As we look forward to 2014, there are significant changes ahead for the benefits world. Small business owners face a very dynamic environment as they consider how best to meet the requirements of the Affordable Care Act (ACA). A key topic on everyone's mind is Exchanges and the types of medical coverage that will be available through Exchanges or Marketplaces. Enrollment begins on October 1, 2013.
We have compiled the information below to help you better understand some of the upcoming changes.
Background - Exchange SHOPs
The Small Business Health Options Program (SHOP) available on state Exchanges will promote health insurance availability for small employers. Each state had the option to create their own Exchange, 33 have not entered into that arena. Beginning in 2014, small businesses with more than one, but fewer than 50 employees, can obtain a small business health care tax credit when purchasing employer-provided group insurance through the Exchange. Individual states can extend the SHOP to employers with up to 100 employees.
Qualified employers may select one of the "metal" level of coverages from which their employees can buy their coverage. This allows eligible employees to select any coverage offered within this "metal" range. This is called an employee choice model. The metal ranges are bronze, silver, gold and platinum which denote differing amounts of coverage. Alternatively, employers can also choose a specific plan, or plans, available for their employees to purchase within the SHOP.
Additionally, SHOPs assist the small employer by aggregating premiums into one billing statement to facilitate employer contributions to employees' health insurance choices and premium payments.
One year delay for some SHOP options
As of today, 33 health Exchanges run by the federal government, called federally facilitated SHOPs (FF-SHOPs), will not be ready for the 2014 plan year enrollment that starts October 1, 2013. This means small employers cannot offer the employee choice model through the FF-SHOP as originally outlined. This does not mean that "metal" coverages and a selection of plans will not be available on state run Exchange SHOPs, but rather that the federally facilitated SHOPs will not be able to offer the employee choice model as of 2014.
For plan years beginning on or after January 1, 2015, the federally-facilitated SHOPs will provide qualified employers a choice of two methods to make certified health plans available to qualified employees. Maybe having a single option will cause less confusion for the initial year - after all, there will be plenty of changes for employers and individuals in initial Exchange offerings.
Keep in mind there will be 17 states that have initiated their own programs and private Exchanges that may be available in your state. Each of these states will offer small employers insurance options. Also, employers may not want to drive employees to an exchange for individual insurance, especially if they previously subsidized a portion of employees' premiums. The shift to individual insurance will require employees to pay the entire premium. Employers need to engage now with their trusted advisors to plan for all of the new choices coming in 2014 to determine what will be best for their business.
Health Insurance deductibles for small group health plans
Employers and employees also should be aware of the deductible limits planned for small group health insurance plans beginning on or after January 1, 2014.
New deductible maximum limits of $2,000/individual and $4,000/family will be in place for any plan other than large group or self-insured plans. These annual deductible limits will be indexed for plan years starting after December 31, 2014.
Employers with deductibles greater than the new limits will need to review their plans. Integrated HRAs (those covering employees in an underlying ACA-compliant group health insurance plan) that offset cost-sharing or create wellness incentives and health flexible spending accounts (FSAs) will continue to be an important component of employers’ plans.
A Department of Health and Human Services (HHS) web site (www.healthcare.gov) provides different types of information from key features of the ACA law, information for you, and a timeline for what's changing and when. It also houses the full text of the ACA. You may not want to read the entire law, but other topics on this web site are very helpful. The Timeline page under "The Health Care Law & You" tab is especially helpful in providing a general understanding of the change to laws with a simple to understand thousand-foot view. Employers may want to educate themselves first so they can take on the daunting challenge of educating all their employees.
The number of insurance products and various rules and limitations that come along with them is enough to confuse anyone. To manage all of the changes on the horizon, employers should work with their trusted advisors to build the roadmap that fits the needs of their business.