Health Insurance Reform: Steps to Take Now to Prepare
The Affordable Care Act doesn't go into full force until January 2014, so you have plenty of time to get your company's health insurance plans in order, right? Wrong, say health-care experts. Regardless of whether you already offer health insurance, or you plan to do so starting in 2014, there are several steps you need to take now to prepare for life under the Affordable Care Act, which is commonly called Obamacare.
Open enrollment, both for private health plans and for the new insurance marketplaces established by the law, starts Oct. 1. That's sooner than you may think, given the complexities of the law, says Meredith Olafson, senior policy advisor in the Small Business Administration's office of entrepreneurial development. "Every business owner is going to be impacted differently," Olafson says. "They need to know the facts and information to plan for what's ahead."
Here are five important ways to ready yourself for health reform:
1. Brace for rising costs. Several major insurance carriers have warned that premiums will rise by more than 20 percent next year, and Aetna CEO Mark Bertolini told Wall Street analysts that premiums may even double for some small businesses.
In addition to preparing for that price boost, you need to understand what your company's requirements will be for contributing to your plan. For example, the law says that to be deemed "affordable," an employee's out-of-pocket costs cannot total more than 9.5 percent of his or her income. Some companies used to be able to hold down healthcare costs by offering high-deductible plans, which shifted more of the out-of-pocket burden to employees. But under the law, "high" will likely be capped at deductibles of $2,000 a year for individuals and $4,000 for families.
"Call your [benefits advisor] and say, "What would my costs be if I switch to a $4,000 deductible plan from the $7,500 plan I'm on now?'" says Mike Dauden, director of small business for Mountain View, Calif-based eHealthInsurance. "The sooner you review your options, the better."
2. Plan for the unforeseen. Pat Haraden, a principal with Longfellow Benefits in Boston, suggests that all small business owners prepare for the most costly scenarios, even if they're purely hypothetical. "You can't be sure how other employers are going to react," he says.
Say you have an employee who has never joined your company's plan, because he has been getting his coverage through his wife's employer. "That company could do something drastic, like drop spousal coverage," Haraden says. So if you have 15 employees who are eligible to enroll in your plan and never have, "you need to look at what 15 people will cost you if they enroll in family coverage," Haraden says.
3. Communicate with employees. On May 8, the U.S. Department of Labor released two model letters that virtually all employers will have to send to their employees by Oct. 1. The letter for companies that offer health insurance is three pages long, and it describes the "health insurance marketplaces," previously referred to as "exchanges," which will begin operating in every state in January. Some workers with sub-par health insurance options may be eligible for subsidies to buy coverage in those marketplaces.
If you distribute this letter without any accompanying information about your company's health coverage, your employees will likely be confused. "You're going to hand an employee a document that says they have the right to go to the exchange and see whether or not they get a subsidy, when you already know they won't, because they have [compliant] coverage through you," says Joseph Ellis, senior vice president at human resources consulting firm CBIZ in Plymouth Meeting, Pa. Ellis recommends all companies prepare their own educational documents, describing their in-house health plans as clearly as possible, and send those out before they distribute the federal forms.
4. Check out your insurance options. With health-care costs on the rise, you may be well served by shopping around for a new plan. Starting in 2014, companies with fewer than 100 employees will be able to purchase health plans through the public marketplaces through the Small Business Health Options Program, though the choices there will limited in the first year.
Small companies can also shop on private exchanges, such as those operated by online providers like eHealthInsurance, professional employer organizations and companies such as Mercer, a unit of New York-based insurance broker Marsh & McLennan. "You're getting all of the benefits you need, and the exchange does all the administration and compliance for you," says Tracy Watts, U.S. health reform leader for Mercer.
5. Know you have the right advisors. Regardless of what changes you might be planning to make in 2014, you need to determine now if you have the right team in place, whether it be an insurance broker, PEO or benefits consultant. If you feel as if you know more about the Affordable Care Act than your advisors do, it may be time to recruit a new team.
If you really want to master the intricacies of the new law, consider taking a formal training program through an organization like the National Association of Health Underwriters, or peruse the educational materials offered online by the SBA. "There's a lot of misinformation out there and a lot of confusion," says the SBA's Olafson. "It's really important to understand the facts."
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