New Reforms Include Autism Mandate, Notification Rules, And More
During a June 19 webinar, experts from Bloomington-based HealthPartners, Minneapolis-based law firm Lindquist & Vennum, and Edina-based Doherty Employer Services joined Twin Cities Business Editor in Chief Dale Kurschner in exploring components of health care reform, including expanded benefits, strategies for small and large employers to maintain costs, and more.
They began by recapping some of the fundamental components of the Affordable Care Act (ACA), which were outlined during our April webinar before delving deeper into employer strategies and the most recent changes in the evolving law.
Julie Bunde, director of product management and product and market solutions at HealthPartners, touched on soon-to-be-implemented components of the law, as well as other recent changes that will affect health coverage.
For example, she said that an “autism mandate” will take effect January 1, 2014, and applies to fully insured, large-group plans in Minnesota. It dictates that plans must cover the diagnosis, evaluation, and treatment of autism for children under the age of 18 and expands coverage to include Applied Behavioral Analysis.
In light of the recent passage of Minnesota’s Civil Marriage Amendment, through which same-sex couples will be able to marry in Minnesota beginning in August, Bunde said employers should review plan documents to ensure that eligibility terminology does not need to be altered. Self-insured groups, specifically those with employees in multiple states, should review their documents in light of the new law.
Bunde also discussed the concept of “minimum value”; for a plan to qualify as offering “minimum value,” it must cover at least 60 percent of the cost of its benefits. Recent data indicates that most health plans will meet that threshold, she said.
A key component of health care reform is the state health insurance exchange, and Bunde detailed national trends pertaining to such exchanges, through which individuals and small businesses will be able to procure insurance. Despite widespread concern over anticipated “rate shock”—the suspicion that reform will drive up premiums—some recent filings from carriers in California actually included lower rates than anticipated, Bunde said.
Meanwhile, employers are facing new reporting requirements. For example, they must inform workers of the existence of the state’s exchange, MNSure, by October 1, and the government recently released model notices that employers can use. Click here to view the form for employers who will offer health care plans, and here for those that won't.
Starting July 31, health insurance companies and sponsors of self-insured health plans will be required to pay a fee to support the Patient-Centered Outcome Research Institute. The institution, authorized by Congress, aims to guide and inform patients and their health care providers. The fee has to be reported by July 31, the year following a plan's year-end, so plans that ended between October 1 and December 31 of last year are due to pay soon. Charges currently lie at $1 per enrolled individual, (employee plus family members) and will rise to $2 starting next year; fees for subsequent years will be adjusted for inflation.
And a new summary of benefits and coverage (SBC) disclosure requirement dictates that, for plan years beginning in 2014, employees must be notified whether the plan provides “minimum essential coverage” and “minimum value.” To access the new SBC template, as well as examples of completed SBC documents, click here.
Furthermore, in May, the IRS began seeking input on how people should report to the government the coverage that they provide. Large employers need to report to the government beginning in 2015, while small employers are exempt from reporting.
What Employers Are Thinking
Much of the June Webinar was devoted to exploring strategies through which employers may maintain costs amid changes spurred by reform.
Ed Wegerson, a partner at Lindquist & Vennum who has three decades of employee-benefit experience under his belt, joined Greg Thurston, director of benefits at Doherty Employer Services, in outlining a number of strategies for both small and large employers.
For example, “small” employers (those with fewer than 50 full-time employees or full-time equivalents) may tap the MNSure exchange’s Small Business Health Option (SHOP) program, which essentially provides a “defined contribution” model, through which small businesses may provide a set amount of money to each employee and allow them to select the plan that best fits their needs.
Other small business owners may consider restructuring their controlled groups, reducing the benefits they offer employees, or shifting hours or using independent contractors so as to reduce their number of full-time employees.
Thurston suggested that small employers may consider renewing their plans early, locking in more favorable rates before changes take effect in 2014. Otherwise, they will be subject to “community ratings,” which will be based on individual health surveys submitted by carriers in the small group market. Groups will be analyzed on how healthy they are and be placed into certain categories that determine premiums, Thurston said.
Meanwhile, “large” employers are preparing for the “play or pay” provision, which will require them to provide a certain level of coverage to employees or face monetary penalties. That provision was recently delayed until 2015, although most experts expect the available employer strategies to remain the same.
One such strategy involves the “safe harbor” testing method. Employers can identify how many full-time employees they have during the first year, known as the “measuring period,” in order to assess the amount of coverage they can provide or the fines they may face the following year, known as the “stability period.” For instance, an employer in 2014 will take a FTE head count to determine how much they may need to pay for coverage (or fines) in 2015.
Large employers may consider dropping coverage altogether and paying $2,000 per full-time employee (minus a credit of the first 30 full-time employees), although Wegerson cautioned employers to consider what effects such a move would have on employee satisfaction, recruiting, and retention. If employers choose to withhold coverage, they may want to offer higher compensation to employees or increase non-health benefits in order to maintain employee morale.
A large employer may offer a plan that includes “minimum essential coverage” but doesn’t meet “minimum value.” That option would help employers avoid the $2,000 penalty, but they still might be subject to a $3,000 penalty if employees go on the exchange and receive a tax subsidy. (Employees may be eligible for a subsidy if their income is less than 400 percent of the poverty level.) However, “some entities may take that risk because they feel a lot of their employees wouldn’t go out to the exchange and get coverage,” Thurston said.
Employers may also limit employees’ hours to fewer than 30 per week (which constitutes “full-time” under the law) or offer multiple plans, some with lower values and others that employees may opt to pay more for.
To learn more about what options employers are considering, click here.
To register for our upcoming webinars, which will be held in August and October, click here.
To read a Q&A with the speakers from TCB’s latest webinar, who answered questions from webinar participants, click here.