Key Takeaways from TCB’s April 24 Health Care Webinar
The webinar first looked at the history of U.S. health care trends, pointing out that the industry has experienced several significant changes before the Affordable Care Act (ACA). The 1980s were marked by high costs, prompting employers to re-examine insurance benefits; the 1990s brought new protections for individuals with disabilities, as well as approval for family and medical leave; and health savings accounts and prescription drug subsidies for Medicare beneficiaries were introduced in the past decade. Today, the ACA aims to provide broader access to health insurance through new state exchanges, restructured benefits and regulatory requirements, and a continued pressure on affordability.
“In each of these steps along the way, there has been similar anxiety with the disruption in the marketplace, and health care reform is really a continuation of that,” said Ed Wegerson, a partner at Minneapolis-based law firm Lindquist & Vennum, who has three decades of experience in employee-benefit and executive-compensation matters.
Considerations for Employers
Employers want to offer competitive benefits to attract and retain good talent, but they also want to keep their costs competitive, said Julie Bunde, director of product management and product and market solutions at Bloomington-based HealthPartners. Keeping talented employees healthy while managing costs is achievable under the ACA, she added.
To learn more about how new regulations have changed (and continue to change) benefit requirements, click here.
Effective January 2014, a new employer-shared responsibility provision, also known as the “play-or-pay” penalty, will require large employers to offer certain levels of coverage to a defined portion of their work force or face monetary penalties.
The definition of a large employer is more than 50 full-time equivalents, and that number will jump to 100 by 2016, unless the state elects to make the jump sooner than that. In a nutshell: Large employers must offer a plan with “minimum essential coverage” to at least 95 percent of their full-time employees, cover at least 60 percent of the total cost of benefits, and ensure their employees are not spending more than 9.5 percent of their income on health insurance coverage.
“Minimum essential coverage” refers to the type of coverage an individual will need in order to avoid a monetary penalty. (Individuals will need to validate their coverage on their 2014 tax returns.)
Failing to offer insurance to 95 percent of full-time employees will mean a $166.67 monthly fine per full-time employee (if at least one employee enrolls in health coverage offered over a public exchange and receives an associated tax credit). Fines would amount to $250 per month for those that miss the mark for covering 60 percent of the total costs of benefits or providing unaffordable plans.
There have also been a number of taxes generated under the health care act to pay for reform. Some have already hit health plan premiums, and others will continue to do so, Wegerson said. For example, the so-called “comparative effectiveness fee” will cost $1 per insured person in 2014, and there's also a fee estimated to be about $63 per participant that's designed to offset the cost of newly insured people. To learn more about taxes and assessments related to health care reform, click here.
To learn more about the “play-or-pay” provision, and for access to input from local business leaders, a flow chart to help determine whether your business would be subject to penalties, and a calculator for seeing if your company qualifies as a “large employer,” click here.
Meanwhile, small employers and individuals may be eligible to receive tax credits or subsidies for coverage purchased through MNsure, Minnesota's public health exchange, which is set to debut in October. The exchange will allow Minnesotans to compare plans side-by-side, and small businesses may qualify for a tax credit.
Wegerson noted that the issue of affordability will remain top-of-mind for business leaders and cautioned that 2014 will be a transitional year in which many decisions remain to be made. “This reform really has no end date,” he added.
Wegerson advises employers to collect accurate data and understand the rules in order to project possible penalties and proceed accordingly. “Get trusted advisors plus several different opinions,” he said.
To register for our upcoming webinars, which will be held in June, August, and October, click here.
To read a Q&A with our recent guest speakers, who answered questions from webinar participants, click here.