Legally Speaking: Healthcare Deadlines Approach—Act Now
Early Renewal Strategy
One of the most
important provisions of the new healthcare law, the Patient Protection and
Affordable Care Act (PPACA), commonly called the Affordable Care Act (ACA) or
“Obamacare,” will take effect for plan years beginning on or after January 1,
2014 for small employers (those with fewer than 50 employees). These provisions
are known as the community rating restrictions, and there is some concern that
they may cause an increase in premiums. Employers may wish to renew their
existing health insurance policies by the end of 2013 to avoid potentially
higher costs. Here are some resources to help you consider your company’s
options.
Currently, insurance companies
look at a number of factors when developing premiums. As a result, younger,
healthier groups often pay less than older, sicker groups. For plan years
beginning on or after January 1, 2014, insurance carriers can no longer look at
those factors when setting rates. Thus, many small employers may see large
premium increases, though certain small employers with older workforces may
actually see rates go down.
Due to the new rules, it makes
sense to consider an early renewal strategy as soon as possible. Small businesses
should contact their insurance brokers to discuss their healthcare plans and
consider renewing their current plan by the end of the year, which will allow
them to avoid the new community rating rules for a year. The article “Small
Businesses Race to Renew Health Plans Early” by Jayne O’Donnell from USA
Today discusses early renewal strategies. It is available at:
Marketplace Notices for New Hires
The government has released model notices that
employers can use to notify employees about the new Health Insurance
Marketplace, also known as the healthcare exchange. Citizens can apply for healthcare coverage through the Health Insurance Marketplace, which may
potentially offer lower costs to certain individuals. The initial mandatory notices were to be issued by employers by October 1, 2013. In addition, almost
all employers are required to distribute such notices to new employees within
14 days of hire. An article by Steven Friedman and Ilyse Schuman, “What Do
Employers Need to Know About the ACA Marketplace Notices?” from Littler.com,
gives more information about the notice requirements. Find it at:
The notices must be distributed
to all employees—even those who are not eligible for a health plan (i.e.,
part–time employees). The government’s notices, along with frequently asked
questions about notice requirements, can be found at the Department of Labor’s
(DOL’s) website:
www.dol.gov/ebsa/faqs/faq–noticeofcoverageoptions.html.
New COBRA Notices
In addition to releasing the new marketplace
notices, the government also released revised COBRA notices. Although the
changes are relatively minor, employers should update their COBRA notices to
include the new language. Roberta Chevlowe’s article “DOL Updates Model
COBRA Notice in Light of Health Care Reform” (www.jdsupra.com) discusses
the revised notices and includes links to the new model notices. The full
article can be found at:
www.jdsupra.com/legalnews/dol–updates–model–cobra–notice–in–light–57231/.
The new language in the updated
notices informs readers about the Health Insurance Marketplace, which may
encourage them to look for healthcare coverage through the Health Insurance
Marketplace rather than electing COBRA coverage under an employer’s plan. Over
time, this approach could potentially save employers money.
Employer Mandate Penalty Postponed 1 Year, But
Not the Tracking Requirement
The employer mandate (“play or pay” rules) have
been postponed for a year. The employer mandate requires large employers (those
with 50 or more employees) to offer quality/affordable coverage to full–time
employees (those working at least 30 hours per week), or pay a penalty.
Although the penalties have been postponed until 2015, the tracking
requirements have been implemented. Employers need to keep track of employees’
hours to see if they need to offer employees coverage starting in 2015. The
rules are extremely complex. A downloadable PDF, “Health Care Reform Pay or
Play Guide” by lawyer John Barlament of Quarles & Brady LLP, explains
the rules in detail.
www.quarles.com/files/Uploads/Documents/Pay%20or%20Play%20012813.pdf
Employers should
check with their payroll company or software vendor to see if they can help
with the process of tracking hours. It is important that all employers start
this process immediately.
Predictions for the Future
While no one
can tell what the future may hold, the Affordable Care Act has been passed by
Congress and upheld by the Supreme Court, so it is unlikely to be repealed.
Employers should do their best to prepare for the new regulations and work with
their insurance brokers to create a healthcare strategy that works best for
their businesses and employees.