The Affordable Care Act: What's Next?

On March 23, 2010, President Obama changed the landscape of healthcare as we know it by signing into law the Patient Protection and Affordable Care Act. We commonly refer to this federal statue as the Affordable Care Act (ACA) or “Obamacare.” Regardless of which side of the fence you are on, this new law will have an impact on nearly every American and has increased the number of decisions employers have to make regarding their business.

Where Are We Now?

The ACA was enacted to promote quality affordable healthcare for all Americans. The ACA’s rules were designed to make new policies more generous, affordable and transparent, as well as require everyone to buy coverage unless they are a member of an exempt group. All insurance plans are required to cover ten essential health benefits, along with the elimination of medical underwriting. The law limits how much insurers can vary premiums based on age. Older consumers have new protections against premium increases, while younger individuals may see premium increases.

The first ACA enrollment period ended on March 31, 2014. The U.S. Department of Health and Human Services recently reported that over 8 million Americans have signed up for private coverage during open enrollment. This exceeds the original estimates of 7 million enrollees set by the Congressional Budget Office (CBO), despite the program’s rocky start.

However, the proportion of enrollees ages 18-35, while higher than in previous updates, is still cast as lower than needed to sustain the cost of the new law. There were also a relatively low number of Latino enrollees, which make up the nation’s largest minority group and are also its least insured. Larry Levitt, an expert on health insurance marketplaces at the nonpartisan Kaiser Family foundation said, “beyond a doubt, the number of uninsured Americans has fallen by millions. Whether it is 5 million or 15 million still isn’t clear. The low enrollment among Latinos is an indication of where challenges still lie: the hard-to-reach groups where more outreach is probably needed.”

What’s Next?

The next open enrollment period for 2015 is just a few months away and is scheduled to run from November 15, 2014, through February 15, 2015. Now is the time when federal and most state exchanges will revamp and make necessary changes for the upcoming enrollment. The federal website performed much better toward the end of November, but many of the state exchanges still face significant problems and must work to address them and improve their offerings. In some cases, states must decide whether to stay the course or throw in the towel. Federal law dictates that state exchanges must be financially sustainable by the end of 2015, when federal funding ends.

All but one state exchange failed to meet the percentage of young enrollees experts considered necessary to keep premiums low. Enrollment advocates are beginning to evaluate what worked and what didn’t, in order to conduct outreach and better educate individuals so they are better prepared to make sound financial decisions regarding their healthcare. Healthcare coverage, in general, is reverting back to the way it was 30 years ago, where insurance took care of paying for only the serious things. From an overall cost perspective, this makes more sense. It is far better to owe a $5,000 deductible under “catastrophic plan” coverage than to not have insurance and have a bill from the hospital saying you owe $50,000 or more.

The plans themselves are going to have to start setting rates for next year. According to the Heritage Foundation, more than half of U.S. counties have only one or two insurance carriers selling coverage in the federal exchange. The lack of competition means less choice for consumers and less market pressure to keep prices down.

Ceci Connolly, managing director of PWC’s Health Research Institute, said, “There are big national insurance companies that saw this as an experimental year, and there are start-ups that hoped this was going to help them get off the ground in a big way.” As more information becomes available about enrollees, and the fear of adverse selection dissipates more and more, it appears likely more carriers will enter the marketplace.

What Should You Be Doing?

As an employer, it is not a good time to procrastinate and wait to see what happens with ACA. Seek out an advisor who can look at your business and provide you with the information you need to handle the ACA with confidence. You want an advisor who can walk you through a reform readiness assessment process to make sure you are compliant. You need to know all of your available options and the impact they have on your business, such as:

• Evaluate whether or not it is in the best interest of the employer/employee to offer health benefits.
• Are you subject to a penalty if you don’t offer healthcare?
• Are you keeping your employees from obtaining a subsidy?
• Is a private insurance exchange a better option?
• Are you prepared for a Department of Labor audit?
• Review plan documents for required changes to plan benefits.
• Provide the required notices to employees and dependents.
• Have you established a look-back period (measurement periods for ongoing and variable hour employees) and documented the results for 2014? 
• Analyze tax-favored arrangements and determine if you are eligible for the small business Health Care Tax Credit.

Moving Forward

As an owner or manager, you have a business to run and need to make decisions based on your business needs, not the ACA. The ACA includes numerous provisions that take effect from 2010-2020. However, there have been multiple delays and postponements, such as the employer mandate. The mandate requires large businesses with 100 or more workers to provide affordable health insurance for full-time workers or face a penalty of $2,000 per employee beginning in 2015. New rules allow these employers to cover only 70 percent of eligible employees in 2015 and 95 percent in 2016 and beyond. Employers with 50 to 99 workers have until 2016 to comply with the mandate or face similar penalties.

The ACA is here to stay, and it is highly unlikely it will be repealed, but it will continue to evolve. You know your business better than anyone else, and it is crucial that you focus on what you can control. The bottom line is that you don’t have to be an expert regarding the ACA, but you do have to know who you can rely on and where you can obtain credible information so you can make informed decisions regarding your business.