Why employers need to be aware of the changes on the way for Medi-Cal

Expansion of Medi-Cal under the Affordable Care Act (ACA) was expected to generate as many as 2 million new enrollees by the end of 2014. With 1.9 million consumers already registered for the program by the end of March, however, and an additional 900,000 applications pending, the response has been even greater than anticipated.

Medi-Cal is California’s version of Medicaid and has been around since 1966. It was created to provide government sponsored free or low-cost health coverage for California residents who meet eligibility requirements. Effective Jan. 1, 2014, Medi- Cal and Denti-Cal (government sponsored dental care) is available to everyone in California with an income below 138 percent of the federal poverty line.

For children, it is available up to 266 percent of their parents’ federal poverty level, meaning that children may still qualify for the plan, even if their parents do not.

“Some employers may have employees and/or children that qualify for Medi-Cal,” says Ron Filice, president and CEO of Filice Insurance. “This no-cost option can help relieve the employee of the burden of paying employee contributions each month and it can help the employer save money for each employee that chooses not to enroll with the employer sponsored health plan.”

Smart Business spoke with Filice about why employers need to take note of what is happening with Medi-Cal.

How does Medi-Cal work with employer health plans?

Medi-Cal eligibility is based on the income from an individual’s tax return, without consideration of health insurance offered by an employer. So if someone is eligible for Medi-Cal, they have the option to choose

between the employer plan or Medi-Cal. All of the health plans offered by Medi-Cal include the same ‘essential health benefits’ offered under the ACA. Many individuals who enroll in Medi-Cal have no premium, no co-payment and no out-of-pocket costs.

In some cases, households will see affordable costs such as a low monthly premium. The overall intent, however, is to keep the program in line with its original goal of providing coverage for those who couldn’t otherwise afford it.

How are children covered through the Medi- Cal program?

The eligibility rules for Medi-Cal children are different than they are for adults.

They are meant to ensure that no child lacks affordable health care coverage. This makes Medi-Cal a valuable option for low wage-earning employees to consider when evaluating their health insurance options, as well as an important benefit for their company. It also provides peace of mind for an employee worried about ensuring that his or her children will have access to the medical care that they need.

What about dental coverage?

There has been an expansion of Denti-Cal. It offers more services with participating dentists including exams and X-rays, cleanings, fluoride treatments, fillings, front-teeth root canals, crowns, dentures and other essential dental services.

How does Medi-Cal work with Covered California?

Under federal law, if someone is currently enrolled in or eligible for Medi-Cal, that individual is ineligible to purchase subsidized coverage through Covered California. If the person is eligible for Medi-Cal, he or she can still purchase an individual health plan. But these individuals cannot receive premium assistance to reduce the cost and will have to pay the plan’s full premium.

Medi-Cal is health coverage, just like the coverage offered through Covered California. Medi-Cal provides benefits similar to the coverage options available through Covered California, but often at lower or no cost. Depending on the county of enrollment, Medi-Cal enrollees may even have a managed health care plan through a private insurance carrier such as Anthem or Kaiser.

How can employers help employees choose the best option to meet their needs?

The laws regarding who qualifies for a subsidy are confusing. It is in the best interest of an employer to work with a third- party benefits consultant or other expert that can provide an outreach program for their employees.

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What your business needs to stay on top of changes in health care reform

Is the Affordable Care Act (ACA) working?

That may depend on your political point of view, but based strictly on the numbers, it appears to be a success.

About 8 million people have signed up for private insurance in the Health Insurance Marketplace thus far and as of February, another 3 million were enrolled with Medi-Cal, Medicaid and the Children’s Health Insurance Program (CHIP).

Nationwide, up to 129 million Americans with pre-existing conditions — including as many as 17 million children — no longer have to worry about being denied health coverage or being charged higher premiums because of their health status.

In addition, 71 million Americans with private insurance have gained coverage for at least one free preventive health care service such as mammograms, birth control or immunizations.

Smart Business spoke with Ron Filice, president and CEO of Filice Insurance, about progress toward implementing the ACA and what employers need to keep in mind going forward.

What is the employer mandate?

Employers with 50 or more full-time equivalent (FTE) employees are required to offer their employees ‘affordable’ coverage that meets the law’s minimum essential coverage requirements. If they do not and a FTE employee receives a premium tax credit under an exchange, the employer may be subject to the ACA’s shared responsibility penalty.

According to final regulations issued by the U.S. Treasury Department on Feb. 10, employers with at least 50 but fewer than 100 FTE employees will not be required to comply with the employer shared responsibility provision of the ACA until Jan. 1, 2016. Employers with at least 100 FTE employees will be required to comply with this provision beginning Jan. 1, 2015.

What are the four steps that employers need to take to ensure compliance in 2015?

Determine if you are an applicable large employer. Do you ‘reasonably expect’ to employ an average of 100 or more FTE employees during any consecutive six-month period in 2014? A FTE employee is based on a work week of 30 or more hours. Part-time employees are counted by taking their total number of monthly hours worked divided by 120. Proprietors, partners and shareholders should be counted if they also work as an employee.

If you work with seasonal employees or employees with variable hours, your company may meet the safe harbor for variable employees, which can provide you with some cost control. However, it is recommended that you have a good policy in place that specifically outlines who qualifies as a seasonal or variable employee. Consultants can help you write a policy and outline the risks.

Determine your date of compliance. You may be able to delay the mandate until your benefit policy renewal date. There are some rules around this so be sure that you meet the requirements. Also, ensure you have systems in place for required reporting.

As the cost of health insurance continues to rise, what should employers consider to help control or better manage these increases?

If you have a large number of uninsured employees, perform a thorough analysis to gauge what your new cost exposure will be. Work with a consultant that has a strong individual outreach program with Medi-Cal and individual plan enrollment assistance, especially if you have a large population of low-income and/or part-time employees.

Find a consultant that provides in-depth analysis related to claim utilization, population management, clinical outcomes and formal processes to address health care risk so as to mitigate future exposure. This type of analysis will also give you more negotiating power with insurance carriers.

You may also want to consider alternative funding vehicles to maximize your benefit dollars. Keep your employees engaged and educated to reduce overall costs.

Devise a three-year benefits strategy that is aligned with your business objectives. The insurance industry continues to add more components and options to its packages. It’s imperative to get with an experienced benefit consultant that has the bandwidth, expertise and software to provide your company with the services that meet your evolving needs.

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