Many of the provisions of the new health care bill don’t take effect right away, but there are some compliance issues that business owners need to act on now. If you currently offer a health insurance plan, there are steps you need to take now to ensure that you can maintain that plan, says former U.S. Congresswoman Nancy L. Johnson, a senior public policy advisor with Baker, Donelson, Bearman, Caldwell & Berkowitz, PC.
“In 2010, you will have to make sure your plan covers employees’ adult children up to age 26,” Johnson says. “You also have to make sure, with individual and group health plans, that your plan conforms with the new requirements in regard to lifetime limits and exclusion for pre-existing conditions.”
Smart Business spoke with Johnson about what you need to know to be in compliance with the new health care law and how to make sure your voice is heard when the administration is writing the rules to go with it.
What do business leaders need to do in the short term to comply with the new health care law?
Start by being aware of the new law and asking how you need to change your plan. Some companies won’t need to change much at all. But others will, as they will not be allowed to exclude children for pre-existing conditions and their plan will not be allowed to drop people. In addition, group health plans and individual plans will have to provide access to preventive services with no or very minimum cost sharing.
Those things, along with having to cover employees’ adult children up to age 26 and elimination of lifetime limits, will most likely result in increased costs in a business’s health plan as it meets the immediate requirements of the bill. If medical costs keep rising at the historic pace and the new health care requirements increase costs instead of decreasing them, there is going to be a lot of rethinking. That is one of the biggest dangers posed by the new law, that it might undermine the employer health benefit structure, making employers more likely to drop their plans and let their employees go into the state exchange with few tools to control costs.
Are there subsidies to encourage businesses to offer health insurance to their employees?
There is a program for early retirees who retired after age 55 and who are not eligible for Medicare. It is effective this year and available to employers who provide coverage for such early retirees because this coverage is very expensive. Under the new law, employers can get help through the new subsidy.
In addition, if a company is a small business, with fewer than 25 employees with an average annual wage of less than $50,000, it will be eligible for a tax credit to buy a plan or to apply to a plan that it is already providing.
In 2014, the amount of the credit increases to up to 50 percent of an employer’s contribution and remains available for two years. The subsidy may not encourage businesses to offer insurance because it is modest and time-limited.
What steps can employers take now to have a say in how the regulations shape up?
First, they need to learn about the law and how it’s going to affect them. They need to focus their questions, and write to their congressman with ideas and examples of the impact of the new requirements. It’s also a good idea to work with a lawyer or other representative to get their voice heard before the regulations are written. For the agencies who are writing the regulations, there is no way to understand the complexities of these things without working with people on the front line. Employers need to be part of the input from which the initial proposed regulations are going to emerge.
What can employers do to protect their current health plans?
If a company has a plan it likes, it needs to take a good look at it. If you already have a plan, you are grandfathered in, so it keeps you out from under the bureaucracy. That’s a very desirable position, and if you have it, you should do everything you can to maintain it. But if you make changes to your plan, you can’t maintain that grandfathered status. There are certain things you’ll have to change to comply with the new law. So does that count as a change? You will certainly want to argue that the regulation answers that question with a clear ‘no.’ Many companies may not want to change the content of their plan, but they may want to change their carrier. Will that be perceived as no change to the plan? That is unknown. These are areas on which you should raise your voice to the Secretary of Health and Human Services, and thereafter consult a professional who can advise you when the proposed rules are available for comment.
Employers should be very conscious of what they have now and make sure they don’t get caught in a plan change that could cost them grandfathered status. That could mean higher premiums. The more you know, the more you can make minor adjustments without triggering out of grandfathered status into the highly regulated plan status that’s going to be characteristic of the exchange plans.
Nancy L. Johnson is a former U.S. Congresswoman and now a senior public policy advisor at Baker, Donelson, Bearman, Caldwell & Berkowitz, PC in Washington, D.C. Reach her at (202) 508-3432 or email@example.com.