Wednesday, November 26, 2014

Affordable Care Act News Roundup

And here we go………we have another round of exciting news on the Affordable Care Act! Well, ok – it’s not that exciting for most people – just us geeks who follow this stuff. But, it is important since we are all affected in one way or another by this law.

So, we start with another lawsuit by the Republicans, Obamacare Lawsuit Filed by Republicans and House Sues President over ACA Administration

The House GOP sues the Obama administration for the executive actions taken to change provisions of the Act without first getting congressional approval. Sound familiar? You may remember (or maybe not) that the President delayed the employer mandate – or at least delayed the penalties under the employer mandate. What many people don’t know is that because employers have not had to submit the required reports detailing their health insurance offerings (including which employees are eligible for it and what they will pay), this gives the IRS no way to verify if any particular person signing up for a plan on the federal or state exchanges is actually eligible for a subsidy. It’s on the honor system! Yeeahhhh, that’ll work.

It won’t likely go anywhere, but it’s still an indication of the tension the creation and administration of the ACA has caused and continues to cause. In fact, the Supreme Court will hear another aspect of this soon:

Supreme Court and Affordable Care Act Round Two

This case revolves around a few simple words within the Act: established by the State. The Act specifies how the subsidies are to be calculated and specifically provides for those enrolled in coverage offered through an exchange established by the state. With strict adherence to the language, it would seem to prohibit subsidies for those who enrolled on the federal exchange. Several district courts have heard this issue, and been divided; hence its review by the SCOTUS. If it’s ruled that the federal exchanges cannot provide tax subsidies to people, it would be a serious blow to the health of the law; one from which it may not be resuscitated. Such a decision would have impact on several provisions, including the affordability provisions, the individual mandate and the employer mandate. All of these hinge on the availability of a subsidy to low-income individuals.

Never to be left out, the EEOC has gotten (heavily) into the ACA picture, as well.

EEOC's Litigation Strategy Gets Slapped Around in Senate Hearing

The EEOC has been attacking businesses for their wellness programs, which are specifically allowed by the ACA, and their inclusion agreed to by both sides of the aisle. They’ve decided that, at least in 3 recent cases in which they filed suit against businesses, that the wellness plans were not truly voluntary, and imposed too harsh penalties upon those employees who chose not to participate. The provision in the ACA regarding wellness programs is that they would be allowed, and not considered a violation of the ADA’s prohibition against medical examinations and questions, if participation was truly voluntary.

Then today, we see this post from Eric Meyer (great blog, by the way! I highly recommend it.)

This could be welcome news for employers. Finally, some direction? Why it should take until February 2015 to produce this clarification is beyond me. The ACA went into effect in………2010? Oh, well. It’s not unusual for a regulatory agency to write regulations and then wait for the courts to battle out the implementation issues. Fun times.

Next up, we don’t want to forget the now infamous consultant Jonathan Gruber, now do we?

Obamacare Consultant under Fire

Always nice to have someone openly admit they made every attempt to dupe the American public (and our elected officials – are ya listening, Nancy?).

As we enter the 2nd open enrollment period for plans on the exchanges, people need to be aware that in many cases, premiums are going up and they need to pay attention to avoid paying higher monthly costs.

O-Care Costs to Rise for Many

When the premium goes up, the subsidy effectively goes down. Your income most likely has stayed the same. In order to keep costs in line with their budgets, people may have to choose another plan upon reenrollment. Switching plans may mean your doctor or hospital is not covered…. or it may mean higher deductibles or co-pays – and this could reasonably have the effect of making any particular plan far less "affordable".

How do the subsidies work? The size of each person's subsidy is tied to a "benchmark" plan. Lower income consumers only have to spend a certain percentage of their income for that plan; the government pays the rest of the premium. If you choose a more expensive policy, you have to pay the difference on your own.

For 2014, about 3.4 million people picked the benchmark plan or went even one option cheaper. As those plans raise their rates and new options come on the market, they may lose their benchmark status to cheaper plans and those people will find themselves having to pay a larger portion of the premium.

So, let's say your income is at about 150 percent of the poverty line—roughly $17,000 per year. The ACA says you don't have to pay more than 4 percent of your income for the benchmark plan in your area. You chose that plan this year, and you get a pretty decent subsidy. Then, the insurance company wants to raise its rates by 5 percent next year - not unusual and not too bad, really, and you're only paying about $50 per month out of your pocket anyway (for the premium). You like the plan, so you decide to just auto-renew for next year. However, other insurance companies are now offering cheaper plans in your area. Your plan is no longer the benchmark plan; a cheaper one is. Now your subsidy is based on the cost of that plan, not the one you have. This means you're paying the 5 percent premium increase, but you’re also paying for every dollar of the difference in price between your plan and the new benchmark plan.

These technical changes in subsidies could turn a 5 percent premium increase into a spike of 30 to 100 percent in the net costs for low-income consumers, according to a recent Milliam analysis. Ouch, and get out the headache powder – why is this so complicated?

And the big news, I guess, is that the employer mandate will fully go into effect as of 1/1/15. Businesses with 100 or more full-time employees are required to offer health insurance to at least 70% of their workforce. Employers that don't offer coverage will face penalties: an approximately $2,000 fine for every employee in the company, minus the first 80 employees. (That number drops to 30 employees the following year). Also beginning in 2016, medium-size companies with 50 to 99 full-time employees must offer coverage or face the fines. And the required minimum for coverage will rise to 95% of a business's workforce, up from 70%.

Small businesses with fewer than 50 employees are exempt from coverage requirements under the law. And remember the ACA defines a full-time employee as someone working an average of 30 hours a week. The Republicans, and some Democrats, are trying to get this changed to 40 hours per week, which has been the standard definition of full-time used by the vast majority of businesses for many decades.

What’s a small business to do?
I think it’s fairly safe to say that many more businesses in the 50-99 employee range are having difficulties with the ACA and its requirements. Certainly, you get that impression from all the news articles about companies structuring their workforces to support more part-time (less than 30 hours per week) than full-time (o 30 hours or more per week) employees.

Options are few and not all that great. One option is to not offer health insurance to your employees, direct them to the exchanges to buy individual policies and pay the penalty. Do the math: it may be less expensive to pay the fine than to pay for the group health insurance. But is that who you are as a company? What effect will that have on your ability to recruit qualified people to your business?

The best advice I can offer is to speak with a knowledgeable, full-service broker. As much as you might want to patronize the guy down on Main St. who sells auto, home, life and health insurance, he may be struggling with understanding and keeping up with this law as much as you are. A full-service broker has the knowledge, and the resources to help you wade through the morass that is this law. If nothing else, such a discussion can help you determine what you can afford, and what all the implications are of whatever decision you make.


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