What you should know for your business
Randy Myers, Insurance Agent, Leland-Smith Insurance, Van Wert, Ohio
The Affordable Care Act, also known simply as the Health Care Law, will officially go into effect in January 2014. In the time leading up to that, there is a lot of work to be done and decisions to be made as a business owner regarding the healthcare coverage you decide to offer your employees. Randy Myers, an insurance agent with Leland-Smith Insurance, discusses some of the requirements of the law and how the new coverage will work.
"The new law requires all Americans be offered medical insurance. They have 3 choices: Participate in an employer-sponsored program if offered, purchase coverage themselves through the government exchange programs, or pay a fine," states Myers. As an employer if you offer an insurance program it must be deemed affordable and meet the criteria defined by the government as providing a comprehensive package of items and services, known as essential health benefits (EHB). These include the following categories: ambulatory patient services; emergency services; hospitalization; maternity and newborn care; mental health and substance use disorder services, including behavioral health treatment; prescription drugs; rehabilitative and habilitative services and devices; laboratory services; preventive and wellness services and chronic disease management; and pediatric services, including oral and vision care. In order to be considered affordable, the portion the employee pays for coverage must not exceed 9.5% of his/her household income.
The exchange programs offer insurance coverage through the state and provide the same essential health benefits. States can choose to either run their own programs or have them run for them by the federal government. This is the option Ohio has chosen. There will be four plans available through the exchanges differentiated only by the amount a person is willing to pay for more coverage: Bronze, 60% coverage; Silver, 70% coverage; Gold, 80% coverage and Platinum, 90% coverage. "When determining between choosing an employer-based or exchange program, participants will want to consider the network of providers will probably be different for each," Myers notes.
If a person chooses to not take coverage through an employer or the exchange he/she will be fined annually. The fine for 2014 will be $95 or 1% of his/her taxable income - whichever is greater. This fine is expected to increase each year.
Small vs. Large Businesses
"There are differences in requirements for smaller vs. larger businesses based upon the number of employees," explains Myers. Companies with less than 50 employees may continue to offer their current coverage, assuming it meets the EHB requirements, or go on the exchange. "There are tax benefits available for companies with less than 25 employees and an average income per employee of less than $50,000 per year," states Myers. For employees who choose the exchange vs. their employer plan there may be subsidies available to them if the employer plan is unaffordable based upon income. For companies with more than 50 employees, if they offer a medical plan that does not meet the EHB criteria they will be penalized $2000 per employee over 30 employees annually. "There are some situations where it will be more affordable for business owners to drop coverage and pay the penalty and allow the employees to simply go on the exchange," Myers predicts.
What to Do Now
So what should business owners do now? Information on the exchanges should be available by July 2013 and open enrollment for employees will begin in October. Myers says, "Make sure you plan ahead. Rates are going to be more expensive because everyone is guaranteed coverage. The best thing to do is talk to an insurance agent you know and trust and discuss your options," states Myers. For more information regarding the health care law, visit www.healthcare.gov.