by Vermonters for Health Care Freedom
Less than 30 days Before Exchange Plan Enrollment Begins
Vermonters for Health Care Freedom is continuing our newsletter series on the Federal and Vermont Health Care Exchanges. Our aim is to provide useful information to our client businesses and newsletter recipients, to help you wade through the Vermont Exchange, known as “Vermont Health Connect,” and to keep you updated on related happenings at the federal level.
New Rules on the ObamaCare Individual Mandate: On August 27th, the Obama Administration released new rules implementing the requirement that most Americans have health insurance by January 1, 2014 or pay a fine. The document comes from the Treasury Department and can be found here. When individuals file their 2014 taxes in 2015, they must indicate on their returns if they have health insurance, and if not, pay a fine. The individual penalty is the greater of $95 or 1% of income, and rises to $695 or 2.5% of income in 2016.
On July 2nd, the Administration delayed for one year a provision of the health law that would require employers with 50 or more employees to offer health coverage or pay a fine. Republicans said that if the “employer mandate” was delayed for a year, individuals should also get a reprieve. However, it is not expected that legislation introduced in the House in July to delay the individual mandate will come to a vote in the Senate. Meanwhile, the Administration is moving forward with the individual mandate. It seems patently unfair to penalize individuals but not large employers. If there is going to be a reprieve for some it should apply to all, until such time as ObamaCare can get its act together.
Our view is that a $95 annual fine (or 1% of income) will not be enough to persuade the “young invincibles” to purchase coverage through the Exchange. Compared with shelling out $340 – $370 per month for the least expensive available Exchange plans, the penalty looks pretty benign. Absent sufficient enrollment by premium payers like these who are not going to run up claims, the Exchange will become a financial house built on sand. Add to that the fact that a person can opt into a plan when they are sick or need surgery, and then drop it later when their claims have been paid, and you have the recipe for a perfect financial storm. In the health care world this is called, “adverse selection.” Again the analogy of what your car insurance would cost if there were few or no good drivers, comes to mind.
What You Need to Know Now and Where To Find It: With less than 30 days to go before the October 1 Exchange enrollment period begins, small businesses and individuals have critical health coverage decisions to make. Although we have serious concerns about whether the Vermont Health Connect will be operational by October 1, these decisions must be made now.
The Vermont Health Connect (VHC) website now offers a significant amount of information to assist Exchange purchasers in decision making. However we would caution you that not all the information you need is here and the information that is provided reflects the opinions of the Health Connect.
As an example, the FAQ section under “Eligibility,” states: “Beginning in October 2013 small businesses with 50 or fewer employees will be able to use Vermont Health Connect to find coverage for their employees.” Reading this, one would think that there was a choice to use the Exchange or not. But no, the truth is that such small businesses will be required to use”….a very different situation.
That said, the VHC website includes the following:
- Plan Designs and Premiums Chart
- Cost Sharing Reduction Plan Designs: Shows reduced Exchange plan cost sharing (lower deductibles, copays and out of pocket maximums) based on household income
- Employer Checklist for Broker Assistance: The Vermont Health Connect website includes an “Employer Checklist for Broker Assistance”. As stated in prior newsletters, we strongly suggest that small businesses consult with brokers (licensed employee benefits specialists) to sort out all of the complexities related to whether or not to offer a health plan for employees. Not all of the issues relevant to a small employer plan are listed in the VHC Employer Checklist. These include:
- Your present and proposed contributions,
- Tax exemptions,
- Small Employer Tax subsidies,
- Catamount Assessment,
- Federal subsidy and plan selection.
- What is a Navigator? Navigators are persons trained by the state to provide information about health insurance, qualified health plans, Medicaid and other public programs and enrollment assistance. While these services may suffice for an individual, small employers need more help and information than Navigators are qualified to provide. The Q & A section of the website, under “Broker Fees & Compensation”, describes the federal subsidies available to small businesses to offset the cost of using a broker.
