Tag Archive: large employer shared responsbility mandate

ACA small group market changes for 2016 could potentially benefit SHOP

The Patient Protection and Affordable Care Act holds two significant changes for the small group market taking effect for plan year 2016:

  • A mandatory definition of “small employer” as those employers with 100 or fewer full time equivalent (FTE) employees. Section 1304(b)(3) of the Affordable Care Act afforded states the option – which all exercised – to set the metric at 50 or fewer employees for plan years 2014 and 2015.
  • The delayed phase in under 2014 federal transition relief guidance of the large employer shared responsibility mandate. Under the guidance, the requirement that employers offer most employees health coverage meeting minimum benefit and affordability standards encompasses employers with 50-99 FTE employees starting in 2016.

Both alter the post-Affordable Care Act landscape of the small group market starting next year by expanding its parameters and providing greater incentive for small employers to offer health coverage. What remains to be seen is whether they will operate to expand small employer participation in the Small Business Health Options Program (SHOP) that all state health benefit exchanges must have in place unless they opt to combine their individual and small group exchanges as authorized by ACA Section 1311(b)(2). SHOP enrollment has been very weak in nearly all states relative to small group market as a whole.

A larger and more compulsory small group market could potentially boost SHOP’s prospects. But it won’t address the lack of strong economic inventive for small employers and their brokers to engage with the SHOP. The SHOP is predicated on pooling the purchasing power of small employers to drive down premiums that many small employers perceive as unaffordable. Gaining that purchasing clout with small group health plan issuers requires SHOPs first bring a lot more covered lives to the bargaining table – the classic chicken and egg conundrum.

Meanwhile, 17 business groups and the National Association of Health Underwriters have asked the U.S. Department of Health and Human Services in a February 18, 2015 letter to postpone implementation the 2016 mandatory definition of small employer to 100 or less employees to 2018, warning it would produce market disruption among health insurers that could limit employer coverage options as well as potentially lead to premium increases.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

Doubts over wellness programs could unravel employer health coverage

Questions over the effectiveness of employer wellness programs intensified this month and could mark the beginning of the end of employer-sponsored health benefits that have already been eroding from the bottom up in the small group market segment. Wellness programs seek to improve the health status of large employer risk pools in order to reduce the utilization of high cost medical services and to hold down premiums for large insured employers. Now that their efficacy has been called into question, it also begs the larger question of the degree of control large employers have over health care costs. The experience with wellness programs suggests little if any. As Bill Leonard writes for the Society For Human Resource Management:

Even with the modest rise in health care costs over the past several years, sources familiar with the issue believe businesses have reached a tipping point and that the expense of providing medical benefits to workers has become unsustainable. Cost-containment efforts therefore are putting more pressure on wellness programs to deliver on the promise of reducing health care expenses. However, as the CHRO survey and other recent studies have shown, wellness plans may not be producing the return on investment (ROI) that employers expect and need.

The sense of no control over rising costs could prompt large employers to increasingly throw up their hands and cease offering health benefits. The money saved could then be redirected to higher earnings and compensation that couldn’t be done when the U.S. government established wage and price controls during World War II and employers first began offering employee health benefits in lieu of higher compensation. That in turn would create pressure to repeal the Patient Protection and Affordable Care Act’s mandate that employers with 50 or more employees offer health coverage.

There would also be a philosophical motive. Employers and employees alike could rightly declare health is an individual responsibility. Accordingly, the role of employing organizations would shift from a medicalized view of wellness – one that wellness program critics equate to nannying — to one that promotes a culture of wellness that supports healthy lifestyle choices and affords their members sufficient schedule control to engage in health promoting behaviors such as adequate sleep and exercise. Those behaviors require time and commitment in order to become healthy lifestyle habits. For office-based knowledge workers where the greatest occupational hazard is sedentary lifestyles that lead to preventable chronic health conditions, giving them greater control over when and where they work would provide a mutually beneficial tradeoff for taking responsibility for their health. That could pay bonuses in the form of increased engagement and staff attraction and retention.
 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

Small group most voluntary market segment under ACA – and faces unique viability risks

Of the three major health insurance market segments – large group, small group and individual – small group is the most voluntary market under Patient Protection and Affordable Care Act rules that take effect January 1, 2014.

Large employers, defined by the ACA as employing 50 or more full time workers, are subject to the employer shared responsibility requirement to offer coverage to nearly of these employees. All individuals must have some form of health coverage under pain of a tax penalty for going bare. Small employers on the other hand have the greatest degree of freedom of choice as to whether to play in the small group market.

The ACA strengthens the functionality of the small group market with several provisions. It eliminates risk rating of small employers by health plan issuers. The ACA also enhances the risk pooling power of small employers by combining them into single statewide risk pools. Finally, the law affords small employers the purchasing power of large employers through the Small Employer Health Options Program (SHOP) of the state health benefit exchange marketplace. The SHOP also serves as a benefit administrator of sorts for small employers, helping them select plans and billing them for monthly premiums.

The extent to which these reforms work as intended to shore up the small group market will become clearer over the next few years. There are several factors that could result in the leakage of potential covered lives out of the small group market, potentially adversely affecting the viability of the small group pool and the SHOP, particularly if a significant number of small employers now offering health coverage to their employees adopt them. They include:

  • Opting to participate in “private” exchanges set up by health benefit plan administrators and insurance brokerages instead of the SHOP
  • Offering a defined contribution benefit or stipend to help workers buy their own coverage on the state exchange individual marketplace instead of directly offering coverage
  • Self-insuring for employee health care costs.
 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

Decision to delay employer mandate will cause more employers to drop coverage | LifeHealthPro

What Hilgers is referring to is the fact that offering coverage that is affordable for the employee blocks all “related individuals” — generally, the spouse and tax dependent children — from accessing a government subsidy. And the bar hasn’t been set very high: if the employee would not have to pay more than 9.5% of his household income for his portion of the single (employee-only) premium on the employer’s plan, his entire family is firewalled off from getting the subsidy.

It really doesn’t make any sense. The IRS has concluded that congressional intent was to block these individuals from obtaining the tax credits. Instead of basing the affordability determination on the cost of the family premium, they’re basing it only on what the employee would pay, which means that coverage will be considered affordable for most employees and their family members will be locked into the employer’s plan, even if it’s significantly more expensive and the employer isn’t contributing to the dependent premiums.

Many experts believe that, as employees learn how the tax credits work, they may ask their employers to stop offering health insurance altogether so that they can afford coverage for their families. And a lot of employers won’t have to be asked twice.

via Decision to delay employer mandate will cause more employers to drop coverage | LifeHealthPro.

This analysis — which is relevant to large employers with large numbers of low wage employees — suggests the delay in enforcement of the employer mandate combined with the so-called “kid glitch” will spur enrollments in the individual health benefit exchange marketplace for plan year 2014.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

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