Affordable Care Act Gives Small Employers Options
YOUNGSTOWN, Ohio -- The month of October begins a series of deadlines imposed on employers by the Affordable Care Act, better known as Obamacare.
All employers must notify their workers in writing by tomorrow, Oct. 1, that health insurance exchanges will become available Jan. 1. This mandate applies to every business with two or more employees, even if that company does not provide health insurance. Also tomorrow, individuals can begin signing up for health insurance on the newly established health exchanges.
To help readers of The Business Journal understand the new law as it applies to small employers, we asked George Morris III, president of Morris Financial Group in Salem, to explain the Oct. 1 deadline -- and the decision that all small employers must make before the end of the year. What follows are excerpts from a transcript of our interview:
George Morris: The first deadline is a requirement by federal law – that by Oct. 1 every employer, whether they have employee health insurance or not, must notify their employees of the Affordable Care Act.
This can be accomplished through a standard document put out by the U.S. Department of Health and Human Services, and the Department of Labor, which states that the new opportunity called the Health Insurance Exchange is available. It’s a simple notification, standard language and employers can easily access that through their health insurance adviser or on this government website.
In Ohio, an employer with a full- time equivalent of two to 50 employees has the option of deciding to exit out of the health-insurance business, and if they do, their employees can individually look at the health-insurance exchange option.
But as a small employer, you also have to determine if you want to extend the coverage date of your existing health-insurance plan.
Through December of this year, most of the major insurance companies in Ohio are giving employers in this two-to-50 [employees] market an opportunity to extend their effective date until December 2014. The main reason why employers are looking at this option is because it allows them to keep what they have now until December 2014, and that can help them mitigate or offset some of the major changes that the Affordable Care Act could have on their plan effective in January.
Business Journal: What do you advise small employers to do?
Morris: First, sit down with your independent adviser or health-insurance broker and compare your options. There are going to be a lot of options and choices: simply to maintain what you have through your renewal date next year or to extend until December 2014, which is as far as you can.
Now is the time to make that decision, because all of the carriers offering insurance in Ohio are extending this choice to their employer groups and then giving them the pricing, which will be finalized here in the next few weeks.
But the concept of being able to extend your plan all the way to December 2014 with the health insurance your company has now is available right now, to the best of my knowledge, to all employers offering insurance in this two- to 50 marketplace.
Business Journal: Two- to 50 meaning the number of employees.
Morris: Right. Full-time equivalent employees.
Business Journal: And full-time equivalent means an employee who works 30 hours a week?
Morris: In Ohio it’s actually 25 hours. The government’s rules are 30. So Ohio has a little more generous offer of 25 hours, which is how the insurance carriers in Ohio are administering their plans.
Business Journal: So what you’re saying is, amid all this confusion over these exchanges that come on board in January, is it might be better to continue the health-insurance plan you have for as long as you can until the dust settles.
Morris: Exactly. And that’s really the main thing I have advised employers to do -- with the exception of employers for whom the financial burden is just so high that they would be better off to exit the health-insurance market entirely.
But most of the employers that I’m consulting with – because of the confusion, all the unknowns about what the health-insurance exchanges are going to look like and what employees will be eligible for subsidies, and how that may impact their workforce – have decided to maintain what they have. They’re deciding to get through as much of 2014 as they can and allow the government, the states and the insurance companies to figure out what’s going to happen.
Because quite frankly, nobody really knows the impact of the Affordable Care Act.
What we do know is that employers have a plan with any major carrier, they know what the plan design is, what they’re paying, and how the claims are paid. If you, as a small employer, are satisfied with that, then – as I’ve advised clients to do – is if we can find pricing around that plan design to extend as long as we can into 2014, that’s going to be your best option.
Business Journal: But you have to make that decision by Dec. 1. Correct?
Morris: Well actually, to get an extended rate option, most of the insurance carriers are requesting some sort of notification either at the end of September through mid-to-late October. So there is somewhat of a deadline, because they have to internally change your effective date.
But as a small employer you still have plenty of time. Now is the time to begin investigating your options and looking at what you want to do with your plan.
Business Journal: And in the meantime, by Oct. 1 most of the major carriers will be telling small employers how much extending their plan through 2014 is going to cost.
Morris: Exactly. By Oct. 1, the employers will know what the new community rate plans are going to look like, but also the existing plan and the impact if you elect to take the December 2014 effective date. You will know what the cost of making that change will be and you will know from December 2013 to December 2014 what your cost will be.
You can make a strategic decision at that point, and that is really what my advice is and what I believe is going to happen in most cases.
Business Journal: Is there anything else you advise small employers to do?
Morris: I think the main thing employers need to begin doing is working very closely with their advisers and starting to look at the complexion of their workforce, of the mix of their estimated payroll income. Because one of the biggest things that companies haven’t quantified yet and qualified for yet is the fact of the subsidies.
Subsidies are going to be available for certain people and for some people they aren’t based on household income. Those subsidies are going to be available for individuals who don’t qualify for employer-based health insurance.
There’ are a lot of moving parts on this. But there is still ample time. If you’ve got an existing relationship with an adviser that is well versed and committed to this industry, they can take you through this process and give you proper counsel well before any sort of effective dates or deadline dates that are coming up in October and December of this year.
Business Journal: You’re saying two things: stay the course but in the meantime investigate.
Morris: Absolutely. You have to know what your options are. When I say stay the course, most employers have had a long-term relationship with a carrier and their employees. And their employees have come to expect employer plans are provided. If an employer is able to withstand whatever prices they are being offered, it is my recommendation they stay [with group health insurance through 2014].
There’s going to be so much change hitting in 2014, and we don’t know what that impact is going to be.
EDITOR'S NOTE: First published in the MidSeptember edition of The Business Journal.
Copyright 2013 The Business Journal, Youngstown, Ohio.
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