Webinar Recap: Three Things To Know Right Now About Health Care Reform
Twin Cities Business’ August 14 webinar called back experts from Bloomington-based HealthPartners and Edina-based Doherty Employer Services to explore recent changes under the Affordable Care Act (ACA). The three key takeaways: Expect continued confusion about the state of reform, plan accordingly in the wake of a one-year a delay of a major provision, and make sure you're providing the proper notifications to your workers.
It's No Surprise That People Are Confused
Greg Thurston, director of benefits at Doherty Employer Services, opened the webinar by discussing how people are reacting to reform. In a June survey conducted by the Kaiser Foundation, a nonprofit that researches health policy issues, 43 percent of respondents had an “unfavorable” view of the law; of them, 33 percent said the law goes too far, while 8 percent said they don’t like it because it doesn’t go far enough. Roughly 35 percent of respondents said they have a “favorable” view of the law, and 23 percent said they didn’t know or refused to answer altogether.
Furthermore, members of the House of Representatives and potential presidential candidates continue to voice their opposition. “Both sides, I think, were hoping probably for a decisive Supreme Court decision in their favor, which of course came out a couple months ago,” Thurston said. “Although it landed on the side of finding the law finding constitutional, I think the court’s reasoning left a lot of people troubled.”
Even when looking at the same subject, many people are drawing disparate conclusions. To illustrate, Thurston compared two newspaper headlines from the Washington Post and Baltimore Sun, whose articles were based on the same data. They read, “Maryland Issues Insurance Rates That Are Among The Lowest In The U.S.,” and “Premiums To Go Up By As Much As 25% Under Health Reform,” respectively.
“Given the conflicting headlines and the political situation, I don’t think it’s really surprising that employers, employees, and people in general are confused at the current status of health care reform,” Thurston said.
Dealing With A Delay In “Play or Pay”
Among the biggest changes that surfaced after TCB’s June webinar was the surprising July announcement that the so-called “play or pay” provision was delayed until 2015. The provision will require large employers—those with at least 50 full-time or full-time equivalent employees—to offer a certain level of insurance or face monetary penalties.
In order to avoid a penalty, large employers must offer a plan with “minimum essential coverage” to at least 95 percent of its full-time employees, is expected to 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.
Since the provision was delayed, employers have been revisiting their strategies for maintaining costs amid reform.
Julie Bunde, director of product management and product and market solutions at HealthPartners, said during the August webinar that the Obama administration was receiving a lot of feedback from employers about the complexity of the requirements. Employers expressed the need for more time to implement the systems, specifically with payroll processes. She said there was also concern about unintended consequences to the workforce, including potential hiring slowdowns and what impact the change would have on the economy.
Employers will now have more time to decide if they will offer insurance to existing employees or if they'll make other changes, such as reducing employees or their hours. Large employers could also potentially choose to pay the penalties for not offering insurance, come 2015. But because the size of an employer is calculated based on the year leading up to the 2015 change, employers may choose to implement changes in 2014.
Don't Forget To Notify Your Workers
The delay, however, does not affect the individual mandate, which will still go into effect in January 2014. Employers need to provide an updated Summary of Benefits and Coverage that denotes whether the plans they offer constitute minimum essential coverage and “minimum value,” which requires businesses to provide a plan that pays at least 60 percent of the total allowed cost of benefits. The document must also inform employees of the existence of the MNsure health exchange.
All employers that are subject to the Fair Labor Standards Act (and the vast majority are) must send out the notices to all of their existing employees before October 1, and to new hires within two weeks of hiring them after that date.
When announcing the delay of the provision requiring large employers to offer coverage, the U.S. Department of Treasury issued a press release titled “Continuing to Implement the ACA in a Careful, Thoughtful Manner.” Some thought the headline undercut the magnitude of the news, and Thurston described the delay as “significant.”
The government’s costs may climb due to the delay, because in 2014 it will pay out subsidies to some individuals who buy insurance on exchanges but it won’t begin generating revenue until 2015 through penalizing large employers that don’t offer sufficient plans.
