May 23, 2014

Affordable Care Act Update

What we know now


The Always Confusing Act (ACA) may have adjusted this content. Feb. 14 brought a delay to the pay or play. For employers with 2-99 employees, they got a delay until 2016. Employers with 100 or more employees need to pay or play in 2015. No matter how the law morphs over time, we anticipate health insurance rates will go through the roof; however, we know for a fact having health insurance is a valued benefit.

Individuals - The deadline of March 31 to enroll in exchanges passed. To date, there are 7 million enrollees, 24,000 are in Nevada.

Companies - Independent experts told the CMS actuaries that they thought the community rating rules would increase rates for about 60 – 67 percent of the fully insured small groups. Carriers are telling us that renewal rates will increase between 20-70 percent for small group. Most small businesses early renewed for a “best rate” with their broker, who helped kick the can down the road.

Budgeting – Budget increases now. Get educated and stop staying, “I am just going to wait until ACA goes away.”  Many pieces of the law are already in place.  Some of the benefits in the ACA, like the non-exclusion and 26-year limitation, have been incorporated by carriers since 2010. We have been in ACA land since then and the insurance carriers had to comply, so the chance of unwinding the law seems remote.

There are Options

1) Employers with less than 50 – not offer coverage. Send people to the exchange. There will be no penalty but you may lose market share as well as employees, seniority, productivity, efficiency, and knowledge.

2) Keep your existing policy – A conventional small group policy should expect 20-70 percent increase by Jan. 1, 2015. Decrease employer contributions, increase employee share, pay more money yourself, or keep it the same. Caps in the qualified plans limit “traditional” co pay and deductibles manipulation. Analyze cost of turnover versus cost of benefits. Look at HSAs and qualified HRAs (associated with a qualified plan).

3) Law of large numbers – Find a better way to aggregate the risk. Association and membership groups disappeared, but you can join a large group like a Professional Employer Organization.

What is the final word?

Do not play ostrich. Perform your due diligence and decide now, despite 2016 participation delays. Budget accordingly so that you will be prepared for when – not if – you experience a 20-70 percent rate increase. The market is spending money on head hunting to hire top talent away from competitors, so competition is tough. A rich benefit plan will help attract and retain that top talent.

Written by Jim Annis, President/CEO of The Applied Companies, which provide HR solutions for today’s workplace. Celeste Johnson, Tom Miller, and Suzanne Chennault, Applied’s division directors, contributed to this article.

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