Ready or not, health care changes coming

Ready or not, certain changes to the health care market are on the way, and small businesses will be impacted.

As some parts of the Affordable Care Act take effect Oct. 1, Alaskans will see changes in the health care market, Josh Weinstein said at an Aug. 19 Anchorage Chamber of Commerce Make it Monday presentation.

Weinstein works for Northrim Benefits Group, which recently launched an “Enroll Alaska” program to help residents navigate the new insurance market.

Essentially, everyone fits into one of four plan types: individual and family coverage, self-funded plans that cover less than five people, small group coverage (less than 50 people) and large group coverage (more than 50).

Weinstein said he expects to see self-funded plans grow in the coming years, as the plans help employers escape some tax issues associated with other plans and are not subject to the same rating rules as small group plans.

However, employers utilizing self-funding rather than purchasing insurance policies, like some of Alaska’s school districts, will see other changes from the act that are still being studied.

New taxes, altered plan requirements, and new health insurance exchanges — paired with mandated individual insurance — are on the way, Weinstein said.

In all, the impacts to small businesses can be difficult to gauge.

A major component of the act is the 20 new taxes needed to generate about $2.6 trillion over 10 years, Weinstein said.

Those include a “Cadillac tax” on certain high-value plans, a tax on health insurance premiums, an excise tax on medical devices, the insurance mandate penalties and even a tax on tanning beds.

Medicaid changes also are part of the financial plan. Weinstein said that states such as Alaska that don’t increase Medicaid eligibility are causing hardships for hospitals, because there’s less federal reimbursement, and the new structure assumes the expansions will occur, otherwise the hospitals feel the pinch.

Come Jan. 1, 2014, individuals and businesses will both be subject to certain costs.

Individual and family coverage will be mandated, and the tax penalty for not having coverage will start at $95 or 1 percent of annual household income in 2014, and rise by 2016 to $695 or 2.5 percent of household income. Businesses also will have to provide insurance, or pay a certain penalty for not doing so.

While the individual mandate will take effect in 2014, the mandate for employers with 50 or more employees to provide minimum coverage has been delayed by the White House until at least 2015.

The taxes and fees are meant to support many of the changes that have already occurred, and those that are still on the way.

ACA implementation has been ramping up for the past few years, Weinstein said.

The changes passed in the 2010 law included the removal of dollar-based lifetime limits on coverage, definition of essential benefits that all insurers must provide, a high risk pool was established, and the small business tax credits were created.

Those, however, can be difficult to understand and its uncertain whether very many businesses will get them, Weinstein said. That year, adult children under age 26 also were allowed to remain on their parents’ insurance plan, emergency services were covered at in-network level and insurers also were notified that dollar-based annual limits would be gone in 2014.

The requirement for insurers to remove annual caps on out-of-pocket expenses also has been delayed beyond the January 2014 deadline established in the law.

In 2011 and 2012, additional changes took effect, including minimum loss ratio rebates, increased tax-penalties for non-qualified health savings account rebates and the expansion of women’s preventive services.

This brought more changes, including increased Medicare payroll taxes for higher income earners. One of the biggest is yet to come — new health care exchanges are supposed to open Oct. 1.

Come 2014, the most talked-about set of changes will hit, Weinstein said.

Plans are guaranteed, there will be no pre-existing condition limitations, and lifetime benefits limits will be phased out.

There are, of course, certain exeptions. Individuals can go without health insurance for 90 days, which also is the maximum waiting period for employers to wait to provide it to new employees. Certain exemptions also will be available, including for religious reasons, those using healthcare sharing models and others.

Businesses must navigate the changes, starting with figuring out if they are large or small based on full-time equivalent employees (30 or more hours per week), and then looking into the specifics for each group. Some requirements will phase in over the next few years, but all employers should be prepared for close accounting of their plans and double-checking the details to prepare for audits, Weinstein said.

As for small employers, Weinstein said the changes are mixed.

For 2014, he said, plan for volatility. Gender and industry ratings will be gone, and plans will be rated by community, rather than by individual group performance.

Ultimately, Weinstein said he still believes there is a value in offering health benefits, particularly because of the value it creates for the employee.

Larger employees see fewer requirements and less changes, including allowances for gender ratings.

If an individual doesn’t have employee coverage, how they get coverage will change. Beginning Oct. 1, Alaska will have a federally facilitated marketplace where all plans are laid out for comparison and purchase.

Weinstein said Alaska made a “wise call” on the decision to not set up its own exchange, allowing the federal government to set it up instead.

The plans will have the same essential benefits as other plans in the country, and be judged based on the same tiered standards. The federal government, however, will be responsible for the information technology driving the exchange, and much of the groundwork. That was a good choice for a small state that likely couldn’t operate an exchange in perpetuity without a significant cost, Weinstein said.

The ACA changes dictate much of a plan’s pricing.

Ultimately, prices will be somewhat leveled, going up for the healthiest and getting cheaper for others. Weinstein said that today, a young person might be able to get a plan for $100 per month. Under the new requirements, a plan might cost $200 per month.

For individual and family plans, males and females will pay the same rates, although Alaskans can pay a higher cost than other states because of a geographic factor, he said, and tobacco users also can pay more. The government also has set the maximum ratio between plans for younger and older people.

Subsidies also will come into play in the new pricing changes, also for those without access to “good” and “affordable” job-based coverage. Those making 100 to 400 percent of the federal poverty level will be eligible for the tax credit, while those making less than that will likely be eligible for Medicaid.

The goal of the subsidy is to bring spending down to less than 9.5 percent of household income for health insurance, Weinstein explained.

Molly Dischner is a reporter for the Alaska Journal of Commerce.