You’ve possibly heard of the Cadillac
tax, skinny plans and even read up on potential employer penalties, but there’s
a lot to sort through when it comes to the details of health care reform. We’ve
briefly summarized the latest issues and bottom-line concerns for businesses,
so you can stay focused and prepare for key changes in the months ahead. And at the end of the article click-through
for two more bonus topics.
Employer mandate and penalties took
effect Jan. 1.
After much discussion around the delay of employer
penalties, also known as shared-responsibility payments, the U.S. government
provided detailed instructions for how penalties phase in starting Jan. 1,
- Businesses with 100 or more full-time equivalent employees will need to offer compliant coverage to at least 70 percent of their full-time equivalent employees and dependents in 2015.
- In 2016, businesses with 50 or more employees will also be responsible to comply. Additionally, employers must extend coverage to at least 95 percent of their full-time workforce and dependents in order meet the requirement.
- Employers who didn’t offer dependent coverage in either 2013 or 2014 are also given a grace period. These employers won’t be penalized in 2015 as long as the companies can show they’re taking steps to make dependent coverage
available in 2016.
Bottom line: The time to act is now.
The risk of employer penalties can
no longer be ignored. Employers with 50 or more full-time equivalent employees
need to pay attention to the triggers that could activate these penalties. Take
advantage of resources such as Aflac’s health care reform decision tool, or ask
your broker or benefits advisor for practical steps you can take to comply with
the new regulations.
Exponential employee enrollment in
private exchanges; expected to exceed government marketplaces.
Private exchanges are online
marketplaces, where people and businesses can shop for, compare and buy health
insurance. They offer one-stop shopping for a variety of benefits including
major medical, dental, vision and voluntary products to meet employees’
individual needs. While private exchanges existed prior to health care reform,
they have become part of the benefits lexicon as the law has gone into effect.
A recent Accenture study found 2014 enrollment in private exchanges exceeded
three times their predictions. The trend is expected to continue, ultimately
surpassing state and federally funded exchanges, reaching 40 million in 2018.
While exchanges offer employers more predictable costs and
additional options for employees, the study notes there’s a trade-off:
Approximately 25 percent of employees enrolled in private exchanges selected
less coverage than they previously had, leading to lower monthly premiums, but
higher out-of-pocket costs.1 Less coverage shifts the amount of
reimbursement medical providers seek directly from patients and can leave
employees financially unprepared for health care costs.
Bottom line: Take a look – these may be a great
fit for your business.
Private exchanges help employers
offer robust benefits options with predictable health care costs on a single
platform. If your company hasn’t already, consider the option for your
employees. Keep in mind the health and financial ramifications to your
workforce. To transition successfully to a private exchange, a comprehensive
employee communications plan with benefits education components will be
Opposing court rulings could lead to
more uncertainty for health care reform.
In summer 2014, two courts delivered conflicting rulings
concerning the legality of health care subsidies. These tax advantages help
offset the cost of purchasing health care coverage, for those who qualify,
through federal or state facilitated health insurance marketplaces. The rulings
could increase the possibility of another high-stakes U.S. Supreme Court case
for health care reform. The possibility of overturning subsidies is no trivial
Key implications if the court rules
subsidies aren’t legal:
- Individuals would lose the subsidies that help to make coverage affordable on federal health insurance marketplaces.
- Since employer penalties are triggered by employees receiving subsidies, it’s less likely the employer mandate could be enforced under the current law.
- There are questions about whether individuals would be required to purchase health insurance without these subsidies, which could jeopardize the stability of the individual insurance market and success of health care reform.
Bottom line: More wait and see.
Challenges to the health care law
aren’t over. It could take several years for potential rulings to be resolved
by the U.S. Supreme Court. For the time being, employers should operate under
the assumption that their employees may be eligible to receive subsidies and,
therefore, could trigger a penalty for their business.
For even more, take a look at this easy-to-understand
wrap up of five hot reform-related
topics, and we’ll help you grasp what you need to do now.
And get more health insurance information at aflac.com/healthcarereform.