GROUP HEALTH–WHAT CLIENTS NEED
anymore. It’s entirely possible to be a small group and a large group at the same time under this law! Counting employees for ACA compliance purposes is about to become very important and more complicated than you would think. ACA defines full-time employees as those who work an average of at least 30 hours per week. However, it is unclear how this definition is measured and over what time period it is measured. When determining the number of full-time employees relative to the employer’s affordable coverage requirement, employers will be allowed to exclude any full-time seasonal employees who work less than 120 days during the year. Part-time employees are counted as full-time equivalent employees in determining whether an employer is subject to the employer mandate but part-time employees are excluded from the penalty calculation. The ACA does not define full-time employee for purposes of the automatic enrollment provision. The definition of a “ full-time employee” is about to change to 30 hours a week for benefit purposes. The definition of “full time employee” is expected to be released in 2014. The ACA requires each state to have a health insurance “exchange” to provide an alternative marketplace where individuals and small businesses will be able to purchase private health insurance coverage, effective Jan. 1, 2014. My state, Maryland, has elected to create state-run exchanges. All groups will be required to notify their employees about the exchanges soon, even though the exchanges are not operational yet. Subsidized coverage is only available to low-income individuals who do not have a valid offer of group coverage, and it’s only available through the “exchange.” This means that if the employer provides an affordable and quality coverage option, their employees and their dependents can’t peel away from the group and get reduced-cost coverage through the exchanges.
If an employer drops coverage and sends employees to the exchange, all of the employees, including those who do not qualify for the subsidies (typically the corporate decision-makers) have to go to the exchange for coverage too, and that coverage probably will be much more expensive than their group coverage today (particularly with no government or employer subsidy!) There are no business tax advantages to dropping coverage and paying penalties. The penalties are not tax deductible to the business and don’t go toward paying premiums for employees to purchase coverage elsewhere. That money just goes straight to the U.S. Treasury. I’m afraid that many businesses will do the math and decide to drop group plans and pay the penalty. It may cost them less and they are relieved of many administrative burdens. But I’m hoping that the majority of employers will realize that health insurance is still the best way to attract and retain employees. For groups of 100 and less, the looming changes to how health insurance policies must be structured and priced and what they must cover may have a dramatic impact on premium costs. None of the employer requirements have been officially released in a regulation yet, and employers must start complying in less than one year! Employers need to let the Obama administration know how they feel about this. This is a very scary and uncertain time. As a licensed benefit professional, you can help families and businesses of all sizes work their way through it and ensure that they make choices that make the most sense for their needs and budget. Diana H. Johnson, CEBS, CLU, ChFC, is vice president, employee benefits at The Avon-Dixon Agency, Easton, Md. Contact her at Diana. Johnson@innfeedback.com.
HEALTH
Bronze, Silver, Gold, Platinum Become Familiar With These Metals Under the Affordable Care Act, insurers will be required in 2014 to offer plans that fit within four levels of coverage, Bronze, Silver, Gold and Platinum. Insurers don’t have to offer plans in all four levels, but within the health insurance exchanges, all insurers must offer at least one silver and one gold plan. The four levels of coverage indicate the percentage of health costs that a health plan would pay for an average person. Bronze: The insurer would cover 60 percent of all health care costs for an average person. Enrollees, on average, would be responsible for paying 40 percent of the costs. Silver: The insurer would cover 70 percent of all health care costs for an average person, with enrollees paying an average of 30 percent of the costs. Gold: The insurer would cover 80 percent of all health care costs for an average person, with enrollees paying an average of 20 percent of the costs. Platinum: The insurer would pay 90 percent for their covered benefits and an average individual would pay 10 percent out-of-pocket. The U.S. Department of Health and Human Services continues to release information about these standardized health insurance plans, and further details will be featured in an article in the March edition of InsuranceNewsNet.
February 2013 » InsuranceNewsNet Magazine
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