Leading into 2014, this is a banner year for changes within the benefits world. A topic on everyone’s mind is exchanges and just what kind of medical coverage will be available. Below are a couple of facts about exchanges that are timely. Enrollment is set to begin on October 1, 2013.
The Small Business Health Options Program (SHOP), available for state exchanges, will promote health insurance availability for small employers. Beginning in 2014, small businesses with more than one and fewer than 50 employees can obtain a health care tax credit when purchasing employer-provided group insurance through an exchange. States can extend SHOP to employers with up to 100 employees.
Qualified employers may select coverage from one of the “metal” coverage levels for their employees. These categories are bronze, silver, gold and platinum and denote differing amounts of coverage. This employee choice model allows eligible employees to select any coverage offered within the chosen metal range. Employers can also choose a specific plan, or plans, available for their employees to purchase within a SHOP.
Additionally, SHOP assists the small employer by aggregating premiums into one billing statement to facilitate employer contributions to employees’ health insurance choices and premium payments.
One Year Delay for Some SHOP Options
Thirty-three of the health exchanges run by the federal government will not be ready this year, as originally outlined. This does not mean that the various metal coverage levels and a selection of plans will not be available on a state-run exchange SHOP; it simply means that the federally-facilitated SHOP (FF-SHOP) will not be available during 2014.
The FF-SHOP will be available for plan years beginning on or after January 1, 2015, and will provide qualified employers a choice of two methods to make certified health plans available to qualified employees.
Keep in mind there will also be state run as well as private exchanges from which small employers may choose the type of insurance they already offer to their employees. Some employers may not want to push their employees to an exchange in order to get individual insurance. However, now is the time to work with your employer/clients as a trusted advisor to plan for new choices coming in 2014 and beyond.
Health Insurance Deductibles for Small Group Health Plans
Along with the FF-SHOP delay described above, this is a good time to remind you of another restriction both employers and employees will be seeing in small group health insurance plans beginning on or after January 1, 2014.
A $2,000 individual and $4,000 family deductible limit kicks in for any plan other than large group or self-insured plans. These annual deductible limits will be indexed for plan years starting after December 31, 2014.
One popular plan design, where an employer “buys down” to a higher deductible through the use of a health flexible spending account (FSA) or a health reimbursement arrangement (HRA) is also out of the question. In the past, employers might offer their employees a high-deductible health plan and establish a side account, such as an HRA, to offset the higher costs to enrollees. Final policies by the agencies have barred this type of arrangement.
A Department of Health and Human Services (HHS) website (www.healthcare.gov) provides different types of information from key features of the Affordable Care Act (ACA) law, information for you, and a timeline for what’s changing and when. It also contains the full text of ACA. You probably don’t want to read the entire law, but other topics on this website are very helpful. The timeline is especially useful to get the thousand-foot view and a general understanding of changes to the law. First, employers need to be educated and then take on the daunting challenge of educating all employees.
This isn’t Survivor. Employers and employees do not want to be dropped onto an island on their own with hundreds of insurance products to sift through. Nor do they want to be “voted off” the island, so employers will be looking to their trusted advisors for a good road map to follow into the changes proliferated by ACA.
The information contained in this article is not intended to be legal, accounting, or other professional advice. We assume no liability whatsoever in connection with its use, nor are these comments directed to specific situations.
Janet LeTourneau, ACFCI
ACFCI is the Director of Compliance Services at WageWorks. She draws upon more than 25 years of experience with flexible benefits plans and tax laws to perform consulting services and monitor quality control. LeTourneau is a frequent speaker to employer groups and conferences and was formerly on the board of directors for the Employers Council on Flexible Compensation (ECFC) and is a current member of the ECFC Technical Advisory Committee (TAC). She is the lead instructor for the Section 125 administrators training workshop. LeTourneau was one of the first people in the country to earn the Advanced Certification in Flexible Compensation Instruction designation sponsored by the Employers Council on Flexible Compensation. She is a certified trainer in the ACFC program. LeTourneau can be reached by telephone at 262-236-3021 or by email at firstname.lastname@example.org.