for pricing, eligibility, and coverage offered are the same on or off the Federal Marketplace for small businesses. It’s important to note that tax credits may be available to small employers who choose provide coverage using the SHOP. These tax credits may make it possible for the employer to better manage their overall cost. All health insurance companies will have to provide federally compliant health plans starting in 2014, which means some benefits will change or be expanded to ensure all Essential Health Benefits are provided.

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In 2014, how should a small business employer evaluate healthcare options and ultimately decide what is best?

Employers must weigh several options when looking at benefits for 2014. First of all, there will be a limit to the number of plans available through the SHOP (and an employer can choose only one SHOP plan), but at the same time the employer may be eligible for tax credits based on how much they pay toward the coverage. Small employers who choose to make benefits available outside of the Marketplace or SHOP will not be able to use the tax credits—but they will be able to offer more than one benefit plan, which may be more consistent with what they do today.

Some small employers may elect to no longer offer health coverage to their employees. In that case, employees could go to the Marketplace and possibly qualify for Advanced Premium Tax Subsidies, which could lower the amount they have to pay for coverage.

Most carriers will announce their premiums and benefit changes for January 1, 2014 plans in October—around the same time the Marketplace opens, so employers will be able to compare coverage and pricing options for plans that are available both on and off the Marketplace. Employees will also be able to visit the Marketplace to see if they may be eligible for the advanced premium tax credit (or premium subsidy). In fact, there are already tools today that individuals can use to get a rough estimate of their advance premium tax credit, however they cannot get final numbers until the Marketplace opens in October and rates for all the coverage options are finalized.

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What do small business employees need to know with regard to tax credit? In what scenarios would a small business employee qualify for a tax credit?

Besides the tax credits available to businesses, one of the biggest parts of healthcare reform is financial assistance to help make insurance more affordable for individuals who earn up to 400% of the Federal Poverty Level (FPL).

That means if you’re an individual without coverage through your employer and earn between $11,505 and $46,021 a year, or a family of four earning from $23,425 to $93,700 a year, you can qualify for a tax credit to help pay for part of your premium, or maybe even pay for your whole premium. And if you earn less than $34,516 for an individual or $70,275 for a family of four, you also can get help to pay out-of-pocket costs, such as deductibles and copayments. You may also qualify for tax credits if you have an employer-sponsored plan and the cost for employee-only coverage exceeds 9.5 percent of your income.

The discount that helps cover the cost of premiums is called the Advance Payments of the Premium Tax Credit (APTC), and the Cost Sharing Reduction (CSR) helps reduce out-of-pocket costs.

Remember: You must use the Marketplace to see if you qualify for financial assistance, and if you do qualify, you must buy your policy through the Marketplace.

People eligible for public health coverage or Medicaid are not eligible for APTCs.

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If a small business does offer group coverage, but an employee could get better coverage through the Marketplace, can the employee purchase the Marketplace plan instead? And if so, could he or she receive a tax credit to do so?

If a business offers health insurance, an employee could enroll in a different plan on the Marketplace and qualify for the tax credit ONLY if the cost for employee-only coverage under the employer-sponsored plan exceeds 9.5 percent of the employee’s income.

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How can a small business employee take more action and get more involved when it comes to his/her healthcare purchasing decisions?

People should ask their employer what the company’s plan is for providing coverage in 2014. Also, visit the Federal website www.Healthcare.gov to learn more about the Marketplace and the options that may be available.

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How can people take accountability for their own health, thus ultimately lowering healthcare costs across the board?

Healthcare costs certainly have gone up over the years, but most people really do have more control over their medical expenses than they think they do. For example, those super-sized fries or double cheese pizza may sound like a bargain now, but if they lead to expensive heart surgery later, or diabetes, are they really worth it?

Your doctor can take care of you when you’re sick, but YOU are the best one to take care of yourself every day, and hopefully avoid getting sick. You don’t have to be a body builder or marathon runner. Small, everyday changes can make a big difference. Even the little things we always hear about—cutting down on sodas, junk food, and the drive-thru; walking 30 minutes a day, even if it’s 15 minutes after lunch and another 15 after dinner; eating more fresh fruits and vegetables; get an annual checkup; and of course quit using any tobacco—really do add up over time to help you lose weight and improve your health.

Also, insurance companies really do want their members to be healthier, and most have free wellness programs and disease management tools by phone and online, so be sure to take advantage of them. Just pick one thing to focus on, and get started!

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More information

Be sure to keep checking the websites that provide ongoing updates on Health Care Reform and the implementation process. We encourage you to visit www.HealthFirstHealthPlans.org and www.Healthcare.gov for an ever-increasing amount of information on programs that can help you provide coverage for yourself and for your family. Also look for more information on “Navigators” who will soon be helping individuals and employers understand healthcare coverage on the Marketplace or SHOP.

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