Under penalty of law, every U.S. employer is required to send out notices by October 1, 2013 regarding the upcoming changes in healthcare. Though the Affordable Care Act (Obamacare) doesn’t go into full force until January 2014, open enrollment for private health plans, and for the new state exchanges established by the law, starts October 1. To “help you”, the U.S. Department of Labor released two jargon-laden legal notices last May to use as a model to explain the state health insurance exchanges launching next year. Don’t panic if you’re still trying to decipher those; here’s practical “in the trenches” advice about how to communicate the changes to your staff.
Every business is going to have its own challenge interfacing benefits plans with the new state health exchange offerings – now called “Health Insurance Marketplaces” – regardless of whether you employ more than 50 full-time people (and therefore must offer health insurance), or fewer than 50. Anyone can elect to buy a policy from their state’s marketplace, but as a general guideline, you want to help employees make the best decision of where and what to buy. So first of all, you want to remind employees of what you offer or do not offer and also tell them why. Transparency serves best: If you don’t offer insurance because you are a small business that cannot afford both health insurance and the level of staffing you have, let employees know you have chosen to first offer jobs. There is no “bad company” to explain — only best decisions made for the greatest good.
Before you decide how to answer the basic question of coverage, know:
(1) The projected cost. Analysts predict that premiums will rise by more than 20% next year, and may even double for smaller businesses (one reason the exchanges may be the best choice for some). If your past strategy of offering high-deductible plans was working to help push back cost, you likely offered employees as much as a $7,500 deductible option to do so. Under the new law, a high-deductible plan will be capped at deductibles of $2,000 a year for individuals and $4,000 for families, so a policy cost review might be in order before you budget or calculate future company premium contribution rates.
(2) Your options. The SBA has a lot of online advice to help you figure out what to do and where to turn. Starting in 2014, companies with fewer than 100 employees may purchase health plans through the exchanges; the SBA clearly explains what impact the law will have on your business, based on size.
(3) How your policy might be impacted by actions taken by other companies. As I predicted in a previous blog, large corporations and small companies alike are reviewing both voluntary and mandated policies. Those which previously had offered spousal policies will not be required to do so, and so given the rising double-digit cost of insuring people – and the availability now of a viable option — we may see a sea change in “standard” family coverage options. Can your company absorb employees who formerly were covered by “better” spousal or family policies? I’m not making a recommendation for or against changing coverages – only advocating that you anticipate changing market realities and the cost you will bear.
First question: Do you now offer a company health insurance plan?
If yes, you offer coverage:
Does your existing plan meet the federal guidelines (as defined in those Labor notices)?
• Cost is an issue. If your premium options would cost any given employee more than 9.5% of their household income, they may be eligible for tax credits. If you have a range of options, including lower-cost options (usually those higher deductible plans), H.R. might review those individually with affected employees to see if there is a better fit with their budget, or if the exchange is right for them.
• If you have affordable, compliant coverage, communicate to your employees that they will not get a tax subsidy, which is the driver for some to consider making a change to the Health Insurance Marketplace. Describe your health care plan and have your analyst (or your insurance agent) draw a point-by-point comparison so that when they get the notice, they know how to respond.
• What a great recruitment/retention tool you provide! It’s worthy of pointing out to employees.
Is your plan “substandard” under the law? Employees may be eligible for tax credits if they purchase their health insurance policy from the Health Insurance marketplace.
If no, you do not offer health insurance coverage:
Will you initiate a health plan offering next year? (If you have 50 or more employees, that isn’t so much of a question as it is an observation: Yes you will, or you’ll face penalties that start out fairly affordable but then jump sky high.) You’ll want to start from ground zero with sound advice for your employees about policy and service options and deductibles for pharmacy and out-of-network charges. Probably time to have an all-company meeting to go over the proposed coverages — before mailing out the notices.
What do your employees need to know to buy from the state exchange? Some states are hiring insurance agents (and others whom they will train) to come to your company (free) to explain exchange options, and to help them navigate the purchase. Insurance carriers in some states pay the consultants to help broker their services (at no charge to the employer, then), and advice is advice regardless who the employee signs on with after the fact, so that’s worth investigating. If you include that offer along with the notice from the Department of Labor in October, you’ll go a long way toward helping employees understand the new law and how it applies to them.
It’s a changing frontier, and we all want the best for our employees. Put those sentiments into words by taking time to think through your communication on this emotional topic, and your employees will feel well served rather than flooded with confusing information.
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