It has been more than three years since President Barack Obama signed the Affordable Care Act (ACA) into law. While some of its provisions, including free preventative care services and requiring insurance agencies to cover children up to the age of 26 in the policies of their parents, have already been enacted, the bulk of the law is scheduled to go into effect on Jan. 1, 2014.
On that day, all Americans will be required to have health insurance, and health care exchanges, the state-regulated marketplaces that will offer health care plans, will become effective. These include Covered California, our state exchange, which will open its enrollment on Oct. 1. The start of the year also marks the start of the ACA provisions that ban insurers from denying coverage to those with pre-existing conditions and those that expand Med-Cal to cover those whose income is up to 133 percent of the federal poverty level.
The Carlsbad Chamber of Commerce is helping its members get a better understanding of the law. We've reached out to experts in the health care and health insurance fields to answer some of the pressing questions about the law.
ASK THE EXPERTS
Q. How will ACA affect me as a business owner?
Cleta Fredricksen: If a company has 50-plus employees, ACA will require the company to offer a qualified health care plan for its employees.
If a company has less than 50 employees, there are no penalties for not offering a medical plan. Employees will be subject to the mandates of the ACA.
If a company has less than 50 employees and does offer a medical plan, the plan must meet the minimum requirements or be subject to penalties, currently delayed until 2015.
All employers are required to provide a Notice of the Exchange to all employees whether they offer a health plan or do not offer a health plan.
According to the temporary Department of Labor guidance, the notice is applicable to all employers that are subject to the Fair Labor Standards Act (FLSA). This includes most employers, regardless of size.
Employers must submit the notice to all current employees by Oct. 1, 2013, and to new hires within 14 days of their employment start date, at least for 2014. All employers, whether they have a medical plan, or do not offer a group plan, are required to comply with the requirement to mail or email all employees the Department of Labor notice.
Q. What can I do now to prepare?
Chris Van Gorder: Small businesses (with fewer than 50 employees) are not subject to any mandate to provide coverage for their employees. For those that do offer coverage, however, there are some changes coming to small group plans that they can prepare for now, keeping in mind that changes will affect their plan on the first plan anniversary after Jan. 1, 2014.
Waiting Period, California law says that the maximum waiting period for benefits to begin for new hires of small businesses is 60 days. Employers need to review their current benefits waiting period to see what changes will be needed in 2014.
Benefits, The new law states that all plans must cover "minimum essential benefits" at established actuarial levels. Compliance with these actuarial guidelines is not a burden to the employer, carriers have been tasked with creating plans that are compliant with the law, but the new benefit guidelines may be richer than what they are currently offering, which may mean higher premiums.
Rate Structure, the biggest changes coming to the small business market are changes in the way that small group rates are calculated. This new approach is called "Community Rating" and the idea is that rates need to more accurately reflect the individual and their dependents who are insured. For example: rather than have one rate for employees who are age 40 to 49 with family coverage that is determined solely by the age of the employee, the new law will break the rates down into one year multipliers (vs. 10-year tiers) and also include spouse and child ages in that calculations.
The result is a rate that is more specific to the individual and his family but it carries with it a higher administrative burden to the employer, who must now track additional dependent information in order to get insurance quotes and plan its budget.
Now is the time to discuss the upcoming changes with a licensed agent and begin putting this information together for 2014.
Exchange Options, California's small businesses will have an additional insurance option through the Covered California SHOP, which is the small group exchange.
The exchange is not a replacement for current options in the market place, it is simply an additional option that provides employers the ability to offer their employees multiple plan options with multiple carriers, without having to worry about participation issues or getting multiple invoices from different carriers.
The Exchange will be open for quoting on Oct. 1 and the coverage will be in effect Jan. 1, 2014 so employers should notify their broker if they want a SHOP quote. Not all brokers will become SHOP-certified, so it's important to have that discussion now if an employer is interested in considering coverage through SHOP.
