With the employer mandate delayed until January 1, 2014, and the individual mandate hanging by a thread, the Health Care Reform Act will have far less impact in 2014 than originally anticipated. And while many of the stipulations and mandates set forth by the Act are already at work, the “pay or play” lynchpin is a major sticking point moving forward.
I suspect this won’t be the last snag or delay. So our best course of action as business advisors is to stay informed about all the emerging details regarding Health Care Reform—which should give us a better picture of what to expect for 2014.
Even with the delayed employer mandate, there are lots of significant changes taking place:
- Individual mandate will still take effect. All individuals must have qualified coverage or pay a $95 per year tax penalty.
- Health exchanges are scheduled to be up and running.
- All health insurance will be guaranteed issue and without annual or lifetime limits.
- There will be a modified community rating.
- Underwriting can only be based on age, locale, and tobacco usage—and the maximum rate up will be very limited.
- The effect of the community rating will be that most groups and individuals will see an uptick in rates while only a few of the most unhealthy individuals will benefit from lower rates.
- Plans must cover a minimum of 60% actuarial value.
- Essential health benefits are defined as ambulatory, emergency, hospital, maternity, newborn, mental health, substance abuse, prescription drugs, rehabilitative, lab, preventative, wellness, and pediatric services.
- There are four tiers based on these actuarial values or % of essential health benefits covered by the plan. Most providers will offer multiple plans for each tier.
- Bronze 60%
- Silver 70%
- Gold 80%
- Platinum 90%
- Premium assistance and tax credits (subsidies) will be available within the individual insurance market.
- Waiting periods will be no more than 90 days.
- New expenses and taxes will be assessed to insurers to cover the program. These expenses will be passed along by carriers in the form of premium increases.
- PCORI: $2 per employee per year
- Market Share Fee: 2%-3% of total premium depending on market share
- Transitional Reinsurance Program: $5.25 Per Employee Per Month
- Risk Adjustment Program: $1.00 Per Employee Per Year
- Risk Corridors Program: Unknown
- Wellness credits will be possible of up to 30%.
The good news is that businesses with over 50 full-time equivalents will have another year to gain their footing before making the decision to “pay or play.” The bad news is that this thing is still moving forward—albeit slowly.
I realize this is a lot of new information, and it might not make a lot of sense right now. However, businesses and business owners need to be aware of the mandates and be in compliance as they happen.
The Health Care Reform Act is in a constant state of flux, and I doubt changes will let up anytime soon. Staying informed can be a full-time job in and of itself. But even though these reforms might not sting as much as we thought this year, it’s more important than ever for businesses to choose vendors and partner wisely.