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Employers Eye Bare-Bones Health Plans Under New Law
Employers Eye Bare-Bones Health Plans Under New Law
http://online.wsj.com/article/SB10001424127887324787004578493274030598186.html
Employers are increasingly recognizing they may be able to avoid certain penalties under the federal health law by offering very limited plans that can lack key benefits such as hospital coverage.
Benefits advisers and insurance brokers--bucking a commonly held expectation that the law would broadly enrich benefits--are pitching these low-benefit plans around the country. They cover minimal requirements such as preventive services, but often little more. Some of the plans wouldn't cover surgery, X-rays or prenatal care at all.
Federal officials say this type of plan, in concept, would appear to qualify as acceptable minimum coverage under the law, and let most employers avoid an across-the-workforce $2,000-per-worker penalty for firms that offer nothing.
The idea that such plans would be allowable under the law has emerged only recently. Some benefits advisers still feel they could face regulatory uncertainty. The law requires employers with 50 or more workers to offer coverage to their workers or pay a penalty. Many employers and benefits experts have understood the rules to require robust insurance, covering a list of "essential" benefits such as mental-health services and a high percentage of workers' overall costs.
But a close reading of the rules makes it clear that those mandates affect only plans sponsored by insurers that are sold to small businesses and individuals, federal officials confirm.
<snip>
Administration officials confirmed in interviews that the skinny plans, in concept, would be sufficient to avoid the across-the-workforce penalty. Several expressed surprise that employers would consider the approach.
http://online.wsj.com/article/SB10001424127887324787004578493274030598186.html
Employers are increasingly recognizing they may be able to avoid certain penalties under the federal health law by offering very limited plans that can lack key benefits such as hospital coverage.
Benefits advisers and insurance brokers--bucking a commonly held expectation that the law would broadly enrich benefits--are pitching these low-benefit plans around the country. They cover minimal requirements such as preventive services, but often little more. Some of the plans wouldn't cover surgery, X-rays or prenatal care at all.
Federal officials say this type of plan, in concept, would appear to qualify as acceptable minimum coverage under the law, and let most employers avoid an across-the-workforce $2,000-per-worker penalty for firms that offer nothing.
The idea that such plans would be allowable under the law has emerged only recently. Some benefits advisers still feel they could face regulatory uncertainty. The law requires employers with 50 or more workers to offer coverage to their workers or pay a penalty. Many employers and benefits experts have understood the rules to require robust insurance, covering a list of "essential" benefits such as mental-health services and a high percentage of workers' overall costs.
But a close reading of the rules makes it clear that those mandates affect only plans sponsored by insurers that are sold to small businesses and individuals, federal officials confirm.
<snip>
Administration officials confirmed in interviews that the skinny plans, in concept, would be sufficient to avoid the across-the-workforce penalty. Several expressed surprise that employers would consider the approach.
Comment by Don McCanne of PNHP: Imagine health insurance not covering hospitalizations nor surgery. Yet this is still possible because the Affordable Care Act applies the essential health benefit requirement only to plans for small businesses and individuals and not to larger employers.
This has opened up the opportunity for a conspiracy between larger employers who could care less whether or not their employees have health insurance and private insurers who are quite willing to sell these almost worthless bare-bones products as long as there is a profitable market for them.
The solution is obvious. Cover all care that people need, and then provide that coverage to everyone, automatically. Maybe these uncaring employers might not like that, but when the taxes to pay for an equitable system are obligatory, they would get used to the idea of their employees being able to obtain health care when they need it. Not such a bad idea after all, especially when their competitors are treated the same.
53 replies
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Me not being one of them and I'm a medicaid worker. 
The way it is supposed to work is the employer has to provide insurance for their employees....It should seem obvious that the employer will choose the cheapest form they can legally get...however the employee will still come out with something, which is more than they have now.
http://www.jonesday.com/affordable_care_act/
The Affordable Care Act at 2½—What Employers Should Expect Now
August 2012
<snip>
III. THE MANDATES FOR LARGE EMPLOYERS
A. "Play or Pay" Mandate
Effective January 1, 2014, the ACA will generally require all employers who employed an average of at least 50 "full-time equivalent" employees during the prior calendar year (which the ACA defines for this purpose as a "Large Employer"
to either offer health insurance coverage constituting "minimum essential coverage" to full-time employees and their dependents[8] or potentially be subject to a tax equal to $2,000 annually ($166.67 per month) for each full-time employee of the employer in excess of 30 employees. (Code § 4980H(a), (c)(1)). For these purposes, an employer is defined by the controlled group rules of Code section 414. The term "minimum essential coverage" does not require the employer to provide certain types of coverage or maintain certain cost-sharing limits, such as would apply to an "essential health benefits" plan eligible for certification by an Exchange as a "qualified health plan." Minimum essential coverage merely needs to be a group health plan (as defined in Section IV.A.1. below) offered by an employer. (Code § 5000A(f) (defining "minimum essential coverage" ). That being said, there are numerous requirements that independently apply to such coverage. The ones added by the ACA are described in Section IV below.
There may be insurance brokers peddling the cheap, worthless policies to large employers, but if the large employers buy those policies instead of the ones they're required to offer their employees they're going to wind up in a mess, and probably the brokers will, too. It would serve them all right.
