The PPACA (PATIENT PROTECTION AND AFFORDABLE CARE ACT)is good for fulltime working consumers, small and some medium sized businesses, but bad for large firms.
The PPACA doesn’t really address the needs of the unemployed or the poor unemployed (such as the homeless). So will the (U.S.A)federal government’s new insurance company, American Health Benefit Ecxchanges provide vouchers for health insurance to the unemployed and the poor unemployed.
In case you readers don’t know about Free Choice Vouchers, here’s what they are and are not.
An employer offering minimum essential coverage who pays any portion of the costs of such plan will provide free choice vouchers to each qualified employee. A qualified employee is defined as an employee whose required contribution to the employer plan is greater than 8% and less than 9.5% of the employee’s household income for the taxable year, whose household income is not greater than 400% of the FPL for the relevant family size, and who does not participate in the plan offered by the employer. Beginning after 2014, the 8% and 9.5% would be indexed by the rate of premium growth.
The amount of a voucher will be equal to the monthly portion of the cost of the employer plan that would have been paid by the employer if the employee were covered under the plan for which the employer pays the largest portion of plan costs, for either self or, if elected by the employee, family coverage.
An exchange will credit the amount of a voucher to the monthly premium of a qualified health plan in which the qualified employee is enrolled, and the employer will pay the exchange the credited amount. If the amount of the voucher exceeds the premium, the excess will be paid to the employee. A individual receiving a free choice voucher will not be eligible for the exchange premium credits or cost-sharing subsidies described later in this report.
No penalty will be imposed on an employer with respect to any employee who is provided with a voucher.
By the way, are you readers familar with SHOP?
It’s an Exchange (SHOP=SMALL BUSINESS HEALTH OPTIONS PROGRAM ACT-PPACA) is an organization that brings together buyers and sellers of health insurance benefits. From a consumer stand point, it is a web based function intended to be a source of quickly accessed information while providing ease in purchasing.
Each state has an opportunity to be a SHOP (with the help of federal government grant money FROM THE DEPARTMENT OF HEALTH AND HUMAN SERVICES) before January 2014.
So there are some good and bad about the PPACA.
If you’re a Republican and pro-business, you’re probably against the PPACA.
Now if you’re a Democrat, the PPACA is good from a humanitarian stand point.
But there are penalities associated with the PPACA that affect employers, also affect the unemployed and the poor unemployed.
NOW LETS DISCUSS THE FULL DETAILS OF THE PATIENT PROTECTION AND AFFORDABLE CARE ACT (AND AS YOU READ KEEP IN MIND WHY PRO-BUSINESS REPUBLICANS WANT TO REPEAL/KILL THIS PPACA EXECUTIVE ORDER).
On March 23, 2010, President Obama signed the historic Patient Protection and Affordable Care Act (the “Act”). Together with the Health Care and Education Reconciliation Act of 2010, which was signed into law on March 30, 2010, the Act will reshape the United States health care system.
A few significant changes will become effective immediately or over the course of the next few months. For example, for plan years beginning on or after September 23, 2010, employer sponsored plans may no longer impose lifetime benefit caps (restricted annual caps are allowed). Pre-existing condition exclusions for children up to age 18 also are prohibited.
Many of the more significant changes will not become effective until 2014. For example, in 2014 all pre-existing condition exclusions will be banned (including those for adults) and all annual caps on benefits will be prohibited. In addition, in 2014 the new health insurance “Exchange” rules come into play as do the new “pay or play” rules applicable to employers and their group health plans.
Despite the delayed effective dates that apply to many of the more significant changes, employers that sponsor group health plans should make an effort now to understand the new health plan world in which they will be operating; a world of mandated benefits, “pay or play” concepts, Exchange-based competition and a potentially different health insurer marketplace.
Benefit Mandates. Historically, benefit mandates have been the province of the states. However, even state mandates meant little, since federal law precluded states from applying those mandates to self-insured plans. With the health care reform legislation, the federal government has become a key player in the world of benefit mandates, with new rules that ban lifetime or annual benefit caps and pre-existing condition exclusions and require preventive care and a basic menu of “minimal essential coverage.” Employers that sponsor health plans must become familiar with these new rules.
“Pay or Play” Rules. Employers also will want to brace for the new “pay or play” rules. Under these new rules, an employer that fails to offer a plan with qualifying benefits will be assessed a penalty if it has more than 50 full-time equivalent employees. Even if the employer offers a plan with qualifying benefits, if eligible employees opt out of coverage, a different but similar set of penalties will come into play.
New Competition. Employers that intend to continue their health plans also will want to prepare for competition with a new competitor in the health insurance field — benefit programs available to their employees pursuant to the new state run health care Exchanges. Beginning in 2014, an employee earning less than four times the federal poverty level ($88,200 based on the 2010, $22,050 poverty level for a family of four) will, in certain circumstances, be allowed to opt out of his or her employer’s plan and, instead, receive a voucher from the employer to help finance the cost of heath coverage under a state run Exchange-based program. The opt out election will only be available if the cost of the employee’s coverage under the employer’s plan is at least 8% and less than 9.5% of the employee’s household income. To avoid the “flight of the healthy” to these Exchange-based plans, employers may decide to cap an employee’s share of the premiums at 7.9% of household income.
Changes in the Market Place. Changes in the health insurance market place also may have a significant, albeit indirect, impact on employers that sponsor health care plans. Under these new rules, 85% of the premium dollars paid to health insurance companies must be used to pay claims. In other words, the health insurance company will have a 15% margin that can be used to cover the costs of doing business, paying their employees and rewarding their shareholders. Tighter limits are also imposed on an insurer’s tax deductions for compensation expenses. Will these new rules cause some health insurers to cut staffing levels, leading to poor or non-existent service? Will your health insurer or stop loss carrier exit the market? Will you be able to secure a stop loss policy with an unlimited lifetime benefit?
Employers that sponsor health plans should study and carefully consider these and all of the other impending changes. They also should consider the changes that are on the horizon as they design, implement or modify existing health insurance programs. However, employers should be careful not to overreact at this time. In addition, precise planning at this stage may be premature. These new rules (especially the rules with delayed effective dates) will likely develop over time as the federal and state governments issue additional guidance.
In order to help our clients and friends understand the impending changes and when they will become applicable, the table below summarizes the key features of the health care reform legislation, organized by the year in which each change becomes effective. The table approaches health care reform from the perspective of the employer that sponsors a health insurance program and, as a result, does not address many of the significant changes that have a less direct impact on employers, such as the changes in the Medicare and Medicaid programs.
A.W. Khabir
Registered Federal Lobbyist