BILL KING: Put it off for as long as you can. Change your renewal date to Dec. 1, 2013. Changes will take place on Jan. 1. If there is savings to be had this year, change your insurance company. Insurance companies are more aggressive now than any time in the last 40 years.
Most businesses will pay higher rates and have to change their benefits in some way. Some employers may save money if their employees are eligible for the subsidy and they end their plan.
Christopher Kirkland: If you're an individual you may want to take a look at whether or not you may qualify for a subsidy. If you're an employer group under 50 you may want to consider a defined benefits employer contribution plan for yourself and your employees.
Q. How will the new law affect me as a patient?
Irma Cota: The new Health Care Reform law will provide more low-cost choices to access and purchase health insurance than ever before. If you are uninsured you will have access to either the Medi-Cal expansion program for eligible incomes ($13,000 annual income for a single person or $32,000 for a family of four) or Covered California, the state's marketplace for affordable insurance, for individuals with incomes above this level. Covered California provides guidelines to individuals to select a private plan that best suits their needs. The guidelines offer information on the amount of tax credits an individual will receive and cost of plan coverage depending on income and plan selection.
In San Diego County there will be at least five well-known health plans offering a broad spectrum of providers and geographic coverage.
The State of California is fully committed to implementing the Accountable Care Act and will be offering its citizens the full spectrum of coverage intended by law. This is a massive undertaking and it may create confusion at first.
Although this new change will be unfamiliar at first, North County Health Services (NCHS) believes this law will enable individuals and families to access better coverage and options which will ultimately lead to improved health outcomes.
Q. What penalties am I facing as an employer?
Jim Morrison: Here are a number of potential fines that employers need to understand. The following are a few of the majors ones:
• Summary of Benefits (SBC) disclosure non-compliance is $1,000 fine per occurrence.
• Delayed until 2015, employers that have 50 or more employees can be fined ($2,000 per employee -the first 30 employees are exempt) if they don't offer coverage at all. Even if they do but it is not considered affordable and an employee obtains a subsidy through their state exchange the employer is fined $3,000 per employee that gets a subsidy.
• There are a number of other areas employers face fines but the goal appears to be to get as many people covered rather than the fining of employers at least in the beginning.
On that day, all Americans will be required to have health insurance, and health care exchanges, the state-regulated marketplaces that will offer health care plans, will become effective. These include Covered California, our state exchange, which will open its enrollment on Oct. 1. The start of the year also marks the start of the ACA provisions that ban insurers from denying coverage to those with pre-existing conditions and those that expand Med-Cal to cover those whose income is up to 133 percent of the federal poverty level.
The Carlsbad Chamber of Commerce is helping its members get a better understanding of the law. We've reached out to experts in the health care and health insurance fields to answer some of the pressing questions about the law.
ASK THE EXPERTS
Q. How will ACA affect me as a business owner?
Cleta Fredricksen: If a company has 50-plus employees, ACA will require the company to offer a qualified health care plan for its employees.
If a company has less than 50 employees, there are no penalties for not offering a medical plan. Employees will be subject to the mandates of the ACA.
If a company has less than 50 employees and does offer a medical plan, the plan must meet the minimum requirements or be subject to penalties, currently delayed until 2015.
All employers are required to provide a Notice of the Exchange to all employees whether they offer a health plan or do not offer a health plan.
According to the temporary Department of Labor guidance, the notice is applicable to all employers that are subject to the Fair Labor Standards Act (FLSA). This includes most employers, regardless of size.
Employers must submit the notice to all current employees by Oct. 1, 2013, and to new hires within 14 days of their employment start date, at least for 2014. All employers, whether they have a medical plan, or do not offer a group plan, are required to comply with the requirement to mail or email all employees the Department of Labor notice.
Q. What can I do now to prepare?
Chris Van Gorder: Small businesses (with fewer than 50 employees) are not subject to any mandate to provide coverage for their employees. For those that do offer coverage, however, there are some changes coming to small group plans that they can prepare for now, keeping in mind that changes will affect their plan on the first plan anniversary after Jan. 1, 2014.