- What Will I Be Able to Compare on the Website? You will be able to compare the various Exchange plans available, but most small businesses are looking for side-by-side benefit comparisons between their current Blue Cross or MVP plans and the new Exchange plans, in order to see where they are and where they are going. These are not to be found; however, we have requested this information from the VHC and will share it with you if/when they provide it.
- Small Business Information: Small businesses can access a plethora of information through the Q & A’s and by clicking on “Information For You”.
- Vermont Employer Assessment: The Employer Assessment will continue for employers who:
- Do not offer to pay any part of the cost of health coverage for employees;
- Have employees who are not eligible for employer-sponsored health coverage;
- Offer insurance but employees do not accept coverage and have no other health insurance.
- The assessment is $476.48 per year and kicks in after the first 4 “uncovered” employees (FTEs) as defined here. The good news is that the first 4 do not count.
At the end of the day, this is all very confusing for businesses due to the amount and variety of information to consider. However, there is money available to offset broker fees. The VHC has secured $2m from the Feds to subsidize a portion of the fee employers pay to brokers during the first year of the Exchange. The state will subsidize $7 of the $20/per employee per month (pepm) broker fee, which lowers the business’ cost to $13 pepm.
The $2m is available on a first come-first served basis so we strongly suggest that small businesses avail themselves of this subsidy and let a broker sort this all out.
Employers Must Provide Exchange Notification:
- Per the Affordable Care Act, all employers are required to provide written notice to all employees about the existence of a Marketplace exchange by October 1, 2013. The notice can be delivered by mail or electronically and must include:
- A description of the services provided on the Marketplace
- How to contact the Marketplace for assistance
- That the employee might be eligible for a subsidy to purchase coverage on the Marketplace
- The consequences should the employee purchase a qualified health plan through the Marketplace (i.e., loss of employer dollars and tax benefits)
To accommodate any possible future changes to these notice templates, we advise that you NOT fill out and send to your employees until after September 16, 2013. We did not find a model notice or guidance on the Vermont Exchange website; however it may be added soon.
ObamaCare: Surging Premiums and Shattered Promises:
While Congress has taken a one month hiatus in preparation for a busy fall, there’s been no August recess for the President’s failing health care legacy known as ObamaCare.
In the latest report from Kaiser, “the average employer-provided family health insurance premiums have climbed $2,976.”1
Flashback to June 5th, 2008—at a town hall meeting in Bristol, Virginia, the President promised to “lower premiums by up to $2,500 for a typical family per year.”2 Promise broken.
In fact, the “survey found that the average family premium this year is $16,351, up 4% over the last year, and up 22% since 2009.”
POLLSTER: National Research for The Kaiser Family Foundation and the Health Research & Educational Trust
DATE: Conducted January to May 2013; Released 8/20/13
SAMPLE: Sampled 2,067 firms
SOURCE: Slide 3; http://kaiserfamilyfoundation.files.wordpress.com/2013/08/8465-employer-health-benefits-2013-chartpack.pdf
DATE: Conducted 8/7-11/2013
SAMPLE: Sampled 2,059 Adults; 18±; MoE ±3.0% @95% confidence interval
ObamaCare’s Impact on Business: An Update for Business Owners
ObamaCare will impose new health coverage costs, the employer mandate, compliance regulations, and new taxes on all businesses. Altogether these constraints will dramatically affect companies’ per-employee costs, desire to provide health coverage, and motivation to grow in terms of both income and employment.
HHS Finalizes More ObamaCare Policies: As part of its continued effort to solidify Affordable Care Act regulations before insurance exchanges open on October 1, the Department of Health and Human Services finalized a new rule last week clarifying how a number of issues will be handled in the new marketplace.
Quote of the Week: Regarding criticism that Anya Rader Wallack is walking away from ShuminCare at a critical time to return to Rhode Island:
“That suggestion is absurd,” Shumlin counters. “Anya can’t walk away from this any more than I can.”
Really, Governor? Who wants to take bets on how long Shumlin will be around after January 1, 2017?