The Affordable Care Act: What it Means For You
The Affordable Care Act – sometimes called Obamacare – has been phased in over the past few years. Already, we’ve seen changes that include:
- An exclusion in the use of tax free flexible spending account or health savings account dollars for over the counter medications, and increased tax penalties for doing so.
- A requirement upon employers providing medical coverage to notify employees annually of the organization’s Medicare Part D creditable coverage status organization’s plan.
- A requirement for insurance companies to provide consumers with a concise document detailing, in plain language, information about health plan benefits and coverage.
- A mandate for employers to capture the value of an employee’s health benefit on their W-2.
- The requirement that insurers spend a minimum of 80-85 percent of premium dollars on claims, not administrative costs.
- Certain in-network preventive care services will be paid at 100%, with no co-pays or deductibles. These services include women’s health screenings, well-baby visits, childhood immunizations, and various types of testing such as that for colon cancer, diabetes, cholesterol, high blood pressure, and AIDS.
- No one can be excluded for any pre-existing condition
- Lifetime benefit limits will be eliminated
- Dependent children can be covered under parent’s plan until age 26
While Fairfield University and our insurer, Anthem Blue Cross Blue Shield, have been in compliance with all requirements thus far, the ACA brings major changes to the healthcare landscape for 2013 and 2014. Flexible spending accounts are limited to $2500, and
individuals will not be allowed to take a tax deduction for medical expenses unless these expenses exceed 10 percent of their adjusted gross income (increased from 7.5 percent). Additionally, employers must provide a notice to employees regarding the existence of health insurance marketplaces, which Fairfield has recently done.
Employers must offer affordable, minimum essential coverage to employees who work 30 hours or more per week, and their dependents (excluding their spouse) or face a penalty.
Future components of the ACA include:
- A three-year transitional reinsurance program to help stabilize premiums in the individual health insurance market from 2014 through 2016. For 2014, the fee has been set at $63 per healthcare plan participant per year. (Employees and dependents covered under the plan are assessed the fee.)
- A health insurance tax to be placed on health insurers starting January 1, 2014. The purpose is to help fund the state and federal health insurance marketplaces. Medical, dental and vision plans are affected by this fee. The impact is estimated to be between a 2-2.5 percent premium increase in 2014 and a 3-4 percent premium increase for 2015 and beyond. The tax will generally affect plans in the small group, self-employed, and individual markets but will no doubt be passed on to all employers providing health insurance.
- Wellness program rewards and penalties permitted in connection with wellness programs in employer group health plans can increase to a maximum of 30 percent of the total health cost.
- States must establish a health insurance marketplace that will sell “qualified health plans” to individuals and small businesses. The health insurance marketplaces will have to meet certain criteria and prohibit discrimination based on pre-existing conditions.
- Group health plans must limit cost-sharing amounts (deductibles, coinsurance, and co-pays) incurred by participants to the limits applicable to high deductible health plans. (For example, in 2013, the out of pocket limits on a high-deductible plan are $6,250 for singles and $12,500 for family.)
- Group health plans may not impose a waiting period in excess of 90 days.
Employees of Fairfield University who are covered under the University’s health plan do not need to do anything regarding the ACA or their health insurance. Anyone concerned that the available state and federal health exchanges would provide better coverage should log into the site: http://www.ct.gov/hix/site/default.asp
It is quite obvious that many of the major components of the ACA, such as mandated coverages with no office co-pays and the additional taxes and fees, will dramatically increase the University’s health costs, create an additional administrative burden, and increase the cost of health insurance for the University, our employees, and their families.
To date, Fairfield is in compliance with all requirements of the ACA, and will continue to work with our health insurance brokers to maintain that compliance. However, we would not be serving the University or our employees well if we did not take steps necessary to address these increasing costs and additional plan expenses.
The University has taken a number of actions to help mitigate the impact of the ACA on our benefits costs, which currently represents more than 8 percent of the University’s total operating budget.
For starters, the University has contracted with Mercer Benefit Consultants, the largest benefit brokerage firm in the United States, to guide us through the maze of regulations and requirements. Secondly, we are planning to unbundle our healthcare packages, meaning that we will separate health and prescription coverage from dental and vision. Thirdly, with the assistance of Mercer, we have put our insurance coverage out to bid, meaning that we are asking for competitive pricing from the three major health insurance companies in the United States. The quotes from these insurance companies are currently being evaluated for potential savings, individual provider disruption, and levels of service.
With open enrollment coming later this year, it is imperative that the University administration move very quickly to enact any planned changes. Employees and their families should know that any changes in provider or level of coverages will be done with the express purpose of maintaining the quality of our health plan while controlling healthcare increases caused by medical inflation and the mandates under the ACA.
For questions, contact the Office of Human Resources at firstname.lastname@example.org