In 2016, a key part of the Affordable Care Act (ACA) is scheduled to take effect for employers classified as small groups. Those organizations may have to start offering ACA plans later in the year or face a penalty.
Some reports say these changes could affect more than 150,000 businesses across the U.S.
“Back in 2013, small businesses got an extension on transitioning to the ACA, which let them keep the plans they had,” says Veronica Hawkins, Medical Mutual vice president, Government Accounts. “But the government says the extension will end in October 2016. That could mean a lot of employers will soon have to move to the ACA.”
Smart Business spoke with Hawkins about the changes scheduled for 2016, what they will mean for employers and how to make the best decisions in what is sure to be a very uncertain climate.
What is happening in 2016?
The big issue is the possible end of transitional relief, which has allowed many small businesses to delay the move to the ACA. The relief is scheduled to end with renewals after Oct. 1, 2016. Until then, nothing really needs to change.
When they renew after that point, they will have to move to ACA plans — unless transitional relief gets extended again.
Is the definition of a small group changing?
For a while it looked like it would. As part of the ACA, the threshold was scheduled to increase to 100 employees on Jan. 1, 2016. However, President Barack Obama recently signed a law that lets the states continue to define the size of a small group.
Ohio will keep the current definition, so groups with 51 to 99 employees won’t have to move to ACA plans next year, as many were thinking they would.
What is considered an ACA plan?
ACA plans are all plans that are not transitional or grandfathered. To meet ACA requirements, employers are required to offer plans that cover 10 essential health benefits, provide annual limits on maximum out-of-pocket expenses, use community ratings and include mandatory coverage for preventive benefits.
What is the difference between transitional and grandfathered?
While transitional plans were part of the government extension, grandfathered plans existed before the ACA was passed in 2010. Grandfathered plans are exempt from many ACA requirements. For some organizations, staying grandfathered makes sense because they avoid some of the extra costs of ACA requirements. If they have relatively healthy employees, however, they may see lower rates with ACA plans. It really depends from case to case.
Does it make sense to move to the ACA early?
Keep in mind: transitional groups aren’t subject to ACA requirements. There’s also a chance the government will grant another extension. Or, another option might be introduced before they have to switch.
That’s why, if your plan is working, it may be best to sit tight for as long as you can.
What if you’ve already switched?
These changes don’t really affect organizations if they have already moved to an ACA plan. The only thing they really have to do in 2016 is recertify their status as a small group. All small groups have to certify their status to ensure they are placed in the correct market segment.
What else should organizations do?
Depending on the organization’s size and plan status, they may have a lot of questions. The landscape is still uncertain and things can certainly change.
The best thing organizations can do is work closely with their health insurance carrier to know where they stand — and what their options are.
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