“With this delay, I think the question now is whether employers will actually use this extra year to prepare or if they’ll sit back and find themselves still unprepared at the same time next year,” Thurston told webinar participants. He cautioned that employers, even if they’re hopeful for more delays or even repeals, shouldn’t use them as an excuse to be unprepared.
“If we sit back and kind of put this a little bit more in perspective, we’ll realize that the legislation has over 2,000 pages to it, so I don’t think it should really be too surprising that delays have occurred,” Thurston said.
TCB conducted a poll before the webinar to learn what questions employees are asking about reform. About half of respondents said their employees are voicing concerns about possible cost increases, while about a quarter of employers hadn’t yet received questions. Meanwhile, 7 percent of respondents said they’ve fielded questions about receiving coverage or a subsidy on the state’s exchange, and 6 percent said they’ve received inquiries about possible eligibility changes for employer-sponsored coverage.
TCB also inquired about the major concerns of businesses themselves. The largest concern—cited by 68 percent of respondents—was an increase in premiums. Roughly half were worried about the overall implementation and if they were failing to carry out certain tasks. Employee confusion and the cost for employees were also common concerns.
“The cost increase is very much something that is on everyone’s mind,” Thurston said.
Thurston suggested small employers, those with fewer than 50 full-time or full-time equivalents, look at the timing of their insurance plan’s renewal. “Group ratings,” or what the carrier’s underwriter has determined to be the relative risk of the group, are an important factor. Currently, carriers tend to give groups a rating of between .75 and 1.25, Thurston said, which ends up resulting in a 67 percent difference in premiums paid between the healthiest and least healthy groups.
Thurston said employers that already have favorable ratings may want to renew their plans in December because it will lock in their rates before the “community rating” goes into effect on January 1. When the community rating is implemented, “everybody’s going to be kind of squished into that 1.0 rating,” Thurston said. The community rating will allow for everyone to pay the same in premiums regardless of their health condition, with the only differentiators being age, location, and tobacco usage, Thurston said.
However, he cautioned that if plans are renewed early, pre-existing condition limitations will still be in effect, so employees that would benefit from the discontinuation of such limitations wouldn’t be able to take advantage of the change until their plan is renewed the following year.
Another strategy would be actively managing employee headcount for 2014, which could be particularly beneficial to employers who currently have close to 50 full-time equivalent employees, Thurston said. Employers that are manipulating their headcount to get below the 50-employee threshold should pay careful attention to workers’ classification, he added.
Hiring more part-time employees or reducing full-time employee hours could, however, backfire, Thurston said. That’s because when determining a company’s size for 2015, it must take an average of its employee base over the past year. So a company that started the year at 80 full-time employees but downsized to 40 mid-year may still be deemed “large,” and a growing company that starts 2014 with 40 full-timers but gradually increases to 60 by year’s end could be considered “small,” depending on the timing of their hiring. (For a chart demonstrating this phenomenon, click here.)
Employers may also consider hiring temporary workers instead of full-time employees, so the temp worker counts toward the staffing agency’s employee count.
Bunde touched on the four levels of coverage that will be offered on the MNsure exchange, which begins open enrollment on October 1; plans will take effect January 1. The “bronze” plan, the cheapest option on the exchange, must cover 60 percent of the benefit costs for the average individual. The plans become more expensive the more coverage they offer: The “silver” plan must cover 70 percent, “gold” covers 80 percent, and “platinum” covers 90 percent.
In preparation for 2014, Bunde outlined a checklist for employers. She said to ensure Summary of Benefits and Coverage forms are updated and distributed by October 1.
“It’s important to remember that 2014 is not an end point,” Bunde said. “The law is huge and the implementation is going to take a long time. There’s going to be twists and turns along the way; there’s going to be extra parts and missing parts for quite some time to come.”
To view additional TCB coverage about health care reform or to sign up for our next health care reform dialogue webinar, click here.