Legal

Legal Health Insurance

On the Rise Again

According to the US Census Bureau, 55% of Americans obtain health insurance through their employer. In addition, more than 160 million Americans receive health insurance through an employer-sponsored insurance plan.

By MATTHEW SEMINARA

Today, the percentage of US citizens with health insurance is under 84%, as approximately 49 million Americans are without any form of health insurance.

This article will discuss the rising costs of health insurance for employers and employees based upon recent legislation in the US, and what employers and employees should expect with respect to the new health care legislation in the US.

PATIENT PROTECTION AND AFFORDABLE CARE ACT On June 28, 2012 the US Supreme Court released its ruling on the 2010 health care law, upholding the Patient Protection and Affordable Care Act. The law expands health care access to millions of Americans. While the altruistic theory that all Americans should be afforded some form of health care should be commended, the Act fails to address the ever-rising costs associated with such a law where employers and employees are required to purchase health insurance that serves to subsidize the health insurance expenses of fellow Americans.

EMPLOYER COSTS

Employers with fifty or more employees are now required to provide health insurance or pay sizeable penalties. In addition, employers are also required to provide summaries of the Act to their “covered employees” and to report the value of its health plan on their covered employees’ W-2 form. Form W-2 is a United States federal tax form issued by employers to employees which states how much an employee was paid by their employer in the previous year. The health insurance coverage offered by employers must provide certain essential benefits that include emergency care, inpatient care, prescription drugs, lab testing, maternity and newborn care, and pediatric care.

EMPLOYEE COSTS

The Kaiser Family Foundation, the leading not-for-profit, privately operated foundation focusing on the major health care issues facing the US, reports that as a result of the Act, the cost of employer sponsored health insurance plans have increased by approximately 9% in 2011. It is also projected that this cost will increase again by approximately 8.5%. Faced with rising health insurance costs, employers are planning to use a wider variety of cost-sharing measures with their employees. They include increasing: • the percentage that employees contribute to their insurance premiums, • in-network deductibles; • out of network deductibles; and • out of pocket maximum payments. “In-network” and “out-of-network” refers to doctor or hospitals that are part of an insurance company’s network of providers. Insured employees ordinarily pay less when using an “in-network” doctor or hospital, because those networks provide services at lower cost to the insurance companies with which they have contracts. With respect to the individual employee, the Supreme Court upheld the much debated “individual mandate” which requires most Americans to maintain “minimum essential” health insurance coverage. Individuals who are not exempt, and who do not receive health insurance through an employer or government program, must purchase insurance or pay a fine. “Beginning in 2014, those who do not comply with the mandate must make a ‘shared responsibility payment’ to the Federal Government.” The Supreme Court ruled that the “individual mandate” could reasonably be interpreted as imposing a tax and was therefore constitutional under Congress’s power to “lay and collect taxes.” Exemptions from the individual mandate are for those individuals: • whose income is below the poverty line, or • the cheapest insurance policy the individual can purchase would cost more than 8% of the individual’s income. The fees of the “individual mandate” are as follows: as of 2014, Americans without health insurance coverage must pay a fee of $95. In 2015, the fee is increased to $325, and in 2016 the fee is $695. After 2016, the fee will be tied to the Consumer Price Index. Employees can also expect to see higher costs for their dependents as the Act requires insurance companies to allow adult children to remain on their parents’ health insurance plan until age 26. According to the Kaiser Family Foundation, more than 2.3 million young adults have been added to employee plans since the law was enacted. Additionally, some employers are instituting surcharges for employees who have covered spouses on their employer’s plan and some employers are even instituting wellness programs to incentivize healthy living and lower premiums for its employees. •