Health Care Reform to Impact Employers This Year
Insurance Marketplaces to open for enrollment this fall.
This summer, all employers, regardless of size, will have to inform their employees about the Federal Marketplace for purchasing health insurance. Depending upon the size of the business, employers may have to offer coverage to eligible employees or pay a penalty. Most employees not covered by an employer-sponsored plan will have to purchase their own insurance through a marketplace, formerly known as exchanges, or pay a penalty as well.
The implications of the Patient Protection and Affordable Care Act on businesses were outlined by Christopher Fanning, Vice President of Commercial Sales with Geisinger Health Plan, at a Chamber-sponosred seminar held Tuesday morning at the Danville Elks.
Following the Supreme Court’s ruling last June which upheld the Affordable Care Act. Employers with at least 50 FTEs on an average annual basis will have to offer insurance or pay a penalty. Full-time employees are defined as those working 30 or more hours each calendar month. In order to determine the number of full-time equivalents, an employer should total the number of non-full time employee hours per month and divide that number by 120. Add up the total number of full time employees each month for the calendar year and the total number of full time equivalents each month for the calendar year and divide by 12.
Mr. Fanning’s presentation, which includes the formula for determining the size of your group, is available here.
Employers will be able to offer coverage through a traditional insurance broker relationship or through the Federal or private marketplaces. The Federal Marketplace will open in September for viewing and open enrollment will begin in October for a 1/1/14 effective date. Every employer will be required to provide information about the Federal marketplace to employees once the government finalizes model language for the notification, which is expected in late July or August.
Employers that meet the 50 FTE threshold but do not pay for employee coverage will pay a $2,000 penalty annually for the number of full-time employees minus the first thirty. The employer must provide at least 60% coverage and not require the employee to contribute more than 9-1/2% of their annual wages for coverage.
Small groups (2-50) will be able to able to access a Small Business Health Options Program as part of the Marketplace. In 2016, the SHOP will be expanded to businesses with up to 100 FTEs. Small group employers will be able to apply for tax credits of up to 50% of the price of the premiums.
Most individuals not covered by employers will be required to have coverage through a private or the Federal Marketplace. The penalty for not purchasing insurance will be 1% of annual wages or $95 annually, whichever is greater. Individuals will be eligible for a subsidy on a sliding scale if their annual wages are up to 400% of the poverty level.
Private health insurance providers have just submitted plans and rates to the Federal government for review. Qualified health plans must include essential health benefits. Coverage will be gauranteed issue with pre-existing conditions covered. Premium adjustments for medical conditions are not allowed but there will also not be credits for younger, healthier individuals. Rates can be adjusted based on geographic region within the state, family size and regular tobacco use. Providers such as GHP will be able to discuss rates for these plans once approved in the next couple of months.
Fanning noted that for businesses that currently provide insurance, the changes take effect upon your next renewal date in 2014. Businesses with a renewal early in the year are considering renewals in late 2013 and should contact their broker to discuss the pros and cons. With more details becoming available and deadlines for implementation approaching, the Chamber will continue working with Geisinger Health Plan to provide relevant information on Health Care Reform to members of all sizes throughout this year.