Health Care Reform – A Peek at What’s Ahead for 2014 and Anticipated Trends.

The employer mandate, aka the pay or play tax, was pushed back one year to January 1, 2015, wherein a large employer, a business with 50 or more full time employees (I know, only the government could qualify a business with over 50 employees as “large,”) must offer coverage. A full time employee is one that works more than 30 hours a week, with few exceptions.

If employers don’t “play” they will pay. Two thousand dollars per year per full time employee if no coverage is offered. Three thousand per full time employee, if the insurance plan offered is considered too costly. One mechanism for the government to find out who is not complying will be when employees use the healthcare exchange to get coverage and get a tax credit, the employer will be exposed.

Interestingly, only 3.7 percent of domestic businesses have more than 50 employees so while it’s a big deal for those affected businesses it’s a small percentage of the business community.

The healthcare exchanges, while off to a rough start, are actually working well and are relatively easy to use. 

The surprise is individuals with incomes between 100 and 400 percent of the federal poverty level may be eligible for federal premium tax credits to help pay for private health insurance through the Marketplace. For individuals, that is an adjusted gross income of up to $45,900 and up to $95,000 for a family of four.

A big new insurance regulation for 2014 encompasses a ban on annual limits which include caps, deductibles, co-pays and out of pocket, for coverage on ten essential health benefits. The 10 essential health benefits are:

        1.      Outpatient Care
2.       Emergency Room Services (can’t charge more for ER visits)
3.       Hospitalization
4.       Wellness Visits and Chronic Disease Care
5.       Maternity and Newborn Care
6.       Mental and Behavioral Health
7.       Prescriptions
8.       Services and Devices
9.       Lab Tests
10.   Pediatric Care (including dental and vision)

On April 1, 2014 the IRS penalty kicks in for the individual mandate. If you don’t have coverage, the penalty is $95 or one percent of salary, whichever is greater.

While small businesses received a 35 percent tax credit in the past, in 2014 the new metric is up to 50 percent of employer covered premium costs. That should be favorable for many businesses.

Some anticipated trends as a result of Obamacare could be a rise in self-insurance for mid-size employers. Also an increase in the popularity of HSA’s and FSA’s. This will be incentivized by employers as a way to control costs as employees will think twice about spending their own money for marginal or unnecessary doctor’s office visits.

Also, expect to see larger employers (with thousands of employees) move to private exchanges with wide menus of plans for employees, the exchanges will look like healthcare.gov but will be for employees of companies like 3M or Boeing.

For a much deeper dive please click the following link to the Affordable Care Act and HRSA Programs at  http://www.hrsa.gov/affordablecareact/

CBlakely, CFP®, CTFA                      Jan-2014

Source: US Department of Health and Human Services