The Affordable Care Act at 2½—What Employers Should Expect Now
August 2012
<snip>
III. THE MANDATES FOR LARGE EMPLOYERS
A. "Play or Pay" Mandate
Effective January 1, 2014, the ACA will generally require all employers who employed an average of at least 50 "full-time equivalent" employees during the prior calendar year (which the ACA defines for this purpose as a "Large Employer"
to either offer health insurance coverage constituting "minimum essential coverage" to full-time employees and their dependents[8] or potentially be subject to a tax equal to $2,000 annually ($166.67 per month) for each full-time employee of the employer in excess of 30 employees. (Code § 4980H(a), (c)(1)). For these purposes, an employer is defined by the controlled group rules of Code section 414. The term "minimum essential coverage" does not require the employer to provide certain types of coverage or maintain certain cost-sharing limits, such as would apply to an "essential health benefits" plan eligible for certification by an Exchange as a "qualified health plan." Minimum essential coverage merely needs to be a group health plan (as defined in Section IV.A.1. below) offered by an employer. (Code § 5000A(f) (defining "minimum essential coverage" ). That being said, there are numerous requirements that independently apply to such coverage. The ones added by the ACA are described in Section IV below. IV. HEALTH BENEFIT-RELATED MANDATES
The ACA imposes a variety of requirements on both "group health plans" and "health insurance issuers." These new requirements include rules governing who must be afforded coverage by such plans and insurers, what types of services must be covered, cost-sharing rules governing such coverage, and what coverage limitations can be imposed. Some of the new requirements build on an existing regulatory scheme first established under HIPAA. Others are added separately. The various requirements apply to different health coverages and have different penalties. Below is a discussion of the rules for certain of the requirements, which are mandates added by the ACA to the HIPAA scheme (herein, the "ACA Coverage Mandates" , followed by a list of the various requirements in chronological order by effective date.
A. ACA Coverage Mandates
The HIPAA regulatory scheme is found in the Public Health Service Act ("PHSA" , ERISA, and the Code. Some of the new requirements are added to the PHSA and are incorporated into ERISA and the Code by reference through ERISA section 715 and Code section 9815. It is important to understand the forms of employer-provided arrangements to which these mandates apply.
1. Health Benefits Subject to the ACA Coverage Mandates
The term "group health plan" is not defined in the ACA, but it is defined under the earlier HIPAA rules that are incorporated in ERISA, the Code, and the PHSA, and accordingly such definition will govern for ACA purposes. A group health plan is defined to mean "an employee welfare benefit plan … to the extent that the plan provides medical care … to employees or their dependents … directly or through insurance, reimbursement or otherwise." (PHSA § 2791(a)). An employee welfare benefit plan, in turn, means an insured or self-insured health arrangement sponsored or maintained by an employer or union (or both) for employees. (ERISA § 3(1). As such, by imposing new requirements on "group health plans," the ACA effectively imposes them on virtually all employer-provided health benefit arrangements for employees. Furthermore, the term "health insurance issuer" is defined to mean an "insurance company, insurance service, or insurance organization … licensed to engage in the business of insurance in a State and which is subject to State law …." (PHSA § 2791(b)). Thus, the ACA, by also imposing its coverage mandates on health insurance issuers, has effectively imposed mandates on virtually all individual and group insurance market policies.
The ACA imposes a variety of requirements on both "group health plans" and "health insurance issuers." These new requirements include rules governing who must be afforded coverage by such plans and insurers, what types of services must be covered, cost-sharing rules governing such coverage, and what coverage limitations can be imposed. Some of the new requirements build on an existing regulatory scheme first established under HIPAA. Others are added separately. The various requirements apply to different health coverages and have different penalties. Below is a discussion of the rules for certain of the requirements, which are mandates added by the ACA to the HIPAA scheme (herein, the "ACA Coverage Mandates"
, followed by a list of the various requirements in chronological order by effective date.
A. ACA Coverage Mandates
The HIPAA regulatory scheme is found in the Public Health Service Act ("PHSA"
, ERISA, and the Code. Some of the new requirements are added to the PHSA and are incorporated into ERISA and the Code by reference through ERISA section 715 and Code section 9815. It is important to understand the forms of employer-provided arrangements to which these mandates apply.
1. Health Benefits Subject to the ACA Coverage Mandates
The term "group health plan" is not defined in the ACA, but it is defined under the earlier HIPAA rules that are incorporated in ERISA, the Code, and the PHSA, and accordingly such definition will govern for ACA purposes. A group health plan is defined to mean "an employee welfare benefit plan … to the extent that the plan provides medical care … to employees or their dependents … directly or through insurance, reimbursement or otherwise." (PHSA § 2791(a)). An employee welfare benefit plan, in turn, means an insured or self-insured health arrangement sponsored or maintained by an employer or union (or both) for employees. (ERISA § 3(1). As such, by imposing new requirements on "group health plans," the ACA effectively imposes them on virtually all employer-provided health benefit arrangements for employees. Furthermore, the term "health insurance issuer" is defined to mean an "insurance company, insurance service, or insurance organization … licensed to engage in the business of insurance in a State and which is subject to State law …." (PHSA § 2791(b)). Thus, the ACA, by also imposing its coverage mandates on health insurance issuers, has effectively imposed mandates on virtually all individual and group insurance market policies.
There may be insurance brokers peddling the cheap, worthless policies to large employers, but if the large employers buy those policies instead of the ones they're required to offer their employees they're going to wind up in a mess, and probably the brokers will, too. It would serve them all right.
sad but true
