I’m sure many of you have heard the blockbuster announcement from the Department of the Treasury and Health and Human Services last night regarding the delay of the implementation of certain PPACA rules and requirements for employers of 50 or more employees, termed large group.

After reaching out to experts in Washington DC and industry sources, here is what we know:

  • $2,000 Dollar Penalty For Not Offering Health Insurance:  The $2,000 dollar penalty for not offering health insurance to your employees set to go into effect January,2014, has now been delayed to January, 2015.
  • $3,000 Dollar Exchange Penalty:  It is our understanding (but we have not confirmed with our Washington DC sources) that the $3,000 dollar penalty to employers for employees who have gone to the exchange to seek coverage will also be delayed until 2015.  We understand this to be the case but are waiting for confirmation.
  • 9.5 Percent Penalty:  The 9.5 percent rule regarding what employers can charge employees is effectively delayed until 2015 because there is no penalty for non-compliance, meaning if an employee goes to the exchange because the employer is charging more than 9.5 percent, there is no penalty for the employer.
  • Mini-Meds:  Restaurants, hotels, landscaping services–companies that offer mini-med plans—should check their waivers for expiration dates.  We anticipate more information on this ruling in the weeks to come.
  • Employees’ Access To The Premium Tax Credits:  According to Mark J. Mazur, the Assistant Secretary for Tax Policy at the U.S. Department of the Treasury, “ ..Our actions today do not affect employees’ access to the premium tax credits available under the ACA (nor any other provision of the ACA).​
  • Increasing Costs For Group Health Insurance:  While the ruling delays the penalties for not offering coverage, costs for group health insurance plans will continue to rise for the following reasons related to PPACA [Notably, it appears this transition relief does not extend to other provisions of the Affordable Care Act effective in 2014, including the 90 day limit on waiting periods, the exchanges (including the premium tax credits available to qualifying individuals), or the individual mandate]:
  1. Community Underwriting For Groups 50 And Below:  Instead of the typical 11-1 ratio carriers currently use to underwrite group and individual plans based on gender, age, geographic region, claims history, etc.– all of this will go away in January as we move to a community underwriting standard of a 3-1 spread vs. the current 11-1 or 8-1 spread used by most carriers.
  2. Taxes:  All of the new taxes will stay in place and do not go away.
  3. Decreasing Pool Of Insured:  As a result of the elimination of the penalties on large group employers and the elimination of the 9.5 percent penalty, there will be more pressure on insurers to raise premiums because they will have a smaller pool of people to distribute losses among.  Costs will not decrease because of the ruling but more than likely will increase above the Congressional Budget Office’s (CBO) projection of 27-30 percent.

In closing, I wanted to get as much information to you as possible as quickly as possible.  There are rumors and innuendos that there will be further rollbacks of regulation between now and October, one of which is the elimination of the penalty for not buying individual health insurance.

In addition, in a little known ruling not publicized in the media, yesterday the Department of the Treasury also rolled back reporting requirements for insurance carriers which required them to report to the IRS both employers and employees who do not have health insurance.   This was the triggering mechanism to put the penalties in place and has been delayed until 2015, which begs the question, how do you penalize an individual for not having health insurance when you don’t really know if the individual has health insurance or not?

All of this points to rising costs.  I guess it’s not going to be as easy as buying an airline ticket.

 

Cary Hall

America’s Healthcare Advocate