Waiting Period, California law says that the maximum waiting period for benefits to begin for new hires of small businesses is 60 days. Employers need to review their current benefits waiting period to see what changes will be needed in 2014.
Benefits, The new law states that all plans must cover "minimum essential benefits" at established actuarial levels. Compliance with these actuarial guidelines is not a burden to the employer, carriers have been tasked with creating plans that are compliant with the law, but the new benefit guidelines may be richer than what they are currently offering, which may mean higher premiums.
Rate Structure, the biggest changes coming to the small business market are changes in the way that small group rates are calculated. This new approach is called "Community Rating" and the idea is that rates need to more accurately reflect the individual and their dependents who are insured. For example: rather than have one rate for employees who are age 40 to 49 with family coverage that is determined solely by the age of the employee, the new law will break the rates down into one year multipliers (vs. 10-year tiers) and also include spouse and child ages in that calculations.
The result is a rate that is more specific to the individual and his family but it carries with it a higher administrative burden to the employer, who must now track additional dependent information in order to get insurance quotes and plan its budget.
Now is the time to discuss the upcoming changes with a licensed agent and begin putting this information together for 2014.
Exchange Options, California's small businesses will have an additional insurance option through the Covered California SHOP, which is the small group exchange.
The exchange is not a replacement for current options in the market place, it is simply an additional option that provides employers the ability to offer their employees multiple plan options with multiple carriers, without having to worry about participation issues or getting multiple invoices from different carriers.
The Exchange will be open for quoting on Oct. 1 and the coverage will be in effect Jan. 1, 2014 so employers should notify their broker if they want a SHOP quote. Not all brokers will become SHOP-certified, so it's important to have that discussion now if an employer is interested in considering coverage through SHOP.
BILL KING: Put it off for as long as you can. Change your renewal date to Dec. 1, 2013. Changes will take place on Jan. 1. If there is savings to be had this year, change your insurance company. Insurance companies are more aggressive now than any time in the last 40 years.
Most businesses will pay higher rates and have to change their benefits in some way. Some employers may save money if their employees are eligible for the subsidy and they end their plan.
Christopher Kirkland: If you're an individual you may want to take a look at whether or not you may qualify for a subsidy. If you're an employer group under 50 you may want to consider a defined benefits employer contribution plan for yourself and your employees.
Q. How will the new law affect me as a patient?
Irma Cota: The new Health Care Reform law will provide more low-cost choices to access and purchase health insurance than ever before. If you are uninsured you will have access to either the Medi-Cal expansion program for eligible incomes ($13,000 annual income for a single person or $32,000 for a family of four) or Covered California, the state's marketplace for affordable insurance, for individuals with incomes above this level. Covered California provides guidelines to individuals to select a private plan that best suits their needs. The guidelines offer information on the amount of tax credits an individual will receive and cost of plan coverage depending on income and plan selection.
In San Diego County there will be at least five well-known health plans offering a broad spectrum of providers and geographic coverage.
The State of California is fully committed to implementing the Accountable Care Act and will be offering its citizens the full spectrum of coverage intended by law. This is a massive undertaking and it may create confusion at first.
Although this new change will be unfamiliar at first, North County Health Services (NCHS) believes this law will enable individuals and families to access better coverage and options which will ultimately lead to improved health outcomes.
Q. What penalties am I facing as an employer?
Jim Morrison: Here are a number of potential fines that employers need to understand. The following are a few of the majors ones:
• Summary of Benefits (SBC) disclosure non-compliance is $1,000 fine per occurrence.
• Delayed until 2015, employers that have 50 or more employees can be fined ($2,000 per employee -the first 30 employees are exempt) if they don't offer coverage at all. Even if they do but it is not considered affordable and an employee obtains a subsidy through their state exchange the employer is fined $3,000 per employee that gets a subsidy.
• There are a number of other areas employers face fines but the goal appears to be to get as many people covered rather than the fining of employers at least in the beginning.