The Affordable Care Act is creating significant confusion and along with that, lots of questions. A typical question might be, “How will this affect me?” See below for answers to some of the most pressing and common questions.
Will my current health plan benefits change?
Those who currently have a health insurance plan for their business may have already seen a few changes based on the new law. The law provided for “grandfathering” of policies which were in effect on or before March 23, 2010, which allowed you to keep your benefits for currently enrolled employees, dependents, and new hires. However, it mandated that new elements must be added to these policies beginning in September 2010.
In June of 2010, the Department of Health and Human Services issued regulations detailing plan changes that would cause a health plan to lose its “grandfathered” status, and then be required to implement the new plan requirements. All new group health plans established after March 23, 2010, with plan years beginning on or after September 23, 2010, must include these new elements as well as several other coverage requirements.
Will I be required to buy my insurance from the state Health Insurance Exchange?
No. The law requires everyone to have health insurance coverage, but does not dictate where it must be purchased. The state Health Insurance Exchange is simply a place where those who are self-employed or otherwise not covered by insurance may purchase a plan.
Small employers will be able to provide health insurance coverage to permanent, full-time employees, while temporary or part-time employees will be able to purchase insurance on their own via the state Exchange. The state Exchange may or may not offer the same choices and benefit plan designs to allow you to choose what works best for your business. You may continue to utilize your licensed health insurance broker to provide your employees with the best benefits at the best rates.
Do individuals have to buy insurance?
Yes, if you want to avoid the penalty. Starting in 2014, those who are not covered under an employer-provided health insurance program will be required to purchase their own coverage or face a yearly penalty. In 2014 the penalty will be the greater of 95 dollars or 1 percent of annual income. The fine will increase to 235 dollars or 2 percent of income in 2015 and in 2016 will reach 695 dollars or 2.5 percent of income. From 2017 onward, the penalty will increase annually based on cost of living adjustments.
If individuals can buy health insurance from the state Exchange why should a business owner offer health insurance to their employees?
It is true that a business which employs fewer than 50 workers will not face a penalty for failing to provide health insurance. Those employees will have the option to purchase private insurance or utilize the state Health Insurance Exchange. After 2014, the exchange plans will provide essential coverage and are guaranteed to be issued but it still does not ensure that everyone will participate. Some individuals may opt to pay the penalty rather than purchase insurance.
Employer-sponsored health insurance remains a valuable benefit for your business. It helps the business to attract employees and retain employees, may keep the work force healthier and therefore reduce the number of sick days used, and carries various tax benefits for both employers and employees. For these and other reasons, many small employers already offer health insurance coverage and will continue to do so after the reform is implemented.
Steve Amante is the President and CEO of Amante & Associates Insurance Solutions, Inc. To learn more about Healthcare Reform contact Steve Amante or Frank Faldmo the firm’s Employee Benefits Advisor at 951-676-8800 or visit: www.amanteandassociates.com
