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Differentiate between products and offer guidance to compare costs
Industry experts say that in order to help employers prepare for changes to the market under healthcare reform, plan partners must differentiate between standard group plans and exchange plans.
“It’s a matter of employers being accessible to the information,” says Joel Vogel, principal, The Camps Group, a brokerage firm based in New York.
He also says that request for proposal (RFP) processes need to encompass all the additional offerings that are going to be available to consumers under the Patient Protection and Affordable Care Act (PPACA). Technology will be a vehicle to deliver information and sort plan choices, he says, particularly for private exchanges.
“As an employee, I will go on my computer, have the options in front of me and ask questions through a Q&A in an online portal,” he says. “Technology will assist with making those decisions.”
MINIMUM COVERAGE, MINIMUM VALUE
A webinar hosted by Manatt, Phelps & Phillips LLP, a Los Angeles-based law firm, detailed the penalty that employers will face for not offering employees minimum essential coverage. Under PPACA, employers will pay an annual fee of $2,000 per full-time employee, minus the first 30 full-time employees-paid out monthly, says David Herbst, partner, Manatt, Phelps & Phillips, LLP.
For example, if an employer had 75 full-time employees, it would be charged $7,500 for not offering essential coverage.
A similar penalty will be placed on an employer for failing to offer affordable or minimum value coverage. The employer would be charged $3,000 per year, per full-time employee receiving a premium tax credit. The monthly penalty for not offering affordable or minimum value coverage is capped, however.
Vogel says that 98% of plans are offering enough benefit to end-users to satisfy the employer mandate regulation. A report in November 2012 issued by the Department of Health and Human Services (HHS) showed that 90% of individuals currently covered by employer-sponsored plans are enrolled in coverage that has an actuarial value of at least 60%.
A plan would have to be extremely watered down for it not to meet 60% of the total value, according to Vogel.
“This is true whether you are fully insured or self-insured,” Vogel says. “In fact, what we typically find is that self-insured plans are a little bit richer inherently because they can kind of make the rules themselves.”
Regardless, running a test or calculation to determine minimum value is still recommended by industry experts. Minimum value calculators are available to brokers and can also be found on the IRS and HHS websites.
Employers will continue to offer healthcare benefits of a similar scope, Vogel says, unless costs become unsustainable. Because coverage has become such an expense, employers will gravitate toward what is affordable for them.
“It’s all about the pricing and being able to leverage and negotiate,” he says.
Offerings could be more diverse through the exchanges. In which case, he cautions, the pricing might look good initially, but could endure increases similar to the private sector over time.