We’ve been working hard to remain the experts in our field when it comes to the upcoming Health Care Reforms which are slated to hit on January 1, 2014. In order to do this, we attend countless seminars from various sources, discuss the impacts of various parts of the new laws with our contacts throughout the industry, and even read blogs from other brokers to see if there’s anything we’ve missed! This last part gets fun, because we notice over and over that most folks out there are simply providing the same general information that we already know. The reason for this is that the laws are incredibly complicated! Few people have the ability to really ‘get in there’ and start grappling with the nitty-gritty aspects of the reforms which are already, for the most part, laid in stone.
Bear in mind that the Affordable Care Act (AFA) is still definitely a work in progress. Lobby groups and many other entities are working together to iron out and fine tune bits of the law here and there, on literally a weekly (almost daily) basis. All of the insurance carriers are scrambling to prepare for the changes ahead, too. In fact, HUGE breaking news just got announced in early July: the mandate that employers with over 50 employees provide health insurance (or face penalties) has been PUT OFF for one more year, until January 1, 2015! (This is great news for employers!) The reason for the delay was to allow more time for the insurance carriers and other affected entities to come on board with the changes. But don’t be fooled by anyone who still tries to tell you that much of the information has yet to be determined. There is an awful lot that’s been decided! And it’s all happening as of January 1 2015!
In fact, few people realize that the first phase of the reforms actually took effect way back in 2010. Preventive care is free now on all plans (except grandfathered plans) as a result of the reforms. Birth control, breast pumps & breastfeeding supplies, colonoscopies after age 50, mammograms after age 40, well-baby visits & child immunizations, well-woman visits and annual physicals (for both sexes) all cost zero now, for anyone who has insurance and uses in-network providers. Child-only policies became guaranteed issue in 2010, too. All of these changes greatly benefit the insured.
What lies ahead is “Phase 2”. On January 1, 2014, individual coverage for everyone (not just children) becomes guaranteed issue. Essentially, this means all people can get insurance regardless of whether or not they have preexisting conditions. Since carriers will have to insure more sick people than they care to insure, pundits expect that individual insurance rates will rise quite a bit – anywhere for 20%-50%. Remember, subsidies exist to help offset individual insurance costs for those with up to $94,200 in annual household income (for a family of 4) or up to $45,960 (for a single person). But if you earn more than that, you won’t get any help towards the costs.
If you choose to run around without insurance (which we really truly don’t recommend), you will pay a fine: $95 or 1% of annual income, whichever is greater, for 2014 (per adult in an uninsured household), increasing to $325 in 2015, then to $695 in 2016, and continually increasing after that. Also, bear in mind that you can’t just wait until you’re sick and then hop onto a guaranteed-issue plan; there are strict open enrollment periods, and if you miss them, you’re out of luck until the next year’s enrollment unless you have a qualifying event.
Also as of January 2015, employers with more than 50 full-time employees (or enough part-time employees to equal 50 full-time employees) must offer insurance or face significant penalties. Now that there’s one more year to get ready for this change, certain details will get ‘smoothed out’ in the coming months. As it stands now, if you work for a company that offers coverage, you won’t get a subsidy (regardless of your income) if you choose to go on the individual exchange instead. Also, if you own a company and think you can simply fire employee #51 so you don’t have to put in group insurance, think twice about it – you could have a very costly lawsuit on your hands! There are better strategies for minimizing employer costs (just ask us and we’ll gladly advise).
Groups under 50 have it easy – the laws don’t apply to them just yet! So, while the actual insurance plans available on the group market will change, overall it’s ‘business as usual’ for smaller groups. Groups over 50 should definitely get ready for changes ahead. For one thing, the IRS plans to crack down heavily on non-compliance of any kind among groups, since they need to raise money to help pay for the reforms. Also, many large group employers think that choosing to pay fines instead of putting in group insurance makes the most financial sense, but they should examine that assumption more closely. Premiums paid by the employer towards group insurance create healthy tax deductions for the company, better employee retention, and a more positive work atmosphere; the penalties, by contrast, are NOT tax-deductible, and result in top-dollar losses as well as reduced goodwill. It’s an intricate decision and one which we don’t recommend making without the help of an experienced broker who understands both the world of health insurance AND the ins and outs of the reforms.
Which gets us to our main point: the devil’s in the details with the coming reforms. And fortunately, many of those details are now established. The best way to prepare for the changes ahead is to enlist the help of someone who truly understands those details and do an in-depth analysis of how you stand to be impacted by the changes in January, either as an individual or as a corporation. Face it head on! After all, to quote a famous action figure, knowing is half the battle.