Health care on horizon
Heath E. Combs -- Furniture Today, December 3, 2012
HIGH POINT - It became clear on election night: The Affordable Care Act, also known as Obamacare, will remain the law of the land.
In the coming year, employers will prepare for the biggest provisions of the act. Those will take effect in 2014, when Americans will be required to buy health insurance or pay a fee for not having it.
Businesses will still offer health care plans. But individuals and small businesses will also be able to buy qualified health benefit plans through exchanges that meet federal benefit and cost standards.
The exchanges are intended to give small businesses a choice of more competitive plans that larger employers are able to offer. States can choose to run the exchanges, or operate them in partnership with the federal government, or default to federally run exchanges.
Exchanges must be operational by the beginning of the open-enrollment period Oct. 13, 2013. By March 1 of next year, employers must notify employees by of the existence of the exchanges, the services they provide and how employees can access them.
Also by that date, employers must inform workers if their own company health care plans meet the new law's minimum essential coverage requirements - namely, does the employer plan pay for at least 60% of covered health care expenses for the typical population. If not, employees can access the exchanges.
In 2014, penalties will begin accumulating against employers who don't offer coverage or offer "unaffordable" coverage.
Businesses with more than 50 employees are mandated to offer coverage. Those with less are not, but can receive a tax credit to help offer insurance to employees.
Many questions remain and federal rulemaking is ongoing. One area of concern is how quickly the remaining regulatory guidance will be released, according to Neil Trautwein, a health care lobbyist for the National Retail Federation.
Trautwein said employers may be pressed for time in setting health care plans. He said that usually, companies put employee health benefits plans together from six to 15 months in advance of the start of a benefit year.
"It's important to get the regulatory guidance out in a reasonably complete form at least by the first quarter of next year. Then we're going to be playing catch up to come into compliance. It takes a while to put together a benefit offering," Trautwein said.
"There's a lot of questions as to whether the stars will line up and all this will open up smoothly as of 2014."
For example, he said that a proposed rule on essential health benefits coverage was released on Nov. 20, but doesn't define key ingredients for state benchmarks for health plans to meet all federal requirements.
Without guidance on their of out-of-pocket responsibility for premiums and co-pays, it will be difficult for some smaller employers to decide whether they should offer plans through the exchanges or continue offering current plans, Trautwein said.
Individuals can't opt out of their employer plan in favor of the exchange unless that plan is deemed "unaffordable."
Some employers may choose to continue their existing coverage or instead offer a defined contribution toward exchange coverage that could allow employees to select coverage, he said.
"That's a good bit of change, if you will, for employees to take on, for employers to take on," Trautwein said.
Many employers will have to figure out if they want to pay a penalty rather than offer coverage. Employers will pay a penalty if total employee cost exceeds 9.5% of an employee's family income, making them eligible for subsidized coverage in a state-based exchange.
The NRF estimates that total penalties owed to the federal government by businesses that don't provide coverage to full-time employees - and at least one employee receives an exchange subsidy - will see an annual penalty of $40,000 for 50 employees, $140,000 for 100 employees and $340,000 for 200 employees.
Trautwein said that in most cases, it would be cheaper for a business employing 50 or more workers to not provide health insurance and pay the $2,000 penalty, than to provide a plan and take the risk of also paying a $3,000 un-affordability penalty.
Greg Harden, president and CEO of case goods manufacturer Harden Furniture, said his company has been researching the act but plans to continue providing health benefits. The company has 250 employees.
Harden said his current plan isn't "tremendously expensive" so the company should be able to watch what happens with health care over the next few years - including the impact of exchanges and whether government-sponsored plans drive other private insurers out of some states.
"We don't see an advantage of not paying - of withdrawing and paying the penalty of sending our folks to the exchanges. But again, we don't know what this is going to look like in a two or three years," Harden said.
"I don't know what the end game is," he added. "It could be five years from now you go to the exchange and buy a plan that is sponsored and managed by the federal government and it's difficult to find other carriers who will provide health insurance."
The American Home Furnishings Alliance, representing industry manufacturers, importers and suppliers, hasn't received many inquiries about the plan yet but plans to be a resource as much as possible, according to CEO Andy Counts.
Counts said the majority of AHFA members have self-funded internal programs - a few work with providers like United Healthcare of Blue Cross - and it remains to see how those type plans will be affected.
"You're hearing all these stories now all of a sudden of people cutting hours below 30 a week and other changes like that," Counts said. "I haven't heard a whole lot of that in our industry but obviously people are starting to take a look at it."