A Simple Guide to Health Care Reform (Affordable Care Act) for Small Businesses in Virginia
Although the Affordable Care Act (ACA) is a complicated piece of legislation, there are some key provisions that can be summarized in easy to understand language. The contents of this article apply to employers with less than 50 full time or full time equivalent employees during most of 2013. The rules and regulations governing health plans for employers with more than 50 full time equivalent (FTEs) employees is more complicated and is not discussed here. These discussions are purposely simplified so those employers and clients with less than 50 FTE employees can more easily understand how the ACA may affect them.
- If your company has less than 50 FT employees and you currently offer a Medical Plan to your employees through a commercial insurance carrier, your company will most likely be in compliance with the law and should continue business as usual. Very simple, but important information. How you plan and rates may change will be discussed later in this article.
- The Individual Mandate will require most all individuals, not employers, to have/purchase health insurance starting in 2014. The major provisions are:
- If you do not have health insurance starting in 2014, you will have to pay a fine. Starting in 2014, the fine for not having insurance will be either $95 or 1 percent of a person’s income — whichever is greater. Then in 2015, the fine will be either $325 or 2 percent of income. In 2016, the fine will be $695 or 2.5 percent of income. After 2016, the fine will be based on the cost-of-living adjustment every year.
- There are exceptions to this rule. Americans do not have to purchase coverage if their income is below the Federal Poverty Line and health insurance premiums would cost more than 9.5 percent of their monthly income. In this case, most would be eligible for Medicaid or federal subsidies to help pay for health insurance.
- A number of provisions and protections have already been implemented. Some of the more important of these are:
- Most plan designs currently in force on group policies do not include all of the benefits required by the ACA. This DOES NOT mean your company will lose coverage. It simply means that your insurance carrier, (most likely Anthem or Optima) will offer you a plan on your 2014 renewal that includes the required benefits. The plan designs shouldn’t be radically different, but will include additional required coverage, such as for pediatric dentistry.
- Lifetime limits are prohibited and annual limits are restricted
- Enhanced appeal procedures are available to consumers
- Children under 19 years of age cannot be denied coverage
- Children up to age 26 may remain on a parent’s policy
- Preventive services must be covered at 100%
- Medical loss ratio standards limit insurers’ overhead
- Also in 2014, States are to open online employer marketplaces through SHOP (Small Business Health Options Program). The purpose of the SHOP is to provide employers with lower cost health plan choices though lower administrative costs and streamlined plan choices. Virginia has made little progress toward developing a SHOP marketplace. We will keep you informed as new options emerge.
- For plans started or renewed after January 1, 2014… the plans offered in the market will change to comply with new ACA regulations governing rate factors, mandated coverage and where a plan falls along the “metal level” scale of platinum, gold, silver, bronze. Although there are no penalties to employers in the <50 employee market, your plan and rates WILL change. We will keep our clients informed.
These are the major developments to date for those employers in the <50 market. In summary, if you want to continue offering coverage that meets your company’s needs- you can and should continue to do so. The penalties and taxes fall mostly on the individual in this market.
This is in no way meant to be all inclusive, but is an attempt to distill the volumes of regs down to a manageable level for our clients. We will continue to keep you updated as provisions are formalized. The situation is very fluid and will continue to evolve as regulations and politics influence the implementation.
Each situation is unique, so please call us to discuss your specific concerns. We are committed to remaining your professional advisor through these changes. The best interests of your company are always our primary concern.